Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • Hamish72
    • By Hamish72 16th Jul 17, 10:48 AM
    • 2Posts
    • 0Thanks
    Hamish72
    Should I sell or rent..?
    • #1
    • 16th Jul 17, 10:48 AM
    Should I sell or rent..? 16th Jul 17 at 10:48 AM
    Hi there,
    I have two properties, both are flats in a sandstone terrace, built in 1880. My family and I live in the three bedroom - valued at £100k - we owe £55k on it.
    The other property is a one bed flat - valued at £60k - with a rental of £400 p.c.m - we owe £20k on it.
    We would like to buy a three bed detatched with a budget of £210k.
    (Glasgow)

    What is the best thing to do;
    1. Sell both properties?
    2. Sell one and rent one out?
    3. Rent both out?


    Thanks in advance.
Page 1
    • Hamish72
    • By Hamish72 16th Jul 17, 10:51 AM
    • 2 Posts
    • 0 Thanks
    Hamish72
    • #2
    • 16th Jul 17, 10:51 AM
    • #2
    • 16th Jul 17, 10:51 AM
    ...also, our combined income is £45k p.a.
    • debtisnotme
    • By debtisnotme 16th Jul 17, 10:56 AM
    • 103 Posts
    • 77 Thanks
    debtisnotme
    • #3
    • 16th Jul 17, 10:56 AM
    • #3
    • 16th Jul 17, 10:56 AM
    I would keep the BTL and sell the flat you're living in, you could always remortgage the BTL if you wanted to put down a bigger deposit.
    Debt on 25/5/17
    Mortgage £61,999 £59,335
    Secured loan approximately £20,000 £19,353
    Unsecured debt in DMP with Stepchange £38,887 £37,763
    • saajan_12
    • By saajan_12 17th Jul 17, 9:58 AM
    • 647 Posts
    • 422 Thanks
    saajan_12
    • #4
    • 17th Jul 17, 9:58 AM
    • #4
    • 17th Jul 17, 9:58 AM
    Not an answer, but hopefully some food for thought to help you decide:
    3 bed flat- If you sell, you would get ~£42k after fees. If you rent, you can extract up to £20k equity by remortgaging to 75% LTV BTL.
    1 bed flat- If you sell, you would get ~£38k after fees. If you rent, you can extract up to £25k equity by remortgaging to 75% LTV BTL.
    How much can you borrow on the 210k house based on your income (excluding rent), outgoings etc? Go to a broker / lender and get an AIP. Then you can figure out how much deposit you need from selling / letting and remortgaging. Depending on the interest rate and total amount you can borrow on the detatched house, I would look into borrowing more there at a lower residential rate, so you don’t have to remortgage one/both of the existing properties. Maybe even pay off the highest rate mortgage.

    However note if you don’t need being a LL for two properties is a significant responsibility, from advertising, tenant vetting, inventories, repairs, deposit issues, gas safety.. You would be paying 3 mortgages/high total LTV if you keep both flats – is this possible if there is a void in rent income for 3-6 months while you evict non paying tenants, renovate and search for new tenants?
    • 00ec25
    • By 00ec25 17th Jul 17, 11:52 AM
    • 4,535 Posts
    • 3,916 Thanks
    00ec25
    • #5
    • 17th Jul 17, 11:52 AM
    • #5
    • 17th Jul 17, 11:52 AM
    if you let both properties and buy the 210k house you will have to pay the additional rate LBTT (its Scotland) on that purchase which would cost you an additional £6,300 on top of the basic LBTT of £1,300 so £7,600 in total. Have you allowed for that?

    if you sell the 100k and buy the 210k then you won't pay the additional rate LBTT as the replacement rule would apply (I think, check the rules as I haven't read the Scottish version in full) https://www.revenue.scot/land-buildings-transaction-tax

    with an income of 45k have you actually checked how much you can borrow with a mortgage broker yet? How much available savings do you have to cover the deposit and the costs associated with buying the 210k house if you do not sell at least one of the properties? I have no idea if mortgages are still given at up to 4.5 x income in reality, but your plan looks unaffordable without selling something
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,505Posts Today

4,613Users online

Martin's Twitter