Renting out a house, should we? and how?

Fred1_2

littlened wrote: »

I can see some advantage in interest only, but I'm not sure it's for us. We want to at some point own the property, and in the long term extract as much financial benefit from it as possible.

The main advantage of the interest only option is that it's tax deductable. If you pay interest of £220 per month and invest the £160 per month in an ISA, you'd end up paying no tax on your rental income - at least for the first couple of years until you hit the ISA limit. With a repayment mortagage, as the proprtion of capital to interest increases, so does the amount of tax you pay. As you already run your own business, I'd talk the idea over with your account (s)he will be best qualified to advise you.

gld73

One minor point - you should be happy that Abbey charged you just £95 for consent to let. They've just charged me £595 for some reason, even though I've got 50% equity in the house!! :mad:

littlened

gld73 wrote: »

One minor point - you should be happy that Abbey charged you just £95 for consent to let. They've just charged me £595 for some reason, even though I've got 50% equity in the house!! :mad:

Have you re-mortgage or just gotten a letter from their lettings departments? It seems strange they would charge you so much while only charging me £95

oldMcDonald

littlened wrote: »

..... we'll have our state pension, .....

...hopefully...

A lot can happen in 30 / 40 years and the availability of a state pension is not something I would be comfortable including in my financial plans.

Spendless

Could you manage to pay the mortgage on the rented out house if

you couldn't find a tenant
the tenant didn't pay the rent
you needed to pay for major repairs (eg boiler/electrics)
you lost your jobs
you became ill

all of the above has happened to my friend who bought 2 BTL's and I pointed out each one of these pit-falls to her before she did so- she went ahead anyway. I'd think these aspects thru first.