Building a New House - Mortgage Options!

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lfcfan

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Hi. We're looking at building a new house sometime next year. We currently have a mortgage with Ulster Bank. What would be the best option for building this new house?

1. Rent out our current house and get another mortgage for the house build

This would mean we wouldn't be able to release the equity on our current home to use for furnishing etc of the new house

2. Sell the current house, clear the mortgage, get a new mortgage and have the released equity for extra cash for the house

This is the option we're leaning towards at the moment. What tax implications would this involve? Is there a way of 'transferring' the mortgage from the current house to the new house?

3. What other options are there?

Thanks!
 
Im in the same position and am finding it hard to decide...
reasons to sell.....only in present house 4yrs and will get caught for stamp duty if rent now..money for new house...possibility of no renters for a time and would have to pay 2 mortgages....Hassel...
reasons to rent....house prices still goin up and would be great nest egg.
I suppose its a personal decision in the end...!
 
A mortgage is linked to one property only so you can't "transferr" it. To release equity you would remortgage on the value it has increased since the mortgage was first started. It is probably most advisable to keep the original house and then get a new mortage to build your next one. You should probably consider discussing all the issues with a mortgage broker.
 
lfcfan said:
1. Rent out our current house and get another mortgage for the house build

This would mean we wouldn't be able to release the equity on our current home to use for furnishing etc of the new house
Click to expand...


As mentioned above, if you rent your former home within five years of purchase then you will be subject to a clawback of stamp duty as explained on . Having rented a property you will be subject to [broken link removed] on some portion of any gain arising when you eventually resell it.

A question to ask yourself is if concentrating a significant proportion of your overall wealth in property by retaining and renting your old home while buying a new one is an appropriate investment strategy for your specific circumstances and needs.

lfcfan said:
2. Sell the current house, clear the mortgage, get a new mortgage and have the released equity for extra cash for the house

This is the option we're leaning towards at the moment. What tax implications would this involve? Is there a way of 'transferring' the mortgage from the current house to the new house?
Click to expand...


There are no tax implictions. Unlike 1 above no CGT is chargeable on the sale of one's PPR (Principal Private Residence).
 
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