Do I sell or keep my flat?

alainax

Hello!!

I have a small flat mortgaged. Valued at 55k, mortgage 42k.

I want to buy a house now, but have always said that i want to keep my flat and rent it out. (and to keep it as an investment for the future)

I earn 20k, my partner earns 28K, we want to buy a house at 135k.

We have no money for a deposit for the house, so could sell my flat to make up some of it.

Or we could plead to family to give us the deposit money.

My question is simple, is it worth my while hanging on to the flat to rent it out, or just get rid and move up the chain? and maybe buy a buy to let when we are better off?

Thanks for your help!

dimbo61

"we want to buy a house for £135K and have no deposit" therefore you cant buy your house
Have you got rich generous family willing to GIVE you a 20/25% deposit on a £135K property thats £27,000/£32,000 gift!
You dont give your income and if you are living in the flat now ( can you save big style each month £1000/£1500)
Putting down £13,500 deposit ( ie 10% and all the equity from the flat ) might get you a deal 90%LTV with your joint income

Pee

In your position, I think I would choose to sell the flat and use the money as the deposit on the house, esp as getting a mortgage is fairly difficult at the moment.

Renting out a property - which I do - is not that straight forward and although it works for me, it means that I always have to consider if the tenants moved out or lost their jobs and interest rates went up could I cover the mortgage.

alainax

dimbo61 wrote: »

"we want to buy a house for £135K and have no deposit" therefore you cant buy your house
Have you got rich generous family willing to GIVE you a 20/25% deposit on a £135K property thats £27,000/£32,000 gift!
You dont give your income and if you are living in the flat now ( can you save big style each month £1000/£1500)
Putting down £13,500 deposit ( ie 10% and all the equity from the flat ) might get you a deal 90%LTV with your joint income

Hi, yes we have no deposit as i said, but i aslo said the 2 potential ways which we are contemplating to raise the deposit.

I had worked on around 10% deposit, which we may be able to pull together from family. Or from selling the flat.

I do give our incomes....

We have worked out that with our free income at present we could afford the house.

alainax

Pee wrote: »

In your position, I think I would choose to sell the flat and use the money as the deposit on the house, esp as getting a mortgage is fairly difficult at the moment.

Renting out a property - which I do - is not that straight forward and although it works for me, it means that I always have to consider if the tenants moved out or lost their jobs and interest rates went up could I cover the mortgage.

Thanks for your helpful reply.

I am being more swayed to sell it, as it would be a large burden to have the flat empty and still paying its mortgage.
And also i dont know how difficult it would be to apply and get a normal mortgage for the house, and then change my flats mortgage to a buy to let, i dont know if that would be too hard a hit on my credit score!

dimbo61

Most BTL mortgage now require at least 25% deposit and lenders are being very causious about lending so I think you would struggle to get a £120K mortgage for a house while also having a £42K mortgage on the flat.
Now you could ask your existing lender for consent to let and if the rental income is 125% of the mortgage ( ie mortgage £500 a month Rent £600 a month ) they may allow this but I think you would still struggle with other mortgage.
Really you need to see a " whole of market broker" for help.
GOOD LUCK

TomSRC

If you can get finance from your family then you should consider going for it as its likely to be the cheapest loan you're ever going to get. You really want to be careful not to get yourself in trouble with unaffordable loan repayments. make sure you budget correctly!

bingibongi

Have you checked the terms of the lease on your flat - subletting might actually be forbidden.

Person_one

TomSRC wrote: »

If you can get finance from your family then you should consider going for it as its likely to be the cheapest loan you're ever going to get. You really want to be careful not to get yourself in trouble with unaffordable loan repayments. make sure you budget correctly!

I really wouldn't take this advice, if you fall on hard times and can't afford to pay them back it could cause all sorts of problems. It might be low interest, but there are other things at stake, you don't really care about maintaining loving relationships with banks!