Some mortgage questions

[Lumiere]

1. Is mortgage offer in principle important ?

I have less than a month left on my current contract, then I would probably take July/August off for holidays and actually looking for houses / refurbishing the current one. I won't be able to get the actual mortgage during this time anyway, during the lack of contract.

And when I start a new one in September, lots of things can change by then, so the offer in principle might be useless and there could be better deals with other providers (as a contractor mortgage specialist told me)

Also how it works if I will need residential mortgage for the new house and BTL for old one at the same time ?

2. Generally speaking, would it be better to rent the old house (offset mortgage fully offset) or sell it ?

If I sell I will be able to afford a much more expensive house that, realistically, I don't really need. The main point of upgrading is to make some use for the cash sitting in saving accounts (size and schools are the others). Also thinking long term, I am not a pension believer, if I keep renting out the old houses rather than selling them within some time it would give us a steady income. On the other hand there may be tenant-related problems and CGT issues.

I know numbers are important, but I just wondered about other contractors' overall experience, maybe something I need to consider before making this decision.

[northernladuk]

The mortgage in principle is just a high level view, you will still have to go through the process of submitting all your details at time of application. It's not a gaurantee you will get it. It's just a comment that based on what you have told us so far there is no reason not to give you a mortgage. Official answer will be once you've done all the paperwork which will show you are out of contract so that won't work.

BTL will still count against your residential mortgage. It didn't in years gone by but a portion of it does still affect your affordability criteria... well it certainly does for some lenders. There is some kind of percentage I think, I can't remember but check it out first.

You either let the old house or you rent it out. You don't rent it

I personally wouldn't bother with the tenant related issues. If you have a good letting agent that vets the tenants you should be okish. You might get scruffy people here and there but your nightmare from hell tenants are very very rare. Depends on area, type of house etc etc as well to some extent. I've been letting for many many years and I think I've had one tenant that didn't pay the last two rents and did one. Agent presumed they did it because the deposit would cover (which it didn't quite). Again I wouldn't be overly worried about CGT. It's a tax on profit so cut's the profit you would have got but it's still profit. Even after tax there aren't that many ways to earn the money a good let property can. The investment you use the money for could also fail as well. Spread your investments so if one goes belly up it's not the end of the world. I've got BLT's, personal savings and pension just to spread the risk.

I would personally speak to a trustworthy IFA if you are having trouble deciding what to do,