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  • New Members

    Which option is better financially?

    Hi I am new and will be appreciated for some advices.

    I live in a two beds at Berkshire ( worth 330k) and the mortgage of this house is almost over.  So I am considering two options.

    1 buy another two beds( around 250k) with a new mortgage 150k + cash 100k and rent it out( aim for 1k per month gross)

    2 buy a bigger house(3 beds, max 450k) via equity release of my current house180k + new mortgage 170k + cash 100k; rent out my current house(1k per month gross)

    I am a higher tax payer, not married. No need to have cash flow income in next 5 years

    Wonder which one do you think is the best option, give the current property circle we are in and the unclairity of the economic situation?

    thanks in advance

    Emily

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    Hi Emily, and welcome.

    You are in a very comfortable position to move forwards!

    If you went for option 2, you could live there and rent out two rooms to lodgers, enjoying a tax free income of £7500 per annum.

    You could use this money to put into a savings pot, pay down any other debt you have, or pay down the mortgage on your residence more quickly.

    A good broker will assist you in moving forwards, and if you speak to the team at PT Brokers on 0333 363 6507, they can assist you in finding a new residential mortgage and also releasing the equity from your existing property by taking out a BTL mortgage.

    Hope that helps for starters and good luck!

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    Have you included in your figures the additional 3% stamp duty payable, this will also apply to your new property if you keep your current residence.

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