Looking at buying my second house but renting out the first

[lexi 1]

As above I have a decent amount of surplus funds in a business I own and am looking to start investing in property a few questions to Ph.

I have not even discussed with my accountant as I didn't realise until our recent year end how much money I had lol

1 I wanted to keep and rent out my current house to cover the mortgage left on it

2 Can I use the equity on the first house to put into the second ?

3 I wanted to buy some thing at approx 450k plus what deposit will I need

Or stay where I am and buy a couple of buy to let flats etc near the station etc

[Eric Mc]

Is you business a limited company?

If so, have you factored in the personal tax implications of withdrawing a large sum from your company?

Don't forget the new 3% Stamp Duty surcharge.

[lexi 1]

Eric Mc said:

Is you business a limited company?

If so, have you factored in the personal tax implications of withdrawing a large sum from your company?

Don't forget the new 3% Stamp Duty surcharge.

Hi Eric

Thanks for the reply yes the company is ltd I will need to work out the best way to reduce my tax implications what do you suggest ?

yes am aware of the new 3% sd but there was no way of doing it quicker

[Eric Mc]

What does your accountant suggest?

[lexi 1]

Eric Mc said:

What does your accountant suggest?

Am meeting them this week to discuss I will report back

[Jockman]

Any decent pension fund? Interested in commercial property?

[KevinCorvetteC6]

lexi 1 said:

As above I have a decent amount of surplus funds in a business I own and am looking to start investing in property a few questions to Ph.

I have not even discussed with my accountant as I didn't realise until our recent year end how much money I had lol

1 I wanted to keep and rent out my current house to cover the mortgage left on it

2 Can I use the equity on the first house to put into the second ?

3 I wanted to buy some thing at approx 450k plus what deposit will I need

Or stay where I am and buy a couple of buy to let flats etc near the station etc

As strict answers to your numbered points leaving the commercial/tax implications to others:

1) Implies you will live in the second property, no problem to rent out original if the mortgage company is amenable. Note the 3% extra stamp duty will apply.

2) Only if you re-mortgage or sell the original property. My assumption was you did not want to do this?

3) Buy to let generally requires a minimum 25% deposit, domestic mortgage can be done with less but will usually cost more if not using a 25% deposit. Buy to let generally costs 1.5-2% more in interest rates than domestic.

[pkrplyr]

lexi 1 said:

As above I have a decent amount of surplus funds in a business I own and am looking to start investing in property a few questions to Ph.

I have not even discussed with my accountant as I didn't realise until our recent year end how much money I had lol

1 I wanted to keep and rent out my current house to cover the mortgage left on it

2 Can I use the equity on the first house to put into the second ?

3 I wanted to buy some thing at approx 450k plus what deposit will I need

Or stay where I am and buy a couple of buy to let flats etc near the station etc

Hi lexi,
What you have suggested is very common and a good way to use equity to invest in property.
Yes you can use the equity in your home to finance a new home. Do have an existing mortgage on it?
As previously mentioned 25% is a standard deposit, though if you can get to 40% you will get more options on products.
The two main things to look at when investing in property are rental yield and appreciation.

You will need to get 125% of the mortgage repayment with the rent for a lender to consider it.
Though this can easily be achieved if you opt for an interest only product.

Pm me if you want to have a chat.

[lexi 1]

Jockman said:

Any decent pension fund? Interested in commercial property?

Hi JM

I think I have a fund of about 50K so not massive yes I am interested in commercial property

[48k]

I've done this twice now with my current property portfolio.

OP the only thing I can add to the above advice about speaking with your accountant is to talk with a good independent mortgage advisor to look at the options you have available. When working out rental yields to calculate possible mortgage options, don't forget to include management fees if you are not going to manage the property yourself.

Don't forget to switch your home insurance arrangements for your existing property to a landlords policy.