Advice please

coni7

I want to buy a new property which is priced at £230,000, its a new development so i am sure they will adjust the price when asked. My problem is my property, i am not sure if to rent it out or sell it, first a little background information for you,

Had 3 valuation on my property last week 2 at £180,000 and 1 at £220,000, i own my property outright and there is no mortgage on it, what would be the best option forward? should i sell it and then buy the other with a little mortgage or should i keep mine and rent it out, which i can do for £500 per month and then get a mortgage on the new property.

Whats everyone's opinion on which is the best way and the cheapest?

Thankyou very much for reading.

natman

NO mortgage well done, initially
My first thoughts are how are you funding your new house?

You cant really part exchange because the value of yours is too close to theirs.
If you have to take out a mortgae to fund your new home - how much for?

Why do you want to keep you old house? what are the benefits for you individually?

I suppose - if I could sell for say 200 and get 30k mortgage i personally would do that.........

coni7

natman wrote: »

NO mortgage well done, initially
My first thoughts are how are you funding your new house?

You cant really part exchange because the value of yours is too close to theirs.
If you have to take out a mortgae to fund your new home - how much for?

Why do you want to keep you old house? what are the benefits for you individually?

I suppose - if I could sell for say 200 and get 30k mortgage i personally would do that.........

They wont part ex my house because there isnt enough difference, so i either have to sell it or rent it out.

I was thinking if i rent it out for £500 a month this can go towards my mortgage on the new house and in time the old house will go up in value and i will be able to sell in a few years time and pay off the new house, or would i be better off trying to sell it and then just go with a low mortgage on the new house?

not sure what to do, i am in a good position at the moment with mine and dont want to end up in a bad position, if you know what i mean

clutton_2

have you got a big deposit saved up ?

coni7

clutton wrote: »

have you got a big deposit saved up ?

No I havent, more or less all my capital is in my house except for around 10k

Yakubu22

coni7 wrote: »

I want to buy a new property which is priced at £230,000, its a new development so i am sure they will adjust the price when asked.

If the developer prices a new build property at £230k then you should be looking for a hefty discount off that. If you sell your property for £200k and get £30k of the new build, you've broke even?

Doozergirl

coni7 wrote: »

No I havent, more or less all my capital is in my house except for around 10k

How are you funding the new house then? Remortgaging the old house?

I can't be doing with keeping houses for the sake of it. £500 a month is an appaling yield for a £180-200k house. At a 3% yield, it won't cover the equivalent borrowing you'd undertake to keep it. You could spend £80k on a different little house and get the same in rent if you want an investment property.

00ec25

coni7 wrote: »

i am not sure if to rent it out or sell it, first a little background information for you,

Had 3 valuation on my property last week 2 at £180,000 and 1 at £220,000, i own my property outright and there is no mortgage on it, what would be the best option forward? should i sell it and then buy the other with a little mortgage or should i keep mine and rent it out, which i can do for £500 per month and then get a mortgage on the new property..

£500 per month is a gross yield of 3% per year (£6000/£200,000 selling price). You will have to pay tax on that and obviously will also incur expenses further reducing your profit.

So, not a particularly good rate of return on the £200k locked up in your house as i doubt you will get a mortgage at less that 3% for any meaningful lenght of time on the other property. Also when you do come to sell it you will then incur capital gains tax on the gain made since you moved out.
I'd sell up and use the money to minimise the costs of the new place. also do you have any knowledge of being a landlord and are you willing to deal with the problems which will inevitably arise?

coni7

Yakubu22 wrote: »

If the developer prices a new build property at £230k then you should be looking for a hefty discount off that. If you sell your property for £200k and get £30k of the new build, you've broke even?

This is what i am thinking, would i get 30k of a new build?

Doozergirl wrote: »

How are you funding the new house then? Remortgaging the old house?

I can't be doing with keeping houses for the sake of it. £500 a month is an appaling yield for a £180-200k house. At a 3% yield, it won't cover the equivalent borrowing you'd undertake to keep it. You could spend £80k on a different little house and get the same in rent if you want an investment property.

I was thinking of mortgaging the new house the full amount and the rent from my other house help pay it. The way you have put that it looks like to be a bad move and i am better off selling it off and going for the new one. thanks

00ec25 wrote: »

£500 per month is a gross yield of 3% per year (£6000/£200,000 selling price). You will have to pay tax on that and obviously will also incur expenses further reducing your profit.

So, not a particularly good rate of return on the £200k locked up in your house as i doubt you will get a mortgage at less that 3% for any meaningful lenght of time on the other property. Also when you do come to sell it you will then incur capital gains tax on the gain made since you moved out.
I'd sell up and use the money to minimise the costs of the new place. also do you have any knowledge of being a landlord and are you willing to deal with the problems which will inevitably arise?

Thankyou, your advice is what i am warming to.

Yakubu22

coni7 wrote: »

This is what i am thinking, would i get 30k of a new build?


I was thinking of mortgaging the new house the full amount and the rent from my other house help pay it. The way you have put that it looks like to be a bad move and i am better off selling it off and going for the new one. thanks

Thankyou, your advice is what i am warming to.

Exactly, you should get at least £30K off the original asking price. Sell your home for £200k and buy this, you could be mortgage free still.