Rent out home or sell?

Tonty

Have been trying to do a bit of self-help on this site, but it's taking ages so wondered if anyone's willing to give their opinion on the following.

We own our house outright, valued at £80k. I want to move for better quality of life for the kids and want to do it soon. Estate agent reckons it won't sell even at £70k in current market. Got advice on selling at auction and they reckoned £50k guide price and probable reserve of £55-60k.

Estate agent also mentioned we could borrow £50k against the house instead of selling and cover it with a buy to let mortgage. Advice was that the house would rent easily for about £450 pcm, and that would give us the money we need to put into our next home (tho we'd need a mortgage of about £50k on the new house as well, which I should be able to get on my income.)

My partner is 60 (I'm mid 40s) so I'm not basing anything on his income (which is modest anyway) just mine.

It's a decent house, tho not in a great area, hence the price, and I'm reluctant to sell it so cheaply if I can afford to keep it as a long term investment. On the other hand, I'm worried about the commitment of becoming a landlord and having two mortgages.

What would experienced money savers do in my position?

Grateful for any help. Thanks.

Thrugelmir

Tonty wrote: »

Have been trying to do a bit of self-help on this site, but it's taking ages so wondered if anyone's willing to give their opinion on the following.

We own our house outright, valued at £80k. I want to move for better quality of life for the kids and want to do it soon. Estate agent reckons it won't sell even at £70k in current market. Got advice on selling at auction and they reckoned £50k guide price and probable reserve of £55-60k.

Estate agent also mentioned we could borrow £50k against the house instead of selling and cover it with a buy to let mortgage. Advice was that the house would rent easily for about £450 pcm, and that would give us the money we need to put into our next home (tho we'd need a mortgage of about £50k on the new house as well, which I should be able to get on my income.)

My partner is 60 (I'm mid 40s) so I'm not basing anything on his income (which is modest anyway) just mine.

It's a decent house, tho not in a great area, hence the price, and I'm reluctant to sell it so cheaply if I can afford to keep it as a long term investment. On the other hand, I'm worried about the commitment of becoming a landlord and having two mortgages.

What would experienced money savers do in my position?

Grateful for any help. Thanks.

If the house is valued at £80k. Why are the estate agents saying that it won't sell at 70k ? I would suggest you get a realistic loan valuation first and see if you can get a £50k BTL loan and at what interest rate. Take some advice on renting out property as well.

socrates

You would not be getting a BTL mortgage you would be getting consent to let.

The only real way round this is to release funds from the property first and then afterwards apply for consent to let.

Good idea to get a whole of market, fee free mortgage adviser to handle it all as they will have more of an idea which lenders give consent to let.

I would possibly look at an offset mortgage as you could release the funds but not use them until you are ready and have found a property.

With a conventional mortgage you will be making mortgage payments from day one and it may take months to find a property.

Avoid First Direct as they are very strict on consent to let.

franklee

So you currently own a house outright yet have built up no savings. Yet on the same income plus the rent (which may not always be there every month) you are looking at taking on 100K of debt, 50K on the rental house and 50K on the new house. You do not mention what your income is.

I wouldn't do it!

I also agree with Thrugelmir, how can the house be valued at 80K yet not sell for 70K? I see no harm in selling the house below what was a peaky value so long as you make a similar sized saving on the house you buy Why not have a shot at selling in the normal way, forget the auction.

Tonty

franklee wrote: »

I also agree with Thrugelmir, how can the house be valued at 80K yet not sell for 70K? I see no harm in selling the house below what was a peaky value so long as you make a similar sized saving on the house you buy Why not have a shot at selling in the normal way, forget the auction.

Thanks I'll think about it. It's just that the agent said that the only people buying in my area are investors and they are screwing people into the ground on price. She said that FTBs can't get mortgages and in her opinion it would sit on the market for 12 months. I was after a quick sale, hence my reluctance to go down the 'normal' route, but I may reconsider it.