Q We are a professional couple in our late 20s/early 30s on a combined annual income of �90,000. We are currently renting in London but want to move to Suffolk. We have a deposit of �30,000 and are looking at places for less than �250,000.
We are keen to buy before the end of March to take advantage of the stamp duty waiver for first-time buyers. The trouble is, we won't be able to leave London for a year at least, so we would have to rent out the house in Suffolk.
Will we need a buy-to-let mortgage even though this will be the only home we own? We certainly can't afford a deposit of 25% and the higher mortgage repayments are also worrying. IM
A Whether you need one or not, a buy-to-let mortgage is not an option. With a deposit of �30,000 and a property valued at �250,000 you would need a mortgage of 88% of the value of the property. The most buy-to-let lenders will lend is 80% of a property's value, and that size of loan is on offer from only four buy-to-let lenders.
So if you really do want to buy a property a year before being able to move into it, you will need to persuade a mainstream lender to give you a mortgage and allow you to let your future home for a year or so. This could be tricky as there aren't that many residential mortgage lenders willing to lend as much as 88% of a property's value. In addition, those lenders prepared to lend up to 90% charge much higher interest rates.
Having to pay a higher rate could also wipe out the saving you would make by not having to pay stamp duty. Buying now at a rate of 4.75%, for example, would cost you just over �15,000 a year in mortgage payments, whereas waiting and increasing your deposit so that you need to borrow only 80% would mean an interest rate of 3% and yearly mortgage payments of just over �12,500. The extra cost of buying now rather than waiting until you can actually move to Suffolk is therefore �2,500, which cancels out the 1% stamp duty saving.
But that assumes you would be eligible for the stamp duty exemption anyway. HM Revenue & Customs rules say first-time buyers "must intend to occupy the property as their only or main residence" to qualify. Buying a property to let and having your main home somewhere else ? even for only a year or so ? would seem to disqualify you.
Source: http://www.guardian.co.uk/money/2011/nov/23/stamp-duty-first-time-buyers-rent
Pakistan cricket betting scandal International criminal court US supreme court Global terrorism Taxonomy Office for National Statistics
No comments:
Post a Comment