2nd home or rent?

AceCobra

Again guys,
Many thanks for the comments!
Pasturesnew, many thanks for the advice. Unfortunately selling my current property isn’t really viable at the moment. First time buyers are priced out and without them no one is going to buy my house. Besides, I would need the rental income straight away and selling with a sitting tenant isn’t going to happen. If I could stay here for a few months to sell it, I would give it some thought but alas time is against me.
In relation to not wanting a smaller house, the point is mute. I’d be going for a smaller house if I was buying or renting to keep costs down. Also, buying the house wouldn’t cost 10k, more like 2k.
I really do appreciate your point about house prices going down, but I think it’s important to understand that I don’t live in England, thus the market here is different. If I was able to secure one of the properties I’m talking about for 100-120k they would be a similar price, to a similar property before the boom here. So my question is, are prices likely to correct past the flat line a few years ago, I’m not so sure.
I’m fully aware of the risks and have done my sums; I was more interested in the actual procedure with the mortgages etc. My thoughts being that if I can secure a property with a mortgage similar, or possibly cheaper than the same house would cost to rent there may be some merit. I really wouldn’t care of the house didn’t rise in value as I’m not doing this for profit. However my gut feeling is that in 2 years or so when I go to sell I’d at least get my money back.
All said and done it’s a risk and to be fair one I’m probably not going to take, but it was good to throw the idea about.
Off to hunt for a house/flat to rent.

Thanks again.

Martin.

neverdespairgirl

AceCobra wrote: »

AI think it’s important to understand that I don’t live in England, thus the market here is different. .

You are in NI, right? The market is different there - it is much worse than in England. Prices going over a cliff.

Nosht

M, basically it matters not where you are.
Don't sell, NEVER sell.
I bought 3 weeks ago & my new house has increased in value by 5% already.
O.K., I did not buy for this reason but this is a bonus even though the prices in Scotland have at last dropped a little.

Regards,

N.

P.S. Mortgage no problem from Nationwide.

leftieM

You say that you can buy a house at pre-boom levels. You can buy a house at 2005 prices but you need to understand that the boom in NI lasted longer than that. If you search the house price reports, which go back to the beginning of the decade, you'll see that the rises were double digit most years (except 2001 iirc). In 2005 it went mental but the bubble was being inflated for years before that - at least since 2002 (and imo since 1998). We had the cheap credit too.
If you make the decision to buy now, what happens in the future when you sell shouldn't come into it. 2 years isn't enough time for the market to bottom out and start to recover, or it hasn't been in the previous crashes. You are not buying at the bottom of the market so you need to be fully aware that you are likely to make a loss if you sell in 2 years.

Edit - Found some stats.
HPI in NI (source Nationwide) : 15% in 2000, 3.5% in 2001, 16.5% in 2002, 26.1% in 2003, 16.3% in 2004, 13.2% in 2005, 44.1% in 2006, 24.2% in 2007, -29.8% to Q3 2008.
Still the potential for some hefty falls.

hethmar

Hi there, my son is in a similar position. He has got the ok from Nationwide to rent his flat (he knows 2 guys who want to take it over and they are ok people). The rent will more than pay his mortgage and service charges on that place. Nationwide have also okd a mortgage on a place he has had an offer accepted on. Its a repo - sold at ridiculous £330k in 2006 as new, resold last Jan at £300k and he has had an offer of £160 accepted. Though he is now thinking of lowering that offer in the current climate. It may be he walks away from the deal before exchange if they dont accept a lower offer. He is waiting to see what the valuation comes through as.

Council tax is paid by tenants by the way.

Bungarm2001

Couple of other things to consider..have you thought about selling via the auctions? It would be worth an enquiry at least as to costs etc. Some sellers via auction have their costs added to the eventual selling price. Ask the auctioneers about this.

Also, consider renting a room in a house-share or just being lodger. Much cheaper usually than living on your own, and more flexible.

As for informing your lender of your intent to let your property, please don't underestimate how important this is. You will need to take out landlord insurance, and they may well ask if there is a lender on the property. You of course could lie to them too, but I wouldn't take your chances if you suddenly had a big claim.

leftieM

hethmar wrote: »

Council tax is paid by tenants by the way.

Not in NI. The landlord pays the rates unless it says otherwise and then tenants expect a lower rent. AceCobra will pay rates for two properties if he owns them both, even if one is let.

clairet707

Bungarm2001 wrote: »

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As for informing your lender of your intent to let your property, please don't underestimate how important this is. You will need to take out landlord insurance, and they may well ask if there is a lender on the property. You of course could lie to them too, but I wouldn't take your chances if you suddenly had a big claim.

Agreed!! When we rented our house out, if we didnt inform the mortgage provider it invalidated our insurance!