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To Sell or Rent Frustrated
brooky_agb
Posts: 89 Forumite
Hi,
I hope you kind people can spare a moment to tell me what you would do if you were in my situation.
I have my own successful business and I have managed to pay off my mortgage a year or so ago on my one bed ground floor flat.
Myself and my girlfriend are desperate to move up the ladder. The property is in a prime location and I would be able to let it tomorrow if I wanted to however I am trying to sell it. I paid £130k and it is on the market now for £125k.
My dilemma is that if I get a mortgage on the place, rent it and try to sell it again in three years time I will have less deposit towards a new house. At the same time if I do this I am likely to need to pay to have the lease extended in a few years time. I'm worried that if I mortgage it I will not only have less deposit on a new place but the amount I can borrow towards the new place would be less.
It's only been on the market two weeks but I haven't had a single viewing yet. I am a higher rate tax payer so if I was to rent it I would want to do it to breakeven so I am not taxed. I just want shot of it.... its frustrating because I am in a fantastic position but just feel trapped...
Has anyone been in this situation or have an idea about what they would do?
I hope you kind people can spare a moment to tell me what you would do if you were in my situation.
I have my own successful business and I have managed to pay off my mortgage a year or so ago on my one bed ground floor flat.
Myself and my girlfriend are desperate to move up the ladder. The property is in a prime location and I would be able to let it tomorrow if I wanted to however I am trying to sell it. I paid £130k and it is on the market now for £125k.
My dilemma is that if I get a mortgage on the place, rent it and try to sell it again in three years time I will have less deposit towards a new house. At the same time if I do this I am likely to need to pay to have the lease extended in a few years time. I'm worried that if I mortgage it I will not only have less deposit on a new place but the amount I can borrow towards the new place would be less.
It's only been on the market two weeks but I haven't had a single viewing yet. I am a higher rate tax payer so if I was to rent it I would want to do it to breakeven so I am not taxed. I just want shot of it.... its frustrating because I am in a fantastic position but just feel trapped...
Has anyone been in this situation or have an idea about what they would do?
0
Comments
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You say you currently own your own successful business but you are thinking of running another (that of a property rental) on the basis it will only break even so you avoid paying any tax???
Surely it's better to receive 80% or even 60% (depending on your tax situation) of something, rather than 100% of nothing???
With regards the flat, you claim its worth £125k or thereabouts (despite not even attracting a sniff at that price). If you're right, you could release 75% of that as equity assuming the possible rental income is sufficient.
That equates to over £90k equity. You can get residential mortgages with as little as 10% deposit. That should allow you to buy a property for £900k (subject to status).
How big a property were you thinking of buying?
I'm not saying you should keep the flat, but you seem very confused. I suggest you seek independant financial advice."Now to trolling as a concept. .... Personally, I've always found it a little sad that people choose to spend such a large proportion of their lives in this way but they do, and we have to deal with it." - MSE Forum Manager 6th July 20100 -
I'm not saying you should keep the flat, but you seem very confused. I suggest you seek independant financial advice.
I think I just want rid as I'm frustrated. I can take a dividend in April so I guess I'll know by then whether it will have to be rented out or not by then. I've looked at all the other equivalent properties on the market and this the price is realistic. I'd like to purchase up to £600k.
I think seeking a good financial advisor is the key. I'll get a recommendation from my accountant.0 -
I think you need to speak to your accountant, tax evasion is a crime, tax avoidance is perfectly legal!, If it was me I wouldn't sell in the current market, i'd hold on and rent it out and use any residual money left to overpay your own mortgage, when the market picks up, sell it!0
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I think you need to speak to your accountant, tax evasion is a crime, tax avoidance is perfectly legal!, If it was me I wouldn't sell in the current market, i'd hold on and rent it out and use any residual money left to overpay your own mortgage, when the market picks up, sell it!
This is what we are looking to do... ALthough we would rent our house out, move into rented accomodation ourselves for 6/12+ months and buy when we get the right deal on the right property. If everything goes pear shaped (and the right property never comes along at the right price), then at least we are still on the property ladder.
You need to do your research:
- How long have you been in business for? Have you got 3 years or so of good accounts? Have you spoken to a mortgage advisor/lender - will they lend you the £500k+ that you are looking to borrow?
- Do you know how much your flat will realistically rent out for? How much equity can you release from the flat so that it will break even?
- How much do you want to spend a month on a mortgage for your new house?
- Look around at mortgage deals: some will accept a 10% deposit, but many of the better deals require at least 25% deposit. Look at fixed rates, so at least you will have a fixed idea of outgoings for a few years (important when you run your own business AND interest rates are unlikely to stay this low forever...).
- Consider the costs involved in BTL: arrangement fees for a BTL mortgage tend to be rather high (about 2.5% of the amount borrowed), agency fees, good landlord insurance cover, various certificates, possibly cost of redecorating before you can sell it on (if you want a prime price and your tenants don't treat the flat as kindly as you do...)
- Bare in mind the it could be SOME TIME before the property market picks up again: ok, you could decide to sell it in 2 years, in 5 years, 7 years, or the market could still be flat in 10+ years. It is just unknown what it will do and hanging on to your flat IS a risk: it might well be a goo reward to hang onto it, but no-one can guarantee that.
Just a few thoughts (that are currently going through my own might - being in the same situation)
QT0
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