Sell or Let?? Help Needed

Elizabeth_Owen

We currently have a one bedroom flat which we bought in July 2006 for £110K with a 10% deposit. Me and my boyfriend are both having to move due to our jobs being relocated and got a caluation last week which was £100k. Our mortgage left is £97K so basically we don't have any equity.

We are currently in a dilemma as to Let out our flat or to Sell our flat. If we sell we know we will have lost the £11K deposit we put down and if we Let it will cost us £100-£140 per month if we changed to an Interest only mortgage or £200-£250 per month if we stayed on our current rate (due to rental income not covering the mortgage)

We just dont know what to do?

1) whether to ride out the falling house prices and Let for however many years it could take for the market to get back to where it was in July 2006 costing us money in the meantime

2) If we do let whether to change to interest only or stay on current repayment rate?

3) Whether to just cut our losses now and sell up.

Any advice would be great as we just don't really now what to do with the current uncertainty in the market.

SquatNow

Elizabeth_Owen wrote: »

1) whether to ride out the falling house prices and Let for however many years it could take for the market to get back to where it was in July 2006 costing us money in the meantime

It will take 18-36 years for prices to recover to current levels.

Elizabeth_Owen wrote: »

2) If we do let whether to change to interest only or stay on current repayment rate?

Paying money off your mortgage is always preferable. you'll need to check though if your mortgage lender will let you rent it out. With your LTV it is possible they might not. You certainly wont get another mortgage now with that LTV so you're stuck with whatever mortgage company/deal you are on.

Elizabeth_Owen wrote: »

3) Whether to just cut our losses now and sell up.

Yes sell now, if you can. In the current market it is unlikely though.

Most likely you wont be able to sell it and wont be able to rent it out for enough to cover the mortgage, especially after you fixed rate deal ends and you swap to SVR.

Elizabeth_Owen

SquatNow wrote: »

It will take 18-36 years for prices to recover to current levels.

Do you mean 18-36 months?? surely 18-36 years is a bit long for it to recover?

barnaby-bear

Elizabeth_Owen wrote: »

We currently have a one bedroom flat which we bought in July 2006 for £110K with a 10% deposit. Me and my boyfriend are both having to move due to our jobs being relocated and got a caluation last week which was £100k. Our mortgage left is £97K so basically we don't have any equity.

We are currently in a dilemma as to Let out our flat or to Sell our flat. If we sell we know we will have lost the £11K deposit we put down and if we Let it will cost us £100-£140 per month if we changed to an Interest only mortgage or £200-£250 per month if we stayed on our current rate (due to rental income not covering the mortgage)

We just dont know what to do?

1) whether to ride out the falling house prices and Let for however many years it could take for the market to get back to where it was in July 2006 costing us money in the meantime

2) If we do let whether to change to interest only or stay on current repayment rate?

3) Whether to just cut our losses now and sell up.

Any advice would be great as we just don't really now what to do with the current uncertainty in the market.

Another one... we are getting SO many can we have a sticky to direct this repeated genre of post to or a separate board..... there are so many ......... it's boring....

Elizabeth_Owen

SquatNow wrote: »

Paying money off your mortgage is always preferable. you'll need to check though if your mortgage lender will let you rent it out. With your LTV it is possible they might not. You certainly wont get another mortgage now with that LTV so you're stuck with whatever mortgage company/deal you are on..

Just to clarify as well that if we change to interest only, rental income will be £520-£550 with mortgage payments as £510. It just worked out at £100-£150 loss per month when you take off the letting fees, the ground rent and maintenance charges i have to pay with it being leasehold.

If we stayed on capital repayments they would be £620 per month with rental income of £520-£550. So once letting fees, maintance and ground rent is taken off it works out a £200-£250 loss

Does the lender take these costs into account or is it purely the rental income against the mortgage payments. As we have been told we would be able to get another mortgage if we rented on interst only but i haven't asked about if we stayed on capital repayments?

barnaby-bear

Elizabeth_Owen wrote: »

If we stayed on capital repayments they would be £620 per month with rental income of £520-£550. So once letting fees, maintance and ground rent is taken off it works out a £200-£250 loss

Why are you contemplating subsidising someone else's housing costs Sounds barmy, especially as you'll be exposed to the risk of voids or a tenant who loses their job and stops paying and potentially be subsidising them further...

barnaby-bear

Elizabeth_Owen wrote: »

We currently have a one bedroom flat which we bought in July 2006 for £110K with a 10% deposit. Me and my boyfriend are both having to move due to our jobs being relocated and got a caluation last week which was £100k. Our mortgage left is £97K so basically we don't have any equity.

We are currently in a dilemma as to Let out our flat or to Sell our flat. If we sell we know we will have lost the £11K deposit we put down .

11k for two years rent isn't bad though and you've had stability and not been at whim of a LL....

Elizabeth_Owen

barnaby-bear wrote: »

Why are you contemplating subsidising someone else's housing costs Sounds barmy, especially as you'll be exposed to the risk of voids or a tenant who loses their job and stops paying and potentially be subsidising them further...

Because even though we will have to be paying out that money until the market recovers and prices are back to what they were, we will not only get our £11K back but also any equity we have from reducing our mortgage though our repayments.

We have currently paid off £2500 of our mortgage in 2 years, which i know will increase with time.

So say it takes 5 years to get back to where it was then we will get around £18K back, we may have had to spend £15K over the 5 years but thats still £3K profit rather than losing £11k now if we were to sell!

dreamalittle

So say it takes 5 years to get back to where it was then we will get around £18K back, we may have had to spend £15K over the 5 years but thats still £3K profit rather than losing £11k now if we were to sell!

Um, no. You still have to include the £11K you put in originally, so in that case you'll have spent £26K to get £18K back. And that's ignoring what you've already spent on interest payments to this point.

barnaby-bear

dreamalittle wrote: »

Um, no. You still have to include the £11K you put in originally, so in that case you'll have spent £26K to get £18K back. And that's ignoring what you've already spent on interest payments to this point.

5 years of rental use, probably a couple new cookers/washing machines/beds/redecorations - definitely new carpets to sell, probably the odd big repair... risk of a few months unpaid rent/void, a tenant who doesn't want to move needs evicting is thousands, to sell you'll need vacant possession so rental void then.... plus every problem you get to hear about.... 15k earning interest in the bank sounds safer plus by the time you sell everything else will go up by the same percentage so unless going smaller/cheaper no real gains...