SMF - Just Installed!

To sell or keep??

Started by dmrider_10, September 21, 2014, 12:58:47 PM

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dmrider_10

Hi there. I currently have this situation:

Two properties
Both on homeowner mortgages

Property A :
Purchased Dec 2010
Was my sole residence until DEC 2012 when I let it out
Purchased for £90k
Now worth £135k
10% deposit

Property B:
My current residence
Purchased April 2014
Purchased for £142K
10% deposit

Now in around 6 months time, Id like to get Property C, most likely a student letting property. Circa £70k
I had planned on releasing equity from property A for the deposit and to do some remedial work (basics, no more than 5k worth). This additional borrowing would obviously be at around 4% intrest.

Now someone mentioned to me that I MAY be better off selling property A, making around £40k profit as this would not yet be liable for CGT (having lived there within the last 3 years) and then buying two cheaper 70k student properties, thus avoiding the 4% for borrowing the additional etc?

or do I have it all wrong and im better sticking to my original plan?! Minefield!

Thanks

dmrider_10

For a bit of additional info:

I charge £670 rent for property A
Mortgage is £500 a month
£450 of that is intrest
So Im only paying off £50 a month off the house itself.

Profit after insurance/tax etc is around £170 a month

boboff

What ever you do, to borrow on Student lets will be 4%.

You will only release your equity on Property A by selling, not sure how you can remortage this in any event, with only 10% deposit, and 200x£50 capital repayments, There doesn't seem to be enough in it all way round.

For Student lets you should be looking at 40% deposit I reckon, so you will need £30k in cash on each purchase, as you mention remortgaging A to get £5k, then I assume this isn't money you have??

You need to speak to a mortgage broker first, not really a forum, as they will need details of your income and cash balances.

hadiaali

I think 2% is enough?
what do you think...