Trading Up - keep 1 or 2 properties or not?

[bobsouthside]

Hi,
I own a small apartment with about 100K in equity (owned for 2 yrs). My girlfriend owns a 3 bed with approx 200K in equity (owned for 6 years). We want to buy a second-hand property in a new area for c. 550K with some improvements requried. We are trying to decide what to do, keep my property, sell hers and use the equity in the new house etc. Any advice on what we'd be liable for etc would be appreciated. Would we be better off selling both and putting all the equity into our new place?

My second question relates to what arrangement we should come to in relation to our new house. She has twice the amount of equity than I have. Are there any typical formulas that can be used to protect her extra contribution?

Thanks,
Bob.

 

[Kevin Brod]

Firstly you'd need to work out what your salaries would allow you to cover and go from there.

As a vary simple basis you’d prob get 4.75 times your gross combined salaries assuming no other loans.

Depends whether you want to get into the rental market and invest in that way.

Assuming you rent yours out , you’d probably be liable for a claw back on stamp duty if you didn’t already pay.

She’d be probably ok on her property if shes lived in it for 6 years.

On the new property worth 550k you’d prob pay around 41k in stamp duty.

Do you know the rental incomes on the existing properties, the market value and mortgage outstanding?


I'd just split your new house down the middle and put in an equal equity share, if it works out your salaries that cover an equal loan amount.

You can if want arrange a legal contract on different equity share if you put in different amounts etc. A solicitor would do that for you.