Can we gte 2 mortgages or are we stupid??(14 Posts)
I have been lurking for a few weeks and you all seem to have lots of knowledge so was hoping for some views, ideas or similar examples as getting pretty desperate.
I live with DH and 2 boys in a nice area of Bristol in a 4bed detached which allowing for a lowering offer should be worth about 300K and we have a mortgage for 128K, this house is now on the market after viewing the house of our dreams 2 weeks ago, the house of our dreams needs gutting but has lots of scope for an extention being an ex council house in a village, the house is up for 185K, we have had an offer accepted on it but need to get ours sold. The question being can we get a bridging loan? (although unhappy with this as so much risk) or as suggested by a neighour who has done this can we put the house we live in on a interest only mortgage and possibly rent out for 6 months in hope things will calm down in the selling market and get another mortgage for new house. We have neen advised by current mortgage company that we could borrow another 96K but this isn't enough. If we did this we couldn't get extention built until orginal house sold but would mean we would have hosue we want and could get DS1 into local school.
Or do we just sit it out and hope someone buys ours before the other one sells?? I do belive in fate with houses and homes but this is driving me insane!!
Thanks very much for reading all this
We remortgaged, transferred our original house onto a buy to let mortgage then bought our current one, as I was really worried about getting DD into the reception class of her school as we decided to move close to the cut off point for the first round of admissions to primary school.
We had a buyer in September for our house, moved in November and had to wait until March for our original house to complete and it was a bit on the stressful side.
I don't think I would repeat it, there was a lot of stress involved but DH had already started his job down here and I was absolutely desperate to get down. And at the time we did it the housing market was pretty stable. I would be extremely careful doing anything like it with things as they are.
I guess you have to look at the worse case scenario of doing it and then having to rent out the house for a fair period of time. You'd have to look at all the figures and the rental market in your area to see what the rent would be, how much demand etc and how you think this would be affected if prices do go down.
We did it,
Have moved to a cheaper area, kept the house in an area where property prices are likely to rise considerably and are looking to keep it for about 10 years.
It is scary, we can only do it if the house is rented out and we do have a much bigger mortgage to pay on our new house. But if it all works out we should be quids in in 10 years time, either for university fees or to be able to just splash the cash a bit more and have some fun .
The buy to let mortgage is interest only as it is better for tax purposes, I now have to fill in a tax return as I havent worked for over 7 years it will be very simple .
Both mortgages we have are fixed rate for 5 years, hopefully by then things will have settled down a bit as well.
Good luck with whatever you decide.
I would go with putting your current property on a buy to let mortgage as opposed to taking out a bridging loan..... the latter is VERY risky, especially with the current market situation.
Good luck with whatever you decide and i hope you get the house of your dreams.
OOh where are you moving, is it clsoe to bristol 9we're not far away from you, just over The Bridge)
Thank you for all your messages,
I wasn't sure if we could get a buy to let mortgage on interest only which is what we want to do as prices in the area we live now, should (fingers crossed) rise. Will contact some financial advisers for some information.
Hi peachy, we have in-laws over the bridge, but actually hoping to move further into england to wiltshire, DH very welsh so has taken 10year to presuade him he won't run out of O2 there!
Boogalooblue does the tax thing apply to all buy to let's, sorry haven't a clue about tax stuff, I work part-time but my tax band varies as have a lease car from work, I guess an accountant could advise on stuff like that. Fingers crossed for your rental, it is something we wanted to do for a while but was thinking of buying a small house to rent out.
Will do some reseach and contact some rental agents and finanical people, have e-mailed some one on the MN's board who advertises financial services as a starting point.
Thanks for all your message has made me much more positive.
Tigger think dp could help you with this one
Thanks Lilyloo, I e-mailed the link earlier today
better let him get on his laptop then at some point Tigger
No worries it is a wet sunday so perfect day for chilling, watching rugby and a huge big fat roast dinner!!
Tigger, as far as I am aware anyone who gets more than £5k a year on rental property has to fill in tax return, however figure could just be a figment of my imagination I do know that I have to and feel deeply disturbed by it .
Through doing this I really do feel that we will be quids in in a few years time - we do not benefit short term by any means. We also have the ability to survive for 6 months without a tenant (we borrowed more to enable us to have this backstop).
Hang on, you have £128k equity
you will sell for £300k so will pay off the £128k and will have £170k cash
Your new house will cost £185k so you could put down £170k (once you've sold) and have a mortgage of £15k + extension costs = what, £50k? So you'd have a mortgage of £65k and a house worth that plus more.
I think you should sell your house first before you buy the other one. Because if you do so there won't be any problem.
Sorry if I've misunderstood completely! Where in Bristol btw (I used to live there)
Oh I see, you're wondering about converting your existing house to a BTL and still moving and paying the mortgage on the new house? In which case:
BTL mortgage on old house for £128k, the question is will you DEFINITELY rent it out and will the rent cover the mortgage? Yields are low atm but you don't have a huge mortgage so it may not matter. Can you pay the mortgage even if you don't let it for a while? Is it a good area for students? Will you let to students?
So then you'd be looking at getting a new mortgage for £185k on new house, right? I think if you could secure it against the old one you'd be ok.
But the market is very very uncertain atm and you may find mortgage cos jittery.
You need to borrow max you can on btl and use as much equity on new house, due to tax relief on interest only mortgage. speak to a mortgage advisor, it can work it is just a bit scary. Building soc will only lend something like 75% of projected rental income, ie if you get £1k pcm rent then they will lend you only as much as the repayments are £750 pcm and that should be fixed for x years.
Sorry if this doesn't make sense,ask and i will try and explain more .
You need to take into account running costs and in our case we pay an agency to manage place (saves us being woken at 3am to be told boiler has broken or something)
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