Q I own properties in Australia. This in itself is complicated as they are jointly owned with my brother, but once I can visit Australia after the pandemic, our plan is to get rid of one each.
Chances are I will have a property with a small mortgage and the rental income will cover the repayments.
I would, however, like to buy a flat or a small house in the UK as I am in the process of separating from my son’s father. I have £ 55,000 in savings to put on deposit and should be able to get a reasonable mortgage as our son is now in school so childcare costs will now be drastically reduced.
The problem is, I live in Bristol and the price of accommodation here is ridiculous. Is it 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 of selling my property abroad? Or should I just keep saving or keep saving for longer with house prices keep going up?
A The only way I can imagine using your Australian property – once you own it in your name only – would be to increase the mortgage you plan to take out to raise funds to add to your current savings for a deposit. But if you can do it, it’s in the hands of the Australian mortgage lender. It also might not be a practical solution if the increased mortgage repayments 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 funds to invest in your home in Bristol. It might not be such a bad option if house prices in Bristol are rising faster than house prices in the area where you have property in Australia.
Selling in Australia also means you won’t have to pay the higher rate of property tax on your Bristol home. The three percentage point increase in the SDLT rate applies to people buying a second property in the UK, even if their first property is located elsewhere in the world.