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  • FIRST POST
    • dynamicsjon
    • By dynamicsjon 9th Oct 16, 3:29 PM
    • 5Posts
    • 1Thanks
    dynamicsjon
    Let to buy or sell and buy
    • #1
    • 9th Oct 16, 3:29 PM
    Let to buy or sell and buy 9th Oct 16 at 3:29 PM
    Hello

    We have a house (value about £200k-£230k, mortgage £160k) which we now rent as we have moved to the other side of the country for work.

    We are paying £1000 in rent and looking a house prices slowing rising as the town has a massive build of new houses and people coming to live here.

    We want to live here long term.

    We have no savings or debt apart from the above mortgage.

    We are being told we need to raise about £30k to buy a 2nd house here (value £250k).

    We are late 40s with no pension.

    MY QUESTION IS:
    Should we sell the first house and buy here before house prices/rents rise further OR keep renting and get a 2nd mortgage as soon as we can.

    Thanks for any advice, help or anything that would help :-)

    Jon
Page 1
    • Pixie5740
    • By Pixie5740 9th Oct 16, 3:36 PM
    • 8,849 Posts
    • 11,854 Thanks
    Pixie5740
    • #2
    • 9th Oct 16, 3:36 PM
    • #2
    • 9th Oct 16, 3:36 PM
    Does the £30k also include the £10k SDLT you'd need to pay?
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • Thrugelmir
    • By Thrugelmir 9th Oct 16, 3:44 PM
    • 51,214 Posts
    • 42,998 Thanks
    Thrugelmir
    • #3
    • 9th Oct 16, 3:44 PM
    • #3
    • 9th Oct 16, 3:44 PM
    Where's the deposit for the new property going to come from if you don't sell the existing property.

    Can you afford to service both mortgages and related property costs if the need arises. Letting property can be highly profitable. However when it goes bad. Can be financially disastrous. Only speculate with what you can afford to lose.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • dynamicsjon
    • By dynamicsjon 9th Oct 16, 3:53 PM
    • 5 Posts
    • 1 Thanks
    dynamicsjon
    • #4
    • 9th Oct 16, 3:53 PM
    • #4
    • 9th Oct 16, 3:53 PM
    Thanks for the replies, guys.

    @Pixie5740 no - so will need to look at £40k

    @Thrugelmir - we will need to save the new deposit, etc.

    Just to note the 1st house has a flat and house with a rental income of £1,200 a month.

    So should I keep saving to try and buy house number 2 as interest only rather than renting seems to be about £300 cheaper per month.

    As we don't have much to loose to start with !
    Last edited by dynamicsjon; 09-10-2016 at 3:59 PM.
    • Thrugelmir
    • By Thrugelmir 9th Oct 16, 3:58 PM
    • 51,214 Posts
    • 42,998 Thanks
    Thrugelmir
    • #5
    • 9th Oct 16, 3:58 PM
    • #5
    • 9th Oct 16, 3:58 PM
    So should I keep saving to try and buy house number 2 as interest only
    Originally posted by dynamicsjon
    Few interest only deals available. Those that are tend to have low LTV requirements along with a scheduled repayment plan.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • dynamicsjon
    • By dynamicsjon 9th Oct 16, 4:13 PM
    • 5 Posts
    • 1 Thanks
    dynamicsjon
    • #6
    • 9th Oct 16, 4:13 PM
    • #6
    • 9th Oct 16, 4:13 PM
    OK - so sounds like I am better selling the house and buying a new house with any equity we get from it ?
    • Pixie5740
    • By Pixie5740 9th Oct 16, 4:28 PM
    • 8,849 Posts
    • 11,854 Thanks
    Pixie5740
    • #7
    • 9th Oct 16, 4:28 PM
    • #7
    • 9th Oct 16, 4:28 PM
    To get a LTB mortgage on your existing property you're looking at a max LTV of 75% so you even using the higher valuation you won't be able to release £30k never mind £40k.

    Interest only mortgages are thin on the ground these days so you're more likely to be looking at a repayment mortgage for the place. Plus keeping hold of the existing property means your SDLT jumps from £2.5k to £10k. Your gross rental yield is 6 or 7% depending on which valuation you use which is not bad. However, if you're a higher rate tax payer you'll find your net rental yield falling soon.

    By all means discuss your options with a broker but on the face of it selling the existing place and buying somewhere new seems to be the best option.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • Pixie5740
    • By Pixie5740 9th Oct 16, 4:29 PM
    • 8,849 Posts
    • 11,854 Thanks
    Pixie5740
    • #8
    • 9th Oct 16, 4:29 PM
    • #8
    • 9th Oct 16, 4:29 PM
    Does your employer offer a work place pension? It's free money for you.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • dynamicsjon
    • By dynamicsjon 9th Oct 16, 4:35 PM
    • 5 Posts
    • 1 Thanks
    dynamicsjon
    • #9
    • 9th Oct 16, 4:35 PM
    • #9
    • 9th Oct 16, 4:35 PM
    Thanks again @Pixie5740 - very useful feedback :-)

    I didn't consider your points - very helpful - seem like the landscape is getting more difficult for letting. I am now also thinking just 1 house is best !

    I work for my own limited company (wife and I employed) and earn £30k-40k a year, so not sure about workplace pension position with that.
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