What would u do ( new house Purchases )

[aberdeenelvis]

What would u do if you were in this position....

You own 2 houses

House 1. value £170k+ rented out at £750pcm (no mortgage)
House 2. Value £320k+ living in with your wife + 3 kids under 10 years. (no mortgage)

You want to buy your dream home worth £375k for an already agread £320k

Your joint gross is 80k or so. You have 1car on finance for £370 a month with no other outstanding debt.

You have £60k in cash in the bank. You need to get the rest of the 320k in 2 months for the deal to go through.

Selling either house in the 2 months is not likely! Do you?

New mortgage for £320k - deposit?
Re mortgage house 1 or 2?
Or put both 1and 2 on the market an hope they sell?


So....... What would you do??

Coke and hookers is not a option!!! Thanks in advance A.

[Sarnie]

What is happening to house 2?

[NorthDave]

Get an offset mortgage on the new place and bang house 2 on the market - assuming you dont want to keep it as a buy to let.

[hornetrider]

Don't see why, in the short term, you can't remortgage House 2 for the cash and buy House 3 with said cash. Then you can decide what you want to do with House 2 - let or sell.

[Ozzie Osmond]

In your scenario you will be "borrowing to invest". This is called gearing. It multiplies your rewards if things go well and multiplies your losses if things go badly - a possibility which should not be overlooked.

Many people in your situation might choose to,

• Buy one decent house to live in - enjoying the tax relief which comes from CGT exemption of the main residence.
• Invest in ISAs or pension to enjoy the tax relief available on them - at the same time as avoiding "gearing" and achieving a sensible spread of investment risk.

Your current "100% residential property" situation is a huge concentration of risk.

[walm]

Ozzie Osmond said:

Your current "100% residential property" situation is a huge concentration of risk.

In fairness he has 89% residential property - the rest in cash.

I object more to spending nearly 10% of your net income on a car loan when you have £60k in cash.

I would simply mortgage house 3 and aim to sell house 2 within 3 years of moving out to avoid CGT there.

Presuming you are already facing CGT on house 1.
And presuming you don't have to take a terrible rate on house 3's mortgage given the high LTV.

Then with the £320k cash from selling house 2 - fill your boots with pension, ISAs and emergency fund.

[aberdeenelvis]

Thanks so far everyone.

Answer to some of the posts.

House 2 can be sold or rented out I'm not that bothered TBH. I would like to keep one property for renting out. House 2 would bring in 2 x what house 1 will PCM tho.

The car was not purchased by me but by MBH Pryor to us getting together.

I also have 100k but that is locked away for 6 years that is why it was not mentioned! The 60k is sitting in the bank doing nothing and is it is handy to have for whatever life flings at you.

I will be talking to my financial adviser when he returns from holiday. This is just to see what you'll would do as have no idea what to do at the moment....

Edited by aberdeenelvis on Wednesday 29th July 18:49