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Buying a second house question


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What are the legal and/or financial problems please.

We own a house up here in Scotland with no mortgage and we intend to move to England in approximately 15-16 months when my wife retires (I am retired). A house has come up that is a snip and in an area we like so my wife suggested that we could possibly buy it and sell ours when she has retired and then pay off the mortgage on the house in England. House we own is worth about 135K and the house in England about the same.

Would a mortgage provider give us a 60-100K mortgage (we can pay 40-80K towards it) on my pension and my wifes wages, which are about 1200 each a month? We would like to have an extension built on the side of the house, preferably before we move, so the 40-80K towards the house would help there, but obviously the mortgage would increase/decrease accordingly.

Would there be capital gains or anything to pay?

We really don`t know how this works as we have been in this house for nearly 30 years. Anything else we should know about?

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We bought this house while we were living in England and sold the house in England about a year later. No CGT to pay. Stamp duty is a nuisance as it is an extra 3% over and above what you would pay on a first home.

Get professional advice as they will be able to give you accurate figures. 

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Speak to Brown Sauce on here - has completed various mortgages for me now (and quite a few friends....)

Just now, walshie said:

We bought this house while we were living in England and sold the house in England about a year later. No CGT to pay. Stamp duty is a nuisance as it is an extra 3% over and above what you would pay on a first home.

Get professional advice as they will be able to give you accurate figures. 

The 3% would have to be paid but could be claimed back if the original house is sold within two years of purchase.

I hasten to add that this is the case in England/England sale but not sure Scottish/English sale....definitely seek financial advice.

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18 minutes ago, LondonLuke said:

Speak to Brown Sauce on here - has completed various mortgages for me now (and quite a few friends....)

The 3% would have to be paid but could be claimed back if the original house is sold within two years of purchase.

I hasten to add that this is the case in England/England sale but not sure Scottish/English sale....definitely seek financial advice.

Correct, but it's still a chunk you have to budget for when you purchase. 

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37 minutes ago, walshie said:

Correct, but it's still a chunk you have to budget for when you purchase. 

Indeed, my lad just got caught with the 3%, as his house wasn't sold when his new build was ready. You do get 2 years to claim it back.

So, after paying it and struggling to sell in the current economic climate he thought, **** it, rent it out and keep both, so he has!

 

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1 hour ago, LondonLuke said:

Speak to Brown Sauce on here - has completed various mortgages for me now (and quite a few friends....)

The 3% would have to be paid but could be claimed back if the original house is sold within two years of purchase.

I hasten to add that this is the case in England/England sale but not sure Scottish/English sale....definitely seek financial advice.

It appears to be the same here as Swinney ushered it in in 2015 iirc

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Sounds obvious but can you afford two sets of bills, council tax being your big one, i imagine your not going to be living separately so your other bills will be lower but you need to factor it in.

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25 minutes ago, Mice! said:

Sounds obvious but can you afford two sets of bills, council tax being your big one, i imagine your not going to be living separately so your other bills will be lower but you need to factor it in.

Didn`t think about that, thanks for the heads up

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49 minutes ago, henry d said:

Didn`t think about that, thanks for the heads up

If the house is right as you say might be worth buying and renting it, but then you probably wouldn't be able to do the extension?

as others have said proper advice is essential, we don't know all the ins and outs of your position.

2 minutes ago, team tractor said:

My bills are £250 a month just to leave my house empty and that’s a 4 bed . Most council taxes only go 6 months rates reduction if empty .

 

 

80,000 mortgage is £550 roughly a month over 15 years . 

dont think you get the 6 months on a second property though?

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2 minutes ago, Mice! said:

If the house is right as you say might be worth buying and renting it, but then you probably wouldn't be able to do the extension?

as others have said proper advice is essential, we don't know all the ins and outs of your position.

dont think you get the 6 months on a second property though?

Arrr maybe your right dude 

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36 minutes ago, sle said:

You get 3 years to claim it back.

Yes, HMRC will give a refund provided you sell your previous main residence within 3 years of buying the new one, but you must put in the claim within 3 months of selling the old house, and you need to supply the Unique Transaction Reference Number (UTRN) for purchase of the new house.    Our solicitor gave us the UTRN (free of charge), we applied online, and the cheque from HMRC arrived about a fortnight later.

