I need to buy a bigger house.

Should I sell my current house?

When you move home, you normally have to sell your current property, especially if you need the money to buy a new one. But there are occasions when it makes practical or financial sense to keep the old home. If you rent your old house out rather than sell it, you could end up over time with a valuable asset that generates a
regular income.

When does renting out the old home make sense?

  • If you are just moving temporarily, perhaps for work reasons, and you want to keep open the option of moving back to your old house

  • If it is a good rental property and you are confident that property prices are going to rise - and you have enough money that you do not have to sell your old one to fund buying the new home

How can I finance two properties?

Clearly, you should only consider doing this if you are financially secure, and financially literate - if you are already stretched, and not confident dealing with financial matters, then you could end up really regretting it.

You are more likely to be able to buy a new property while keeping your old one if you have major equity in your existing property, and a sufficient income to easily finance the mortgage on your new property.

If you need to raise the deposit for the new property, you can then do that by increasing the mortgage on your existing home, the payments for which should be covered by the rental income.

You will then need to take out a second residential mortgage on your new home, the payments for which would be covered by your normal work income.

You will then have two mortgages, one on each property, covered by the rental income and your normal income.

Will I be able to pay the mortgages?

If you move out but still have a mortgage on your old property (whether you are buying or renting a new place), you need to work out whether you will be able to keep up with the monthly repayments on that mortgage - in
addition to the mortgage on your new home.

Your mortgage lender is likely to insist that the rental income is enough to cover the mortgage interest payments.

But there are many other factors that you need to consider:

  • How many months of the year are you likely to be able to rent it out? As a rule of thumb, you should reckon on one month a year where it will be unrented (for example, when you are looking for a new tenant)

  • Will you be able to cover the mortgage if you are unable to rent it? You should be confident that you could avoid a forced sale or repossession if you have difficulty renting it out for a while

  • Will you be able to pay for the property's maintenance? Can you afford a new boiler? What if the house gets damp? Or if it needs a new roof?

  • Will you manage the property - or will you pay somebody to do so? How much will that cost?

  • Will you rent it through an agent? What commission will they take?

  • Have you factored in insurance into the total monthly costs?

How much will it cost me to live in the new place?

The ability to afford to keep your old home will depend not just on the rental income you get, but the cost of living in your new place.

Will I have to pay income tax?

Yes you will.

Until now, landlords have been able to claim tax relief on the mortgage interest they pay on their mortgage repayments. They would only pay tax on the profit they made and the amount they'd pay depended on which tax band they were in.

However, from April 2017 this will change. In a new system, that will be phased in, landlords will have to pay tax on their entire rental income (not just the profit) and they'll only be able to claim tax relief at a rate of 20% -
regardless of what tax band they're in. A landlord in the higher tax band, therefore, will pay tax on his rental income at 40%  or 45% but will only be able to claim 20% back tax relief.

Will I have to pay capital gains tax if I sell?

Capital gains tax is a tax on the profit - or 'gain' - you make when you sell an asset that has gone up in value.
You do not have to pay capital gains tax if you sell your primary residence (i.e. your main home) at a profit, but you might have to if you sell a second home. The capital gains tax regime is frequently changed by the
government, and the calculations are complicated, so you should seek advice either from a tax adviser or directly from HMRC. In general:

  • You do not have to pay any capital gains tax if you are not selling the second property at more than you bought it for - or indeed, if you don't sell it at all.

  • If you used to live in the house you are selling, then capital gains kicks in eighteen months after you move out, i.e. if you sell it within that time you will not have to pay any capital gains tax.

  • You only pay capital gains tax for the period you have not lived there (minus the 18 months), and this is worked out on a pro-rata basis as a proportion of the total gain in the value of the property while you have
    owned it.

  • The rate of capital gains tax is tapered (i.e. the longer you own something, the lower the rate you pay), and there are annual allowances, so the total tax bill may be less than you first expect.

