Buy-to-Let on my house so I can till move - Good Idea?

[piranhamorgana]

Me again,desperate to move in time for September. A mortgage consultant has drawn me up some figures in whereby I put my house on a buy to let mortgage whilst still trying to sell,and then purchase with a 5% vendor gifted deposit.

Basically,I will have mortgages on two properties.Rent would cover some ,but not all,of the mortgage on my current house.I would look to get as cheap a deal as possible on the re location property.The house I was hoping for will be too expensive,and the vendors will not accept less.So I will have to search.

I can manage the outgoings with strict budgeting.
My job is secure

A neighbour would love to buy my house - she is local and says it has always been her "forever house".She is waiting for her divorce to finalise and actually asked me if I would rent to her until she could buy.She is willing to get a contract drawn up.She has a months notice to give her current landlord and is willing to give this asap.

I am so desperate to re locate,I am now willing to compromise on my on-going purchase,just to do it.

Straight talkers to the fore - wwyd?

[starmucks]

Why buy again if 1. It's a compromise 2. You will have to pay CGT on any profit from the house you're renting out when you eventually sell it 3. Your buy to let mortgage will be more than your rental income. By the way, there are always unforeseen maintenance costs so making up on the mortgage is unlikely to be your only cost there.

When don't you switch your mortgage to a consent to let. This should be at the same rate as your current deal and valid until the current deal matures. You'd then switch to a buy to let. You'd also have 3 years to sell the property before you'd have to pay CGT. Renting where you are moving to may not be the ideal, but it may make the best financial sense.

[threefeethighandrising]

Sorry to hijack but I've never heard of a consent to let, what does it entail? Do all mortgage companies do it?

[piranhamorgana]

We did talk about this,but it appeared to me that the only way I could get the figures to work out in the here and now is by buying again.

There will be maintenance.But if I don't sell,and continue to live here,I have to sort all those out anyway.None of this is ideal.

If I don't get moved this August,I will have to put it all on hold until for 3-4 years,due to dd1 and then dd2's exams.I can't face the idea.

Oh I know it's a big gamble.I just don't know what to do.My emotions are clouding my decision making.

[narmada]

Could you relocate and go into rented so you can free up some money from the sale of your current house, and then look again at your leisure? It sounds like you really do want to move so could that be an option?

[starmucks]

Obviously you know your numbers best, but giving up 28% to CGT seems really wasteful especially if you're intention is to sell in next few years. Do you think the Market will rise that much just to give it away?

I can't say that all mortgage providers do consent to let, but the majority do.

[piranhamorgana]

Ok,have done some more research.

I could increase the terms of my current mortgage .This would reduce the repayments to be covered by the amount I would get from rent - easily.
A friend is willing to rent it from me whilst keeping it on the market,and to leave at a months notice if it sells.
The lender has agreed to this.

There are two interested purchasers who want to offer,but are stuck in chains.So it will sell at some point.

I have decided I will relocate before September by hook or crook.

On advice from an advisor in the EA in the new area I have worked out the following:-

I could get a mortgage from Halifax which would ,with a deposit,enable me to buy.If I get the asking price reduced,this stands as a 5% vendor gifted deposit,the house values at 10% above the agreed sale price.
I am able to afford the repayments on this product.

I now need to find out if the vendors of the house I want will accept less than the already agreed offer,on the basis that this will enable a chain-free transaction.
If not,I have to find another property.In that case,I have one other property in mind which I will offer on,on the same basis.It will be a low offer ,so if they do not accept,I will rent until my original,rented property sells.

I have done the figures to get this off the ground and make the repayments.
Would CGT still apply in this case?
Am I missing anything?

[Rangirl]

Remember with CGT you get an annual allowance to offset against the gain Is house in 2 names?

[DutchOma]

I know nothing about the figures. Whatever the figures, it will allow you to move. You need to move.

[starmucks]

It depends on how long it takes to sell your house after you've purchased the new one. You'll have to call HMRC. If you didn't buy, you'd have three years grace before CGT would apply.

[diggingintheribs]

You still get the 3 years at the end - even if you buy again