Buying a second home - Financials... help!

[Lemmingsarecool]

Just looking for some advice really as just in ideas phase of what we need to do and if it'd be possible.

We own a home with 100k left on mortgage. (Worth say 350k) Both self employed and can potentially put paye wage up to 2k per month each so 4k take home after tax. No childcare but 2 dependants. We're looking to potentially buy a second home (my parents would live in our current home if we pulled it off so aren't looking at buy to let and they can't help financially so wouldn't get an income from that!) We own our commercial property (own business using it), that's worth 100k. 20k left on mortgage.

My question is really, say we pulled together 10% deposit, would the bank potentially lend us enough to buy a new property on a 30 year mortgage and would our circumstances be classed as assets or debt to them? We'd be happy to lend against current properties we own.

The crux of it is we are looking to take care of elderly parents (proud ones) and still house ourselves whilst keeping our small business intact so looking at options. Thanks for any advice!

It will be on affordability. See salaries and multiples

Having looked into various different options over the years, it’s not straightforward to have a relative living in a property that is part of your affordability assessment for financing the whole thing - especially if the property there are in is mortgaged and/or they are not paying market rent. I recommend seeking professional advice!

My first instinct is it seems very tight, but best to go to a mortgage broker and chat it over with them. You realise a second property means you have to pay more stamp duty too?

However I applaud your kindness in trying to help your parents.

It really does all depend on your affordability, which any bank will look at before deciding. The fact that you don't intend to let it out may go against you, as its not going to generate income to pay for itself, so really the banks will drill into your earnings and spending, to see if you can afford 2 mortgages.

As pp says, you will have 3% (I think) more stamp duty than if it was your own home you were buying, so even if price is below the threshold for stamp duty normally, there'll be 3% to pay, which also needs to be factored in to your affordability.

We spoke to a mortgage advisor last week about a 2nd property, but definitely a buy to let. We were told we'd need 25% deposit, plus stamp duty and cost of buying all to hand.

I think because its a 2nd property, for mortgage purposes it may be classed as buy to let anyhow so higher interest rates 🤷‍♀️

The 30 year term.... depending on your age, they may or may not consider it... we're late 30s and I don't think they'd consider it for us anymore 😏🙈

if you are not selling your home and buy a second property you need to consider the higher rate stamp duty. We are hoping to buy a second home this year. Valued at £530,000 and will be paying £32,500 in stamp duty land tax.