Interest only mortgage for a second home?
Discussion
After some advice folks.
I have been offered a really interesting and well paid job in Cambridge but we currently live in the Central Belt of Scotland.
We have a great place up here - big house, lots of land, no neighbours, nice location etc and frankly to get something similar near Cambridge we would be looking at north of £1m (which is double what our place is worth in Scotland).
Over the years I have worked away a lot (in Europe) and I have just flown out for the working week and flown home on Friday. Flights always paid for by the companies I work for and they also paid for a flat for me to stay in during the week.
The new job does not come with these perks so I'll either need to rent / buy a place near work or fully relocate the family and take on a huge mortgage - or compromise massively on the kind of house we move to which isn't very appealing.
If things turn out well taking on a big mortgage won't be such a problem but I'm not prepared to do that on day one.
So, I was wondering if buying a flat near the new work place with an interest only mortgage makes sense. It would be cheaper than renting and it seems unlikely that I'll lose money on a flat in the area when I come to sell it - either because we have fully relocated or because I don't stay in the job long term.
Thing is, I'm not exactly a finance guy and I have never owned a second home. No experience of interest only mortgages either.
I'd be looking to borrow say 280k over something like a 10 year period.
Any thoughts / advice from you more financially savvy folks on here?
I have been offered a really interesting and well paid job in Cambridge but we currently live in the Central Belt of Scotland.
We have a great place up here - big house, lots of land, no neighbours, nice location etc and frankly to get something similar near Cambridge we would be looking at north of £1m (which is double what our place is worth in Scotland).
Over the years I have worked away a lot (in Europe) and I have just flown out for the working week and flown home on Friday. Flights always paid for by the companies I work for and they also paid for a flat for me to stay in during the week.
The new job does not come with these perks so I'll either need to rent / buy a place near work or fully relocate the family and take on a huge mortgage - or compromise massively on the kind of house we move to which isn't very appealing.
If things turn out well taking on a big mortgage won't be such a problem but I'm not prepared to do that on day one.
So, I was wondering if buying a flat near the new work place with an interest only mortgage makes sense. It would be cheaper than renting and it seems unlikely that I'll lose money on a flat in the area when I come to sell it - either because we have fully relocated or because I don't stay in the job long term.
Thing is, I'm not exactly a finance guy and I have never owned a second home. No experience of interest only mortgages either.
I'd be looking to borrow say 280k over something like a 10 year period.
Any thoughts / advice from you more financially savvy folks on here?
Thanks for the input folks.
Some great points raised.
Renting was my first thought but after having looked at what you get for around 1500 a month an interest only mortgage for around 1k looks like it would get something much nicer.
Mind you - stamp duty (what a punitive tax) is a good point.
Thing is that if I am going to be away from my home and family all week every week I really want somewhere nice to live during the week. Just existing in a cheap bedsit is not very appealing but I suppose I could live with it for a while until I'm more certain that things are going to work out.
All food for thought for sure.
Some great points raised.
Renting was my first thought but after having looked at what you get for around 1500 a month an interest only mortgage for around 1k looks like it would get something much nicer.
Mind you - stamp duty (what a punitive tax) is a good point.
Thing is that if I am going to be away from my home and family all week every week I really want somewhere nice to live during the week. Just existing in a cheap bedsit is not very appealing but I suppose I could live with it for a while until I'm more certain that things are going to work out.
All food for thought for sure.
CubanPete said:
What about a M-T working week lodging?
No idea what this is. Can you elaborate? Monday to Thursday? Managed Tenancy?I did have an apartment in Belgium two years ago that was serviced and rented to me during the week but it was often booked well in advance so sometimes I had to use a hotel which was a total pain since I could never leave anything there over the weekend.
Living out of a small carry on suitcase is no fun long term.
I bought a second home in the uttoxeter. in 2019, after every work contract was in. Derby, Wolverhampton or stoke for 11 years..
Currently trying to work out what to do.
Options include
Sell it
Rent it out
Turn into a holiday let
Rent out a room.
Current contract is 45 mins away, but have worked from home since October..might need to do a day every couple of weeks
Could have done interest only but decided we could pay it off over 16 Years as a kind of investment.
Currently trying to work out what to do.
Options include
Sell it
Rent it out
Turn into a holiday let
Rent out a room.
