Remortgage question

[thebraketester]

Possibly a very silly question

Is it possible to remortgage to release equity to use as a deposit for another house?

Thanks.

[bogie]

yeah, you can remortgage for any purpose you like really so long as you have plenty of equity and enough income to justify the new loan

[pkrplyr]

Yes of course.
You will have to pay an additional 3% stamp duty on the second home purchase.

[thebraketester]

Excellent. We have about 140ish in equity so wouldn't need to max it out but 50-60k would help towards a deposit.

We are just concidering the option of keeping our current house to rent out and buying a new place.

[Sarnie]

thebraketester said:

Excellent. We have about 140ish in equity so wouldn't need to max it out but 50-60k would help towards a deposit.

We are just concidering the option of keeping our current house to rent out and buying a new place.

You will need a LTB mortgage on your current property, max LTV is 75%.

Don't forget the extra 3% Stamp Duty on the new property due to owning two properties

[Rangeroverover]

I would leave it 6 months between drawing the money down and buying something new.

Many mortgage companies don't like a "borrowed" deposit and you will get "computer says no"

[Sarnie]

Rangeroverover said:

I would leave it 6 months between drawing the money down and buying something new.

Many mortgage companies don't like a "borrowed" deposit and you will get "computer says no"

Not so.

[thebraketester]

Sarnie said:

Rangeroverover said:

I would leave it 6 months between drawing the money down and buying something new.

Many mortgage companies don't like a "borrowed" deposit and you will get "computer says no"

Not so.

Cool. We are a while off yet. Probably looking st next year I would have thought.

[Ozzie Osmond]

thebraketester said:

We are just concidering the option of keeping our current house to rent out and buying a new place.

You're a late arrival at that party. You'll be heading into a world of Income Tax on your rental income and Capital Gains Tax at enhanced rate when you sell. You'll also have to pay the new higher rate Stamp Duty on your new house purchase because you own one already.

Make sure you crunch the numbers carefully before you go ahead. Buying one decent house and living in it can be both very enjoyable and very tax efficient. Investing in tax efficient ISAs and pensions may give you a better return than BTL and will certainly give you less hassle. It would also give you greater financial flexibility since it's hard to sell half a house but easy to cash-in half and ISA.

[bmwmike]

I'd be very wary of a BTL in fact I was thinking of it until recently but for me at least the numbers don't stack up yet. 3% stamp, capital appreciation on flats seems to be low, risk of going lower etc.

Nope, not for me. I'm now taking 50k at 2% to buy stocks with div yields of 5% inside an ISA . Much safer over a long term. If pension 40% relief gets formally threatened that's an immediate 40% upswing if needed, just move the lump from ISA to pension wrapper.