Testimonials

By far the best financial services provider I have dealt with. Viral Patel and Laura Jones have been absolutely fantastic with helping me with my mortgage. They were extremely helpful from start to finish and responded immediately to every query and question I had. Getting a mortgage can be a very stressful experience but I feel I was working with the best. Both have been so amazing I would highly recommend them to all my friends and family. Thank you both so much! Thaira
Thaira Sheikh
Thaira Sheikh
17:04 06 Dec 21
I've been using custodia for my remortgages for the past 5 years, they have have been very professional and very quick to respond. I would highly recommend them to anyone who needs any financial services especially Viral who has been there from start to finish throughout the process.
Nitesh Varsani
Nitesh Varsani
16:50 17 Nov 21
Great service, professional and knowledgeable.
Ben Tippen
Ben Tippen
09:16 07 Oct 21
I would highly recommend the services of Viral and his team. Viral is extremely professional and knowledgeable. His support has been invaluable over the last few years from the beginning to the end of our re-mortgages. Despite all the questions we ask, Viral is always so friendly and patient. He is willing to go the extra mile to help us. Thank you so much for your patience and guidance, we couldn't have done our re-mortgages without you!
Usha P
Usha P
23:11 04 Oct 21
We have used Viral’s services for many years, the latest HMO, limited company, buy to let mortgage for our investment property purchase. Always provides a efficient and responsive service. Thank you so much.
29Bricks
29Bricks
20:42 04 Oct 21
Great service, they managed the whole process to completion.
Viz Patel
Viz Patel
15:42 04 Oct 21
Viral has been invaluable to us! He’s reliable, responsive and such a pleasure to work with. We trust him and the advice and service he provides is top notch. 100% recommend Custodia Estate Planning.
Diana Kim
Diana Kim
12:17 16 Sep 21
I have dealt with Viral re a remortgage, and he has been excellent providing a first class service. Advice, support and execution have all been exactly as required. I would highly recommend.
Deesch Achal
Deesch Achal
22:47 21 Jul 21
The team at Custodia are the best at what they do. They are professional, manage your expectations and brilliant at communicating regularly. They exceeded my expectations!
Shan Shanthakumar
Shan Shanthakumar
05:59 17 Jul 21
The company were diligent in the work they did and made the whole experience educational...
Norman Giscombe
Norman Giscombe
15:30 16 Jul 21
Efficient good quality services. Viral and his team made sure to keep me updated where necessary and also responded quickly to any queries I had. I highly recommend using their services.
Chandni Patel
Chandni Patel
15:57 14 Jul 21
Viral Patel was extremely helpful with a mortgage matter. He found a great deal and guided me through the whole process. I highly recommend him.
Usman Sheikh
Usman Sheikh
15:28 17 May 21
Excellent and professional service provided by Custodia Estate Planning and received amazing support from Viral Patel.
minaxi vishram
minaxi vishram
20:29 05 Apr 21
Custodia and Viral in particular are a great company to deal with. Extremely high level of technical knowledge across all of the financial advice spectrum. Highly recommended
Steve Mannakee
Steve Mannakee
15:12 30 Mar 21
I have instructing Custodian for close to tow years for all my work and there is one word that best describes their service: "Excellent!" I have been very impressed with Viral Patel. he is an absolute pleasure to deal with, he is very attentive and has a can-do attitude. He provides first class service and will always reply to your emails, return your calls etc but above all he give very professional and objective advice. He takes great care to ensure that you are provided with the products that meet your needs. Highly recommended.
Mayur Patel
Mayur Patel
11:46 21 Mar 21
bgpostman
bgpostman
20:33 19 Mar 21
Been using these guys for years. Best mortgage deals on the market and great personal service. No one does it better!
Duncan Richardson
Duncan Richardson
13:52 16 Dec 20
Looking for a bridging loan and I was put in contact with Viral and his team. They found a great deal which suited our requirements exactly.Very friendly, helpful, patient and most importantly knowledgable. Happy to recommend.
Simon Cooper
Simon Cooper
13:28 20 Nov 20
Nimit Patel
Nimit Patel
12:02 29 Oct 20
Custodia planning is an extremely professional and helpful company. Could not stress this anymore. I have used them for two properties and as stressful as it is they make your life a lot easier. Viral is extremely helpful and always willing to help anytime of day any question.
George Morton-Clark
George Morton-Clark
07:10 07 Oct 20
I had a great experience with Custodia planning. Viral handled the case extremely well and got us the best deal for our needs. There were some specific needs in our case, Viral took everything into consideration and helped us choose the bank that would be more acommodating and had the best rate. They have already handled 2 cases for us and will certainly reach out to them again if needed.
Saulo Consalter
Saulo Consalter
07:38 06 Oct 20
Excellent service by viral
rikesh patel (mncoachworks ltd)
rikesh patel (mncoachworks ltd)
14:32 26 Sep 20
Excellent service and very friendly responsive
Daxa Kalyan
Daxa Kalyan
20:57 22 Sep 20
Viral worked diligently to secure us a good mortgage during these trying times
Balbinder Jagpal
Balbinder Jagpal
13:19 22 Sep 20
I can highly recommend Viral and his team for mortgage and insurance advise based on the service I have received.
Kapilaben Patel
Kapilaben Patel
10:19 22 Sep 20
Viral provides a really high level of service and really takes the time to understand requirements before presenting a solution.It’s very reassuring to know that your needs are taken care off in the best way possible by someone that genuinely cares.Highly recommended!
Drijen Shah
Drijen Shah
13:22 18 Sep 20
Professional and responsive service and fantastic result! I couldn't recommend Custodia highly enough!
Jacob Figura
Jacob Figura
07:49 16 Sep 20
We have been working with Viral and Custodia for more than five years now. We have always received amazing support and service. They are our financial super heroes and always been there for us during the good times and the challenging ones and have never let us down. I highly recommend Custodia.
Davidene Harrington
Davidene Harrington
11:18 09 Sep 20
Excellent service! I have only use CEP services for all my financial needs.
Rashik Vishram
Rashik Vishram
06:24 12 Jan 20
Custodia planning are a God-send. They helped me tidy up my credit, secure an affordable mortgage, advised me on my will, life insurance. Recently they helped consolidate my debt (saving me 1000s!) Thank you Custodia!
Bonz H
Bonz H
20:07 16 Sep 19
Viral and the team at Custodia are excellent, I recommend them!
Richard Baggaley
Richard Baggaley
16:25 07 Dec 18
The best ever mortgage services .
Sina Motesharei
Sina Motesharei
14:09 14 Nov 18
I know Viral for 8 years in which he has advised me on financial transactions, insurance matters and made several mortgage applications all successful due to his experience and invaluable adviceViral and his team are professional, fantastic communicators and a pleasure to work withI would not contemplate making a financial decision without Viral’s adviceHighly recommendedAndiCovaci
MrAndicovaci
MrAndicovaci
16:14 03 Nov 18
Great Service, Thanks Viral
Dai Rose
Dai Rose
13:02 31 Aug 18

Affiliates

The choice of interest rate and product terms will depend on your circumstances and the amount of the mortgage. Before you make a mortgage application, we will carry out a full review to establish your needs and preferences and if you meet the criteria, we will give advice and make a recommendation to you. There may be a fee for mortgage advice. All mortgages are subject to status. Please note that all products show an indicative rate only and may not be suitable for you. You must be 18 or over.

Your home may be repossessed if you do not keep up with mortgage payments.

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