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Sell or rent out?
jennifernil
Posts: 5,827 Forumite
Our student daughter "owns" her flat, we guarantee and pay the mortgage and we, she, and her brother all contributed to the deposit in order to get her onto the homeowning ladder. She rents out 1 room at the moment and this covers half the mortgage.
In 6 months time , once the 3 year discounted period on the mortgage is up we plan to repay the loan using cash borrowed against our house at a more favourable rate, thus leaving the flat mortgage free. This will give her the flexibility to sell it at the best time, or rent it out without needing to involve a lender.At that point she will still have 18 months left as a student.
We have the necessary agreements signed and lodged with our solicitor to ensure everyone's financial situation is safeguarded when the property is eventually sold, so there are no worries on that front.
My questions are................
1. Is this a good plan, or are there problems we haven't thought of?
The situation is going to be further complicated by the fact that she now thinks she would like to spend some time (maybe a year) travelling before settling down and getting a job. ( Exactly how she plans to finance this she has not yet revealed!) So...
2. Would it be better to keep the flat and rent it out while she is away, or sell it and put the profits in the bank?
3. The flat would be easy to rent out and the rent would cover the costs, but would it be a lot of hassle?
4. Is it a bad idea to "step off the ladder" even for only 1 year?
5. Would she have to pay tax on the rental income?
Any advice would be appreciated.
In 6 months time , once the 3 year discounted period on the mortgage is up we plan to repay the loan using cash borrowed against our house at a more favourable rate, thus leaving the flat mortgage free. This will give her the flexibility to sell it at the best time, or rent it out without needing to involve a lender.At that point she will still have 18 months left as a student.
We have the necessary agreements signed and lodged with our solicitor to ensure everyone's financial situation is safeguarded when the property is eventually sold, so there are no worries on that front.
My questions are................
1. Is this a good plan, or are there problems we haven't thought of?
The situation is going to be further complicated by the fact that she now thinks she would like to spend some time (maybe a year) travelling before settling down and getting a job. ( Exactly how she plans to finance this she has not yet revealed!) So...
2. Would it be better to keep the flat and rent it out while she is away, or sell it and put the profits in the bank?
3. The flat would be easy to rent out and the rent would cover the costs, but would it be a lot of hassle?
4. Is it a bad idea to "step off the ladder" even for only 1 year?
5. Would she have to pay tax on the rental income?
Any advice would be appreciated.
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