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Property plans....am I crazy?(7 Posts)
This is long winded....so I am just going to summarize as quickly as I can!
-DH & I have 500k house, 300k mortgage (large 5 bed home, double garage)
-This is our 4th home, we've done 3 projects (including current house)
-We are looking to move again, due to garden being too small and dark in current house...and loft room we never use (dc are both too small to use it)
-driveway also problem in current house
-my dh would like to buy a buy to let property
we are looking for other properties in our village...
I have found a semi detached that needs gutting for around 200k, with large south facing garden and good driveway.
My plan would be buy 200k house now, whilst still in current home...with interest only mortgage.
I would want to do large extension, almost doubling footprint, and totaling gutting inside. My father/ brothers are in construction, so I think I could do this for around 90k.
My hope would be once building underway, we list our and have 6-9month window to sell it, so we don't have to live on building site with 2 young children.
On completion of current house - we would be left with smallish mortgage on new house, and equity to buy a buy to let (once the dust had settled!)
DH worried that its risky, and that long term I wouldn't be happy in a semi-detached.
BUT this for me would be a life long dream to do something really cool design wise, and long term give us a smaller mortgage, better lifestyle and investment for our kids.
I think you have to work out what you would do if you couldn’t sell your current home. I am not someone who believes that the property market is going to crash but you would be very brave to do this at the moment given that it is pretty certain that we’re entering a depression and we also have real brexit at the end of the year. Could you rent one house out if you couldn’t sell? Could you afford to keep one house empty for a longer period (years?). What if one or both of you lose your jobs? If you have a contingency plan then go for it but you’d be safer selling your current property first (if the dooer-upper has a good garden could you get a static caravan or a garden room built?). Also bear in mind that stamp duty is higher on a second home.
Would you get planning to double the size? It's more difficult with a semi as large extensions can unbalance the pair? Also would you get an interest only mortgage in the current climate?
where will you get the 90k from? are you sure you can get an additional 200k mortgage on top of the one you already have? I don’t think 90k will be enough to double the size of a house plus total gutting of the original, particularly if you are going for a ‘cool’ design.
Factor in the higher stamp duty of £7500 on £200k mortgage for a second home. You can claim £6000 of this back if you sell your first home within 3 years. But you have to pay it out first. You still need the income for the 200k mortgage regardless of having the large house to sell at a later date.
I would love to have this problem! Sorry i'm just jealous, 😬
thanks @cabbageking - I didn't know that re-claiming back stamp duty...
We have £22k in savings, plus bank have said we could borrow an additional 100k against this house