Advice needed: Sell or stick at it!

madfish_3

I bought our first house 8 years ago at the perfect time for £36000. 7 years later with the house fully renovated and a new baby we decided to move but were advised to keep the house we have and rent it. Cut a long story short we did and now with our new house included we have a mortgage of 138000 and 2 propertys. Problem is as its only me working and being used to a mortgage payment of under £200 i think we may have bitten off more than we can chew as the repayments are pushing £1000 per month with £500 being paid from rental we are really struggling. Do you think I should grit my teeth and carry on or sell the rental property as it would leave me a mortgage of 25-30k and a chance to have a comfortable life instead of living on the breadline for the next 10 years.....

Just to add both propertys added together are currently worth approx £220-230K

garysletters

most people in the buy to let market would almost never sell, but would remortgage. however, this assumes that the rent more than covers the mortgage outgoings.

It sounds as though yours may not.
Whats the houses value.
what rent do you get
how do you see the market value going. (this matters only if you intend to sell)
is it easy to let or do you have long voids

Lots of info is needed to make a call on selling or holding. There is no right or wrong answer usually, its an individual matter.

Spendless

Hi
we have been in a very similar position. The house i bought as a single working person wasn't big enough for a husband and child.

My house was in neg equity (anything upto £10.000) and had been for years. Money we didn't have.

We were able to buy a larger property in need of some work
and we rented my house out. After 2 years the tenants left. The house market had gone up by then and we now had equity in my house. I sold and used the profit from my house to have work done on the house where we now live.

Several people suggested we hung onto my property and continued to rent it out but i had several reasons to not do it. These were

Having lived so long with neg equity (6 years) i was a bit bothered if the market suddenly went down.

The property was starting to need some money spent on it to maintain it.

It was in a deprived area and i was worried about how likely i was to find new tenants.

I don't regret my choice but it's down to you.

Is your partner likely to return to work?
Are you likely to have another child so you'll be a one income family for a bit longer?

Best wishes in whatever you decide

Debsie

Hmmmm, I think you may need accounts/tax advise here. As you moved out of your original house years ago you may have lost your main-residence-tax-exemption which means if you sell it you will be liable for CGT. This could be substantial. You can sell the property you are in now & not pay CGT but I don't know how long you would need to be back in your old house for this to be accepted at your main residence for tax purposes. I imagine this area of tax is very straightforward but people must get caught out occasionally.
Good Luck!