Second home

[sunnyd67]

Hello

We are new to anything linked to property, we bought our own home two years ago. We are thinking of buying a second property, it would be a one/two bedroom flat and we would like my mum to live in it. How does it work? Would we need do buy to let mortgage or just a mortgage like we do now, but we wouldn't live in the property ourselves?

Thank you

You need to speak to lenders but probably btl mortgage, assuming she would pay rent etc. You would pay second home stamp duty and have a potential cgt liability in future too.

If your mum would be paying you rent then you could get a buy to let mortgage based on the rental income. You'd likely need a sizable deposit too though and as she's a family member the bank may want proof that she can pay the rent. If she's not going to be paying you rent then a mortgage would be based on your own income. This is possible if you've no longer got a mortgage on your own home, or have a high enough salary to support both mortgages. Be aware that you'll have to pay the extra 3% stamp duty on a second home, and if your mum is wealthy enough for inheritance tax to be a concern, the house you buy for her may still and end up being considered part of her estate if she's been living in it.

Is this because your mum is hard up and you want to help her with free accommodation or are you thinking of it as an investment ? If your mum is going to pay you rent, it will be subject to income tax. There are three main ways you can get money to buy. First,you get a Buy to Let mortgage on the new flat. The problem with that is lenders often don't let you use the flat for family members. The second option is to raise funds by increasing the mortgage on your own home. You can only do this if you have enough equity in your own home. You can then buy the flat for your mum to live in free or paying rent. Third, you get a further residential mortgage. This is what people use for holiday homes. It's usually a condition that you do NOT rent it out.

You need a buy to let mortgage however, some lenders don't allow rentals to family members so you should get a decent broker to help. You will also need a deposit of 25% plus higher rate Stamp Duty will be payable.

You'll also be paying a higher rate of council tax as a result of having a second home

@Palavah

You'll also be paying a higher rate of council tax as a result of having a second home

OP won't be paying the council tax. Her DM will