Should we rent our house out or sell ?

Bella79

Hi all

After a bit of advice and pick your brains !, Long story short we brought a new home 7 months ago a large 4 bed detached we have now decided we would like to downsize a bit as this is jst too big for us

its valued at 230k and our morg is 140k or £670 a month repayment

We could sell but given the current situation houses are not selling around here

or were looking into the poss of renting it and starting with a new morg on a smaller home we could get enough rent to cover the morg and give about 150 a month left over which we could put towards the new morg

or should we stick it out and sell this and put the equity towards the new home reducing our morg to a minimun ?

Also if we do rent all our money is in this house so where would we get the 10% deposit for new home ?

Thankyou in advnace for any help

jenny_13

Hi

Can I just ask is the property still valued at £230k or is that what you paid?

Renting the house out might seem a good idea but there are lots of issues to consider such as periods when the house is empty and no rent coming, problems with tennants, tax etc.

How much do you intend to spend on the next house? Is it possible you could become almost mortgage free?

Do what's right for you.

Bella79

230k is what its worth now , if we sold for this we would have about 80k cash to take out, so we wouldnt be morg free on next one

jenny_13

It's upto you but personally I don't think I could be a landlord and I personally want to mortgage free asap.

Have you asked your lender if they'll be willing to let you rent out the property?

angelfire

Are you sure the property is worth £230k now? Looking at some of your old posts you only bought the property brand new last year - last May you stated it was valued at and you were paying £215k? Has it really gained £15k worth of value in less than a year during the recession?

Bella79

well thats what 3 estate agents have told us , i know i was a bit shocked too , but we did get it quite cheap at the time

Radiantsoul

I would sort of stick it out. You have only lived there seven months...

Will it really be easier to sell than rent. The issue would seem to be that if you can't rent it out then it is going to be costing you £600 plus per month in mortgage payments plus the potential interest on the £70k equity you have.

clutton_2

get some lodgers in ... they are legally easy to get out .... and their income is tax free income up to £8K (anyone know the exact amount ?)

MissMoneypenny

clutton wrote: »

get some lodgers in ... they are legally easy to get out .... and their income is tax free income up to £8K (anyone know the exact amount ?)

"If you already have a lodger or are thinking about letting furnished rooms in your home, you can receive up to £4,250 a year tax-free (£2,125 if letting jointly). This is known as the Rent a Room scheme."
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4017804

PasturesNew

In what way is it too big for you?
What is it about the house that's making it seem big?
If you're not using three of the bedrooms, just keep the doors shut and turn the heating right down to frost setting... and go in once a month to check the room's still there.

Are you finding it a pain in the neck to have to go into all the rooms twice a day to open/close all the curtains? If so, fit net curtains and don't bother

uk_property_expert

Speak to a mortgage broker about how you can use the equity in your property to raise a deposit for a new property. Without a deposit you will not be able to buy somewhere smaller.
Using the equity and borrowing more will mean paying more. If you sell to raise the deposit then you will probably have a early redemption penalty of around 6%. You could rent somwhere smaller and get consent to let your property getting more rent for yours than what you you pay out but your building society may charge at best a fee or at worst ask you to switch to a different product. You could use the extra rental profit to overpay your mortgage within the limits that the building society allow cutting years off the mortgage