Help: What should I do???

gemmylouise

Hi guys,

After some property advice:

I bought a flat in 2007 (when prices where at their peak) for £72,000 with a 10% deposit, my mortgage is £65,000 on interest only (£190 per month). It is currently rented out for £350 per month. I am renting a place myself to live in!

I want a new project, and have found a great one costing £65,000 (repossessed) one exactly the same but refurbished currently on the market for £110,000.

I only earn £21,000 a year, looked on Halifax and could only borrow a max of £110,000. Should I try and sell the flat for a break even or a loss to find a new project? I feel stuck, really want to move on, should I just be greatful the flat is rented out and making money!

HELP???

Thank you

Running_Horse

Getting stuck in negative equity in the high interest rate 1990s was enough to teach me a valuable lesson about building up equity and not buying more than I could afford. Not many people are predicting continuing house price rises or further interest rate cuts. Having lost once, are you really planning to jump in again so soon? And since when did they lend nearly five times income to people in negative equity? The tone of your post suggests you want to do it regardless, so maybe you should. What could possibly go wrong?

Jowo_2

Do you have permission from the lender to rent your original property or was it bought on a buy to let basis?

As you have an interest only mortgage what investment vehicle or method are you using to save to pay off the capital?

If you sell the first property and it has no equity, where will you find the deposit and refurbishment costs for the next one?

Lucywu2012

I think you had better keep it. In my opinion, nowadays, the price of the flat is keeping increasing, if you sold your flat maybe you can't buy another flat in the lower price. Then you will have to lose much money, don't you?

gemmylouise

...so a couple of you think I should keep it. hmmm. I've decided to get it valued, looking at others I wont be in negative equity, I should just break even and get my 10% deposit back. So the question is to stick (make a small but reasonable return being rented out) or give it up now and invest in a better property? hmmm

Of course I have permission to let my property out!!!

I have a mortgage offer lined up to lend up to £100,000

I think I'm going to sell, break even, put my deposit into a better investment.

Thanks for your questionning!!

gemmylouise

Jowo wrote: »

Do you have permission from the lender to rent your original property or was it bought on a buy to let basis?

As you have an interest only mortgage what investment vehicle or method are you using to save to pay off the capital?

If you sell the first property and it has no equity, where will you find the deposit and refurbishment costs for the next one?

I do have permission from my mortgagae company. My wages and rent income go towards paying off capital. I'm hoping I will get my deposit back to reinvest.

gemmylouise

Lucywu2012 wrote: »

I think you had better keep it. In my opinion, nowadays, the price of the flat is keeping increasing, if you sold your flat maybe you can't buy another flat in the lower price. Then you will have to lose much money, don't you?

I might keep it because it isn't losing money although I want a new challenge. If I sold and broke even I could then re-invest in a better property for the same price. hmmm

arby

you say one is on the market for £110k? you do realise this means nothing, right? What have recently sold ones gone for? Also, how are you planning on refurbishing it? If you buy it for £65k you won't be able to borrow the £100k mortgage you've had pre-approved; you'll only get £65k minus your deposit.

Why do you say you feel stuck? You have an extra monthly income with almost no work to do. At best, you'll end up in the same situation as you're in now. At worst, you'll bring yourself years of misery. Why don't you find a hobby to fulfil your need to be doing something.

azkaban420

Hi there, don't know if I'm missing something but you're currently renting somewhere else yourself? Do you have a really low rent that still allows you to make profit from the one you're letting? Otherwise, surely it's pointless renting out the property with a really low mortgage on it when you could live in that one instead? Sorry if I've got the wrong end of the stick but can't get my head round it!

Az