Thinking about letting property to buy a new one, advice please

Psilonaught

I recently got married and we want to buy a family home. We were initially thinking about selling our current property but with pricing obviously falling we feel if we keep our current property we could take advantage of the price drops and buy a house at a "discount"

Some details
combined salaries: £130k per annuma
current mortgage (interest only w/hsbc) £180k
current property value: £300k approx
rental valuation of current property: approx £1300 per calendar month

We are looking at houses around the £400k mark and we don't want to pay more than £1000 per month on the mortgage.

Bearing in the mind the financials above should we consider our plan?
any help would be appreciated

fc123

Psilonaught wrote: »

I recently got married and we want to buy a family home. We were initially thinking about selling our current property but with pricing obviously falling we feel if we keep our current property we could take advantage of the price drops and buy a house at a "discount"

Some details
combined salaries: £130k per annuma
current mortgage (interest only w/hsbc) £180k
current property value: £300k approx
rental valuation of current property: approx £1300 per calendar month

We are looking at houses around the £400k mark and we don't want to pay more than £1000 per month on the mortgage.

Bearing in the mind the financials above should we consider our plan?
any help would be appreciated

To take on a total mortgage debt of £580k at this time may not be a good idea.

The 'equity' of £120k could vanish in the next 12 months....it may not, but it is not 'cash under the bed' STS.

We rented out family home to relocate for work and didn't have too many problems but it wasn't stress free. One of the best things we ever did was not to buy in new location ........we rented instead.

I would suggest renting out the existing proerty, renting a family home for a while and see how it feels having 2 monthly payments go out with one covered by rent coming in.

580k mortgage aginst 130k salary is high...but only you know how secure your work etc is.

Doozergirl

Fair enough if you don't want to spend out more than £1000 but leaving all the equity in your property - at 6% (average mortgage?) you need to bring in £1500 to cover the interest on mortgage payments and interest on your equity lost, let alone covering void periods, landlords insurance, agents fees and maintenance.

You must look at the cost to change rather than the fact that your house might be worth less than it was. You will then see the benefit of cheaper prices to you.

By moving to a bigger house you will increase your outgoings regardless. It's not going to get cheaper despite on first glance looking like the rent in is less than the mortgage out on one house. You have to consider the full borrowings and how much interest and fees in total you'll be paying versus the rent you get in.

If you want to take advantage of a bargain then sell your house for the best price you can get and shop hard on the next place.

Incisor

Psilonaught wrote: »

I recently got married and we want to buy a family home. We were initially thinking about selling our current property but with pricing obviously falling we feel if we keep our current property we could take advantage of the price drops and buy a house at a "discount"

Some details
combined salaries: £130k per annuma
current mortgage (interest only w/hsbc) £180k
current property value: £300k approx
rental valuation of current property: approx £1300 per calendar month

We are looking at houses around the £400k mark and we don't want to pay more than £1000 per month on the mortgage.

Bearing in the mind the financials above should we consider our plan?
any help would be appreciated

So basically you are not stressed by the mortgage, you wouldn't be stressed by another mortgage. In your position, I would be wanting to minimize my exposure to the financial markets over the longer term, but i would take a short term risk. In the short medium term you could afford 2 properties, enough to be chain free nor needing bridging finance. I would put the present one on the market and start looking for the next. If you sell before buying, then rent until you buy again. If you buy before selling, then move, but keep the old place on the market and be a bit aggressive in trying to move it.

RecoveringAlcoholic

Your £300,000 property will give you a gross rental income of £15,600 p.a.

That will give you a gross return before all costs of 5.2%

Why bother?

Psilonaught

ok thanks all, interesting comments

poppysarah

Sell it. Buy a family home.

You've got a huge salary so you'll have a huge bucket of cash saved for a deposit?