I read somewhere that quite a number of people have been missed the 3 month window for refund claim (either unaware of the deadline, or else unable to find the UTRN) and been unable to get any money back.

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What you will need to bear in mind that lenders are expected to prove that you can afford the mortgage and that age too is an important consideration. They daren't bend from the rules for fear of getting into trouble with the Financial Conduct Authority. Three years ago when I was 59, my lender (despite 35 years of never missing a payment) wouldn't give me a mortgage past retirement date, despite a very low Loan to Value. Since then I believe things may have loosened up but they will still  be cautious.

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All excellent replies and many thanks for them.

I too read (online) that it was 3 years and you can claim it back, but didn`t know about the 3 month limit on refund.

Didn`t think about only having a 15 year mortgage, I don`t suppose they would give me a 35 year one at my age :D

We may be able to allow a friend of our daughters stay (gratis) for a while as they are looking for somewhere, which could help with insurance against council tax.

Thanks again.

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27 minutes ago, Brodie said:

Remember to allow for the cost of building insurance on the empty property. It's a lot higher than an occupied house.

That’s a very good point my brother in law was hit with a £2k insurance premium when he insured his 2nd house as it was unoccupied.

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Henry

I am afraid I think the situation is a bit harder than you might have first thought and you are now thinking of making it a lot more difficult.

If you propose to let the property at all,  you will need a BTL mortgage- more expensive than a normal mortgage. In near future (if not now), HMRC will not allow you to offset mortgage interest against income tax, but you will pay tax on rental income.

The first and most important rule in residential letting is never, ever consider letting to a friend. It is a recipe for disaster if not disappointment. If you do have let it to a friend, do a credit check, get a guarantor for rent and do get them to sign an AST. Do not break this rule.

I think most councils now charge 100% Council tax from day one. You can check on the Councils website.

House insurance is expensive/declined on empty properties.

If you do take a conventional mortgage, Lenders are very reluctant to lend to pensioners, due to their fixed income and age. You would have to pass their affordability tests to confirm that you can afford to run two properties (& eat, heat shoot and run a car etc at same time). See Weston Salop above.

In view of your age and circumstances, the first thing you need to do is get advice from an independent mortgage advisor, he will be able to advise you which lenders will consider lending in your circumstances. For example it might be better to remortgage or get a loan on your existing property to buy the English house rather than getting a loan for a second property. You will also need to consider any financial penalties you might incur if you pay the mortgage off early.

It is extremely unlikely you will incur capital gains tax if you move into the 2nd house within a few years. You both will have an annual capital gains allowance.

The mortgage adviser will be able to best advise you on the best way forward. In situations like this, the simplest ways are best. Hope this helps.

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4 hours ago, Dekers said:

Indeed, my lad just got caught with the 3%, as his house wasn't sold when his new build was ready. You do get 2 years to claim it back.

So, after paying it and struggling to sell in the current economic climate he thought, **** it, rent it out and keep both, so he has!

 

Sadly he will now have to pay tax on the “income” before any mortgage interest taken out ... makes it hardly worth it for lots of people these days. 

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On 04/03/2019 at 20:25, Sciurus said:

Henry

I am afraid I think the situation is a bit harder than you might have first thought and you are now thinking of making it a lot more difficult.....

Hope this helps.

It does many thanks.

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Buy it now as a B2L and then rent it even if just to cover bills / get it to wash its face.

When ready to move lose the tenant, flog the Scottish gaff (no CGT for sole domestic residence) and move into English gaff. If you do that in the right order and in time you might get some of the stamp back but saying that uplifted stamp on a 2nd purchase at those numbers won’t kill you.

You can’t leave a gaff vacant for more than about 4 weeks (ie a long holiday) else your insurance will void and the standing bills will mount quickly.

 

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3 hours ago, henry d said:

Many thanks Mungler.

Minor set back; one place we had our eyes on was dropped by 10k! However it looks like it has been taken off the market, so it probably is sold or under offer

phone the estate agent, can't do any harm.

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