Stamp duty

[eyeeyeeyeeyeeye]

I own a property already, it's mortgage free but not big enough for our growing family. Realistically we need to move but the stamp duty is like £35k on a house we like.
I don't really want to sell the house as I'd like to keep it for my kids, but also was thinking of renting it out. We can do a £50k deposit on a mortgage but no way can we afford the stamp duty too. Is it best to sell the current house and use that as a mortgage and use the deposit savings for stamp duty?
Thanks

Can't you just take money from the existing house to fund the new house and keep both?

Sorry if I sound thick but I don't understand ? I'm new to all this and autistic so I struggle to get my head around it all at the best of times

I’m not autistic but I didn’t understand that either!

if you don’t have enough cash to fund buying the new house you will have to either take out a loan to cover the costs ( maybe this is what pp meant, use that property to take out a small loan to cover the stamp duty) or sell your existing property. You can only take out the loan if you can afford this.

please remember that there will be costs in getting your house in a suitable state, legally, to rent it out.

The poster means why don’t you take equity out the property and use that to fund a deposit and stamp duty for another house. You’ll keep both properties but with two mortgages and you’ll need to pay additional rate of stamp duty.

Oh, that sounds worse though two mortgages and more stamp duty

So is taking equity out of the house basically a loan ?

You could borrow against your current house and stick it on a Buy to Let mortgage, the rates are higher than a normal mortgage though. Depending on it’s value the rent may cover the mortgage. Then get a residential mortgage on the new house.

Yes, in the form of a mortgage.

Okay, I really want to keep this house.
Can someone explain it to me like I'm 5? Like step by step what would need to happen

So I would have two mortgages but one of them is "a loan" that we'll be paying back and the other is a mortgage on a new house?

Do you know what is involved in renting out your house? Do you know the legal responsibilities of landlords and all the costs involved? It's not so simple as you might think. You also need to be aware of the added cost on second homes, such as council tax and capital gains when you sell.

If you are not confident that you have the knowledge and funds available to maintain two properties and manage a tenancy, then I would say just sell your house and use the cash as a deposit on your new home.

How is the stamp duty £35k but you’re only putting down a £50k deposit something doesn’t sound quite right there, unless someone else is putting down a huge deposit?

Both are mortgages. One would be a buy to let mortgage and the other one a residential mortgage

I was just using that as an example we're not going for that house, not in a position too for a start !

Put an extension on your current home instead of moving.

We can't, we already extended the kitchen out the back and we can't go up as we're mid terrace

Fair enough OP. Was just trying to think of another solution for you.

I would love to be able to do that though

No I have no idea 😆 I just see myself sitting on a property and don't want to lose it as it was my grandparents house

The stamp duty is calculated on the value of the house so you would need to know that really before looking at your options. Then there are different rates depending if it’s your ‘next home’ or an ‘additional home’ as landlords pay a surcharge. With only a £50k deposit you’re probably not looking at a hugely expensive house so the stamp duty would be much much less than £35k. It’s currently 0% up to £250k but that is due to change in April to £125k

Presumably, in order to keep two houses, you would have to rent out one. This means that, like it or not, you would have to be a landlord. The legal responsibilities are serious and not to be taken lightly. Many professional landlords who have been working for years are coming out of the business now because it's very difficult with the new laws. Most importantly, you are responsible for the safety of your tenants. Please take this seriously and look into the law and costs involved.

Can I ask what's so bad about the new laws ? Only had a quick google

The new law is not bad. In fact, it's very good for tenants as it gives them more security and protects them from overzealous rent increases. For landlords, the biggest cost is likely to be having to go through the courts to evict tenants. If you expect the rent you receive to cover all repairs, maintenance, taxes and legal fees then you should be able to cope financially. If not, then you are better off selling.

Can I ask what taxes would be involved ? I know there will be landlord fees which is like our insurance isn't it ? Not sure what else. Not sure if I can be bothered with the stress of it all to be honest .
We would get around £1k a month in rent going by similar properties in the area

@eyeeyeeyeeyeeye you would have to pay tax on the income from the rental. If you get good tenants it's fine but remember you have to pay to replace boiler dishwasher washing machine etc etc also all the checks you have to do on a property

If you get a bad tenant then it can be very expensive. A friend of ours had rented out her flat for years to a lovely couple. They moved and it was rented out again very quickly....and was fine until the flood and the problem gaining entry...police needed as water coming out of property and a cannabis farm inside

Sell it and love your new property