Amateur bob Posted July 4, 2023 Share Posted July 4, 2023 im currently in the process of planning to build a house, their is a nice house come up for rent nearby though and i will require both the equity in my current house and a mortgage to build new one if planning passes, do lenders allow you to stay in your owned house and borrow against it for the new build or will i have to sell my current house and move into a static caravan/rented accomodation, im currently deciding which route to take so any advice would be much appreciated! Link to comment Share on other sites More sharing options...
JohnMo Posted July 4, 2023 Share Posted July 4, 2023 Really depends on the equity you have in your own house, if you have room to spare just increase the mortgage on your own house, and arrange so you don't need to draw it all at once. This should save some interest payments. Talk with a mortgage advisor. Link to comment Share on other sites More sharing options...
Amateur bob Posted July 4, 2023 Author Share Posted July 4, 2023 1 minute ago, JohnMo said: Really depends on the equity you have in your own house, if you have room to spare just increase the mortgage on your own house, and arrange so you don't need to draw it all at once. This should save some interest payments. Talk with a mortgage advisor. I currently have 16k left to pay on mortgage and house worth 120,000, i have 40k savings also and plot owned outright, not easy deciding the best route Link to comment Share on other sites More sharing options...
JohnMo Posted July 4, 2023 Share Posted July 4, 2023 Look at the interest rates, for a self build mortgage and to remortgage your house. Add in rental costs if you sell. It all a numbers game. We kept our old house until I started to run out of money, then sold it and car to find the rest of the build. Link to comment Share on other sites More sharing options...
PNAmble Posted July 4, 2023 Share Posted July 4, 2023 We also looked at bridging as the redemption fees were expensive. Bridging was cheaper if borrowing for 5 months or less. But any delays in exiting would rapidly make it expensive. I had a very comprehensive spreadsheet. as said it’s a numbers game and depends also on how long the build will take and how much involvement you will be taking. Link to comment Share on other sites More sharing options...
Amateur bob Posted July 4, 2023 Author Share Posted July 4, 2023 yes true its a numbers game i was thinking if i sold up now before the recession hits i could get more for the property and put money in a high interest rate savings account, this wold go some way to offsetting rent? Link to comment Share on other sites More sharing options...
SteamyTea Posted July 4, 2023 Share Posted July 4, 2023 How much is the rent? Link to comment Share on other sites More sharing options...
Amateur bob Posted July 4, 2023 Author Share Posted July 4, 2023 1 hour ago, SteamyTea said: How much is the rent? £1000/month Link to comment Share on other sites More sharing options...
SteamyTea Posted July 4, 2023 Share Posted July 4, 2023 36 minutes ago, Amateur bob said: £1000/month So 12k a year, your build will probably take 3 years. So about equal to your current savings. Link to comment Share on other sites More sharing options...
MR10 Posted July 4, 2023 Share Posted July 4, 2023 (edited) Interest rate on savings isn't great. You may want to reconsider toughing it out in a caravan until the build is complete instead of spending £12k/yr on rent and then some on council tax etc. Look at it this way, you'll have £12k more per year to get your build closer to completion by not renting if that makes sense. Edited July 4, 2023 by MR10 typo 1 Link to comment Share on other sites More sharing options...
SteamyTea Posted July 4, 2023 Share Posted July 4, 2023 Caravan makes sense to me, especially if you fit an A2AHP to control the climate on the cheap. Link to comment Share on other sites More sharing options...
Adsibob Posted July 4, 2023 Share Posted July 4, 2023 9 hours ago, Amateur bob said: yes true its a numbers game i was thinking if i sold up now before the recession hits i could get more for the property and put money in a high interest rate savings account, this wold go some way to offsetting rent? Property has already fallen quite a bit. Even if you listed yours for sale tomorrow, I doubt it will sell that quickly. Lots of uncertainty at the moment. Link to comment Share on other sites More sharing options...
SteamyTea Posted July 4, 2023 Share Posted July 4, 2023 3 minutes ago, Adsibob said: Property has already fallen quite a bit. Property is £120k, different market entirely. Link to comment Share on other sites More sharing options...
Jilly Posted July 4, 2023 Share Posted July 4, 2023 You are cushioned from the interest rates and build delays by living on site. Link to comment Share on other sites More sharing options...
Amateur bob Posted July 5, 2023 Author Share Posted July 5, 2023 thanks for the replies, i understand the feedback although my planning is not yet approved and neither is a mortgage and im only in a 2 bed house im realistically needing 3 bed for having another child and a 3 bed house has come available next to where i work, my thinking is if i dont take this opportunity ill end up renting somewhere i dont want to or living in a caravan for a few years? it looks like i could get a 5% isa if i lock money away for 2 years so 5% on 150k means the interest would help soften the blow, interestingly for me to build the house at current interest rates it would cost me 1100/month on a mortgage but without the interest on my money to soften the blow if that makes sense? Link to comment Share on other sites More sharing options...
SteamyTea Posted July 5, 2023 Share Posted July 5, 2023 2 minutes ago, Amateur bob said: it looks like i could get a 5% isa if i lock money away for 2 years so 5% Is there a limit to how much cash can go in an ISA, seem to remember it is £20,000. So you and your better half can put in £40,000. So £2k a year. Many on here like to rough it in a caravan. Link to comment Share on other sites More sharing options...
Amateur bob Posted July 17, 2023 Author Share Posted July 17, 2023 thanks for the feedback everyone, i have taken the rent of this property as planning is not guaranteed on this new build, the query i have now is do i sell my old house or rent it out? and if i were to rent it out would it change the tax status for capital gains? given that its incresed in value by around 30k since i bought it Link to comment Share on other sites More sharing options...
SteamyTea Posted July 17, 2023 Share Posted July 17, 2023 13 minutes ago, Amateur bob said: thanks for the feedback everyone, i have taken the rent of this property as planning is not guaranteed on this new build, the query i have now is do i sell my old house or rent it out? and if i were to rent it out would it change the tax status for capital gains? given that its incresed in value by around 30k since i bought it Yes it will affect the capital gains tax, but if there is a price crash, you may not have any to pay. All depends if the rent over the build period will outweigh any price increases, or losses. Link to comment Share on other sites More sharing options...
Amateur bob Posted July 17, 2023 Author Share Posted July 17, 2023 5 minutes ago, SteamyTea said: Yes it will affect the capital gains tax, but if there is a price crash, you may not have any to pay. All depends if the rent over the build period will outweigh any price increases, or losses. even if its the only property i own? so if theres a 30k gain will i automatically be subject to 30% tax on this even if i only let it out for a year? Link to comment Share on other sites More sharing options...
SteamyTea Posted July 17, 2023 Share Posted July 17, 2023 9 minutes ago, Amateur bob said: even if its the only property i own? so if theres a 30k gain will i automatically be subject to 30% tax on this even if i only let it out for a year? I am not sure. There are some allowances, and I think the valuation is set when you rent it out, but other may know better. 1 Link to comment Share on other sites More sharing options...
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