Keep investment property or sell? What to do with the money?

ET1976

Wonder if anyone can offer me opinions on whether to keep my money in a house or invest elsewhere.

My situation is I have a fairly large (but easily affordable, low interest) mortgage on the house I live in with my husband, and a small mortgage on my own previous house which I rent out. (I could have paid off the smaller mortgage but it was cheaper to keep it and get a better deal on the larger mortgage by having a bigger deposit).

I am wondering whether I would be better off selling the smaller house and reducing the large mortgage and therefore the interest we are paying, and put the resulting monthly savings away somewhere.

The original rational for keeping the 2nd house was to use it as a pension in future (although my job also gives me a generous non-contributory pension), not to make money from renting. Just looking at the rental profit, its a pretty poor ROI. As well as the financial aspect, I also have the security of knowing I will always have somewhere to live if I keep it.

If I were to sell and use the proceeds to reduce the larger mortgage, it would reduce the payments by £600/month (at the current house value and interest rates, taking into account selling fees and CGT). There are no penalties for paying off a lump sum.

The real question is, is there anything I could do with that £600/month which would be better than keeping the house. I am seriously averse to risk so not sure how to invest! I already max-out my tax free savings allowance with my surplus cash, and use the rest to overpay my mortgages.

Thanks for any thoughts.

G_M

This is a low point in the property market. Why sell now? Wait a few years for the market to pick up again (OK, maybe a few years!) and sell for a better price.

Or, devils advocate, sell now, buy into the stock market and wait for THAT to rise!!

ET1976

it may be a low point nationally, but prices are crazy and property flying off the market where this house is. everything goes for over the asking price. a few months ago i started looking for a flat to buy as an investment because i thought from all the reports in the media there would be some bargains out there, but not so - there were bidding wars for even the worst hovels.

the longer I wait, the less point there will be in selling because we'll have hardly any mortgage left to save interest on.

G_M

Sounds like you're answering your own question then!