New Property Purchase
Discussion
A friend wants to move. He currently lives in a semi-detached 3 bed in Doncaster, mortgage free. A realistic valuation in this market is £120,000.
He is 46, earns circa £25k and has no other debt or dependents.
He has £90k in savings, but is willing to use £60k to put towards a new place.
He has seen two properties. One is a new-build terraced two storey 3-bed house on a small, bespoke development in a good area, reduced from an unrealistic £244k to £199k. The second is a bungalow in a decent area, detached 3 bed which he thinks he would have to spend £20k to get to how he wants.
In considering his options, he has concluded that ideally he wants to keep his current property and rent it out, using the income from that to fund a mortgage or loan facility for one of the properties detailed above.
Let's say he puts £60k down and gets the house above for £190k, meaning he would need to borrow £130k. At 46 years old with an ideal retirement age of say 56, that leaves him ten years to repay a loan or mortgage. He has an endowment to cash in two years worth around £25k.
I'd just appreciate any advice on this situation so that I can pass it on to him e.g. pit falls of doing it, benefits, likely repayment amount, and whether it can be done by way of a loan facility of if it has to be a mortgage.
Comments appreciated
He is 46, earns circa £25k and has no other debt or dependents.
He has £90k in savings, but is willing to use £60k to put towards a new place.
He has seen two properties. One is a new-build terraced two storey 3-bed house on a small, bespoke development in a good area, reduced from an unrealistic £244k to £199k. The second is a bungalow in a decent area, detached 3 bed which he thinks he would have to spend £20k to get to how he wants.
In considering his options, he has concluded that ideally he wants to keep his current property and rent it out, using the income from that to fund a mortgage or loan facility for one of the properties detailed above.
Let's say he puts £60k down and gets the house above for £190k, meaning he would need to borrow £130k. At 46 years old with an ideal retirement age of say 56, that leaves him ten years to repay a loan or mortgage. He has an endowment to cash in two years worth around £25k.
I'd just appreciate any advice on this situation so that I can pass it on to him e.g. pit falls of doing it, benefits, likely repayment amount, and whether it can be done by way of a loan facility of if it has to be a mortgage.
Comments appreciated
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