To Sell or Let flat when moving

GBY

I am moving from my flat in London and can't decide whether to sell the flat or let it out. The monthly payments are about £370 and it will rent for £650. I have to consider though, 8% letting fee and the monthly service charge of about £50, effectively £100 a month in total. However, should I let it I would re-mortgage to the maximum allowed (85%) which will most likely increase monthly repayments over the rental income. I plan to use the equity as a deposit on a new property so would like to release as much as possible.

I am after a hassle free life so my question is whether it is worth letting the property or just to sell it and take the money? Would I need to let it out for many years before seeing any reward?

Any advice on this matter would be greatly appreciated.

BobProperty

GBY wrote:

....should I let it I would re-mortgage to the maximum allowed (85%) which will most likely increase monthly repayments over the rental income.....

Can't see anyone lending you the 85% then. Usually mortgage companies want the rent to be 125% of the mortgage interest.

lush_walrus

If you really want a hassle free life then I would say sell. There is always some sort of hassle around being a landlord!

clutton_2

why do you have to remortgage to 85% ? - why not to 75% the figures might work better for rental then.

Tassotti

What is the value of the property?

We can then crunch figures and see if it stacks up

GBY

It was my understanding that lenders will only lend to 85% of the value of the property to be let. I would like to use as much equity as possible for a deposit on a new house in order to minimize the amount required to borrow for a new property. I am more interested in freeing up equity than letting the flat. However, if people are of the opinion that the benefits from letting far outweigh selling I would have to seriously consider this.

GBY

Tassotti wrote:

What is the value of the property?

We can then crunch figures and see if it stacks up

Thanks for the suggestions.

The value of my flat is about £145,000. If I pay off my current mortage that will cost me £54,000 including any fees, a difference of say £90,000. Combined with my partner's savings of £40,000 I should be able to have £130,000 as a deposit, should I sell the flat. As things stand I have about 18 years left on the existing mortgage.

Re. letting. £650 pcm out of that I have to pay £50 a month service charge and the letting fee which is a lump sum but equates to £55/month.

I am looking to buy a property in the region of £250-275,000.

Tassotti

To be honest, if you want the equity, then sell it.

It does stack up for an 85% 4.88% 18 month Fixed BTL.

However, Loan Amount Would be £123250

Int Payments on BTL would be £503 plus your costs is £608.

Doesn't leave much for voids, maintenance, insurances and the like.

Might even cost you money.

You will have approx 20K less deposit for new place.

realwildone

Youll probably find you cannot let it or sell it.

GBY

Thanks for all the advice. It does indeed look like selling will be the best option.