A dilemma please help

taba

We have just seen a house that we would like to purchase, at the moment we have two properties, the first Value £ 160k which is paid for and is rented out, the second our home value £ 220k, we have a offset mortage of £ 90k and savings of £ 35k. We have always thought of the rented property as our pension the income is £ 650 per month. That would sell immediately, our home may take longer to sell due to its location.

The house is £ 250k and will need about £ 25k spent.

Our options

Sell both properties, we could but the property outright and be mortage free and maybe but a smaller BTL.

Sell our home leave the rented property this would result in an increase to our mortgage.

Sell the rented house and rent out our current home, we would receive a bigger rental income approx £ 800 per month but would still have a bigger mortgage.

What would you do?

Thrugelmir

Sell up and be mortgage free.

Then save money into ISA's , Pension etc and look forward to a comfortable retirement.

The future is uncertain at the moment so to be debt free is ideal.

Conrad

If it were me I'd sell the current rseidence and leave the B2L in situ as I suspect the income yield in relation to the price you originaly bought it for might be ok and it's nice to have an additional income dropping into your account each month.

I don't trust pensions Thrugelmir. As you say it's an uncertain world. Imagine a big catastrophe like a world war or significant weather change - pensions could be wiped out in a stampede, afterall they are merely stocks n shares held by insurance companies that themselves are exposed to risk.

Far better to paddle your own canoe.

taba

Thank you both for your replies, the idea of being mortgage free is very appealing but neither of us have very good pensions, I think we may sell both properties and hopefully have enough to buy a cheaper BTL as we could keep some of our savings and use some for a deposit.

dimbo61

Buying and selling properties is not cheap!
You have a property which you rent out but have no mortgage on it ! so lose the interest payments you could put against your tax bill !
you need to see an accountant and a whole of market mortgage broker who deals in BTL,s

Henry_P_Chester

Conrad wrote: »

I don't trust pensions Thrugelmir. As you say it's an uncertain world. Imagine a big catastrophe like a world war or significant weather change - pensions could be wiped out in a stampede, afterall they are merely stocks n shares held by insurance companies that themselves are exposed to risk.

Far better to paddle your own canoe.

And how would your property fair in such a climate?

It could quite easily go the way of Ireland/USA where you can't give them away!

Thrugelmir

Conrad wrote: »

I don't trust pensions Thrugelmir. As you say it's an uncertain world. Imagine a big catastrophe like a world war or significant weather change - pensions could be wiped out in a stampede, afterall they are merely stocks n shares held by insurance companies that themselves are exposed to risk.

Far better to paddle your own canoe.

If the UK economy tanks then property will not be immune.

With a significant investment in one property already, then it is better to correlate the risk with a mix of investments. Rather than having all your eggs in the same canoe. When you suddenly hit the rapids more than likely you'll capsize.

getmore4less

£650pm on £160k is 4.875% gross yield

What are you nett after all costs and tax?

taba

I remortaged our main property and paid off the mortgage on the BTL so I do claim tax relief on part of our mortgage. Nett cost is approx £ 400 a month.