2nd home question

[Muppet007]

I've not been able to find the answer to this online as all search result I can see are for a different scenario.

We own one house. No mortgage, it's rented out.
We rent a house which we live in.
We want to buy a second home which will become our main house, whilst the first house will still be rented.

What I can't find is how much deposit and stamp duty etc we need to pay on a second home as all results I've found relate to a second mortgage.

Deposit seem to vary between 15% and 25%, which is huge. We don't want to ask a mortgage advisor just yet as we are not in a position to buy but are close so would like to get a slightly more accurate idea.

Can anyone help with the above?

Cheers in advance.

[Rojibo]

You will need to pay second home stamp duty. Plenty of calculators online that will give you the figure if you put in the purchase price. Just be sitting down when you do so

Mortgage, it depends, speak to an IFA. Considering you have the other house paid off I can’t see any reason why you wouldn’t be able to take out a variety of regular mortgage offers, less any other outstanding debt.

[Sarnie]

Muppet007 said:

I've not been able to find the answer to this online as all search result I can see are for a different scenario.

We own one house. No mortgage, it's rented out.
We rent a house which we live in.
We want to buy a second home which will become our main house, whilst the first house will still be rented.

What I can't find is how much deposit and stamp duty etc we need to pay on a second home as all results I've found relate to a second mortgage.

Deposit seem to vary between 15% and 25%, which is huge. We don't want to ask a mortgage advisor just yet as we are not in a position to buy but are close so would like to get a slightly more accurate idea.

Can anyone help with the above?

Cheers in advance.

Speak to a Broker, one worth dealing with won't mind the enquiry.

Speak to a solicitor to qualify your stamp duty position again, a decent one will happily answer your query.

[PurpleFox]

As above, speak to a broker about the mortgage. Personally I cant see why you wouldn't be able to get anything other than a regular mortgage if the rental property is paid off. Any normal person would see it as a bonus that you have extra income and no mortgage on the other property but its anyones guess as to how a high street bank will see it, they are generally clueless on anything outside normal parameters. A 15% deposit seems pretty low to me bit I may be out of touch on residential lending.

As for the SDLT, it will be the usual rates plus 3%, no doubt about that. Usual rates at the moment are temporarily reduced.
Edit to say if you sell the rental within three years you *might* be able to claim the 3% back.

Edited by PurpleFox on Saturday 19th December 11:13

[Birkin1932]

Your new house is replacing your current main residence (rental), it still your main residence although you rent. So all your doing is buying a new main residence. There will be no 2nd home stamp duty in my view, if your quick there will be none at all

Edited by Birkin1932 on Saturday 19th December 12:42

[anonymous-user]

I don't think you can dodge the second home Stamp Duty surcharge simply by buying a BTL before you buy your own home.

To put it another way, I think the previous main residence needs to be owned, not rented, to avoid the surcharge.

[PurpleFox]

Birkin1932 said:

Your new house is replacing your current main residence (rental), it still your main residence although you rent. So all your doing is buying a new main residence. There will be no 2nd home stamp duty in my view, if your quick there will be none at all

Edited by Birkin1932 on Saturday 19th December 12:42

I think you might be right and I was wrong in my post above yours.
The key question is, is the new property replacing the main residence? If yes, then no surcharge.

Was the rental ever the main residence?

[CubanPete]

From my experience I think you will be due the 3% unless you sell the other property.

[Birkin1932]

CubanPete said:

From my experience I think you will be due the 3% unless you sell the other property.

Yes, I stand corrected, you are correct. Seems very unfair.


https://www.ft.com/content/bb51e06e-2bd1-11e6-bf8d...

[CubanPete]

Why is it unfair? Its a tax surcharge for increasing the number of properties you own.

He could sell the other property and depending on dates either not pay it or reclaim it.

[Birkin1932]

Because if he owned the house rather than rented it before he buys his new house there would be no stamp duty.

[CubanPete]

He already owns a house, that he is choosing not to sell!

[Sheepshanks]

If he already owned two house, one his main residence and the other BTL, and he sold his residence and bought another, then he wouldn't have to pay the 3%.

Him having to pay it now is a bit of a quirk of a rushed in system.

Once he's paid it he can't reclaim if he sells the BTL - you can only reclaim if it was your main residence.

[Jon39]

Do you think you will continue to own your prospective main residence and also your rented out property, until 'popping cloggs' time?
If not, give some consideration to your future Capital Gains Tax liability.

Not applicable to the circumstances you have described, but if you did not have tenants, you would be in a position to nominate which of the two properties is your main residence. Some people select the property which they intend to sell first.

It might financially, not be worth continuing owning the rented out property. The money invested in that could be put into your new main residence (CGT free).

I don't think many buy-to-letters ever think about CGT, until they get a big bill folliwing disposal.