Q I own properties in Australia. That in itself is complicated as they are owned jointly with my brother but once I can visit Australia after the pandemic, our plan is to end up with one each.
The likelihood is that I will have one property with a small mortgage and the rental income will cover the repayments.
I would, however, like to buy a flat or small home in the UK as I’m in the process of separating from my son’s father. I have £55,000 in savings to put down as a deposit and should be able to get a reasonable mortgage as our son is now in school, so childcare costs will now be much reduced.
The problem is that I live in Bristol and the price of housing here is ridiculous. Is it at all possible to use my property in Australia in some way to increase the money I have available for my deposit? Or is the only possibility to sell my property overseas? Or should I just keep saving or keep saving for longer with ever-increasing property prices?
A The only way I can think of to make use of your Australian property – once you own it in your name only – would be to increase the mortgage you planned to take out on it to raise cash to add to your current savings for a deposit. But whether you can do this is in the hands of the Australian mortgage lender. It also might not be a practical solution if the repayments on the increased mortgage exceed your monthly rental income from the property.
If your Australian lender is unwilling to let you borrow enough, your only other option is to sell the property to raise cash to put towards your home in Bristol. This might not be such a bad option if house prices in Bristol rise more quickly than house prices in the area where you have property in Australia.
Selling up in Australia also means that you won’t have to pay the higher rate of stamp duty land tax on your Bristol home. The three percentage points increase in the rate of SDLT applies to people buying a second property in the UK even if their first property is located elsewhere in the world.