Current contract is 45 mins away, but have worked from home since October..might need to do a day every couple of weeks
Could have done interest only but decided we could pay it off over 16 Years as a kind of investment.
TorqueDirty said:
CubanPete said:
What about a M-T working week lodging?
No idea what this is. Can you elaborate? Monday to Thursday? Managed Tenancy?I did have an apartment in Belgium two years ago that was serviced and rented to me during the week but it was often booked well in advance so sometimes I had to use a hotel which was a total pain since I could never leave anything there over the weekend.
Living out of a small carry on suitcase is no fun long term.
CubanPete said:
Monday to Thursday lodging. You have a permanent room in a house share, but go home at the weekends to allow to LL to see family / friends etc.
Why would anyone in a very good financial position, with a substantial first home and considering a second home in Cambridge, consider regressing to rent-a-room style student living? It's pauper stuff.OP I would rent for a while, scope out the area and job, then consider buying 6 months down the line.
Olivera said:
CubanPete said:
Monday to Thursday lodging. You have a permanent room in a house share, but go home at the weekends to allow to LL to see family / friends etc.
Why would anyone in a very good financial position, with a substantial first home and considering a second home in Cambridge, consider regressing to rent-a-room style student living? It's pauper stuff.OP I would rent for a while, scope out the area and job, then consider buying 6 months down the line.
When we needed to do this during renovation works, we tapped the private school network to find one and there are plenty in Cambridge.
Although interest only mortgages are available, subject to available deposit, some lenders still assess on a repayment basis so although you can afford the monthly mortgage payments on an interest only basis it may not meet affordability calculations when assessed on a 10 year repayment basis. Monthly payments on interest only are the same over 5 years as 25 years so you may be best to consider a longer term.
Rent for 6 months then if its a perm thing speak to Sarnie!
IO is possible.
Remember you need to factor in:
Solicitors fees (£1k)
Mortgage fees (£2-3k)
SDLT (£nk)
Survey if flat (£nnn)
Then 2 costs such as
Council tax
Insruance
Utilities
Phone / BB
Take all that into consideration when you are thinking about capital appreciation and you will probably find this needs to be a 5 year investment. So add on 5 years mortgage interest to all your sums!!!
Be cautious about flats. Consider a freehold terraced house instead.
Flats very risky ATM.
What I am saying is.... in the short - medium term you might actually be better off renting a flat. If the job only lasts say 2-3 years you might actually end up losing money unless for some reason you want to keep the property and "BTL" it and then it would become a longer term investment.
Might all work out ok - but go in with your eyes fully open.
HTH
IO is possible.
Remember you need to factor in:
Solicitors fees (£1k)
Mortgage fees (£2-3k)
SDLT (£nk)
Survey if flat (£nnn)
Then 2 costs such as
Council tax
Insruance
Utilities
Phone / BB
Take all that into consideration when you are thinking about capital appreciation and you will probably find this needs to be a 5 year investment. So add on 5 years mortgage interest to all your sums!!!
Be cautious about flats. Consider a freehold terraced house instead.
Flats very risky ATM.
What I am saying is.... in the short - medium term you might actually be better off renting a flat. If the job only lasts say 2-3 years you might actually end up losing money unless for some reason you want to keep the property and "BTL" it and then it would become a longer term investment.
Might all work out ok - but go in with your eyes fully open.
HTH
Is the job in Cambridge itself?
If you're flying home at the weekend I'm guessing you're going to have a car down here? Cambridge is s
t for people that have to have a car.
If the role is on one of the Science parks or on the outskirts then it might be better to have a look round some of the nearer towns and villages (certainly now the a14 should be sorted) as you can get a lot more for your money in somewhere like St Ives (about 20 mins from the science parks) you'll get a lot more for your money if you don't need to actually be in the city centre.
I believe the park and rides are pretty good too which may be an option.
If you're flying home at the weekend I'm guessing you're going to have a car down here? Cambridge is s
t for people that have to have a car. If the role is on one of the Science parks or on the outskirts then it might be better to have a look round some of the nearer towns and villages (certainly now the a14 should be sorted) as you can get a lot more for your money in somewhere like St Ives (about 20 mins from the science parks) you'll get a lot more for your money if you don't need to actually be in the city centre.
I believe the park and rides are pretty good too which may be an option.
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