Second property Mortgage

[Snowflakeharpy]

Quick question for anyone who knows what happens in this scenario. Say someone has paid off their mortgage and is buying a second property to live in, none of the properties will be rented out, the mortgage on the new property shouldn't be a buy to let, it's just be a mortgage the same as the first property was?

Speak to a mortgage advisor, they can talk it all through with you.

Not in a position to do anything yet so don't want to waste anyone's time, just looking at possibilities for when we do.

But it will attract a higher rate of stamp duty.

Who is living in the first one? Is this like a holiday home?

I'd be living in one and dh in the other, not separating, it would just suit us better as a couple. Not a popular choice I know.

If you were living in the property, there’s no reason it would have to be a buy to let mortgage.

Because you already own a property, you’d pay much higher levels of stamp duty for a second home (I think it’s double, at lower property prices). I assume there would also be capital gains implications, if/when you sell. It would seem dodgy to allow a married couple to both declare separate primary residences and avoid any charges for second homes.

But as above, you need to speak to a professional. Accountant and mortgage advisor.

for CGT purposes a married couple are treated as living together (even if not in real terms) and having one main home which must be the same property for both of them. The exception would be if the marriage has broken down and they have separated in "circumstances likely to be permanent" (but not YET legally divorced)

where they own more than one home, then they can nominate which one is to be treated as the main home (or in absence of nominated it will be determined on the "matter of facts") provided such nomination is made within 2 years of taking ownership of the additional property

for mortgage purposes, as you state that the couple are not separating, and do not have an existing mortgage, then the loan will simply be a mortgage on a residential property based on income multiples(s) of those party to the mortgage, and inevitably therefore those also named on its deeds as the legal owner(s).

You may choose to have joint legal ownership and joint mortgage or not, your choice, but for CGT purposes the tax liability will be based on "beneficial ownership" ie. who gets the money when it is sold, which may not be the same as who is/are the legal owner(s)

Thanks for the info, we'd both be named on both properties and not separating so good to know what we'd need to research. Assumed they'd be higher/extra taxes, just wasn't sure how it would be termed.

re tax
additional rate SDLT applies to the purchase cost as it will not be a replacement of a main home since you are going from owning 1 to simultaneously owning 2 properties, and only 1 of them can be the main home.

• assuming England or NI see here (Wales & Scotland rates different) https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property

second home rate council tax will (may) apply
It might be worth you seeing professional advice on this as there are certain circumstances where a married couple that has genuine reasons (force of circumstances) for needing to live in separate houses can evade the second home rate, but you have to fight hard to get it.
Bear in mind second home CT can be up to double the normal rate so financially often worth fighting for.

CGT will apply to the eventual sale of whichever of the 2 properties was not nominated as the "deemed" (exempt) main home of the marital "Unit"

Then it's a second property that you are buying together.

I'm not saying you are trying to scam HMRC but it sounds like a scam to say that it isn't a second property because each of you is living in only one house as your primary residence. Because anyone could claim that, couldn't they?

Been married twenty years- if I had the money this would be my ideal choice! Speak to a mortgage broker, but you are looking at higher fees, yes. Its still a second property.