to buy or not to buy, that is the question

rolo

Hi all, looking for advice or words of wisdom in the following scenario...
We are thinking of moving home so as to be in a better town for our daughter's education. Unfortunately house prices there are quite high. One option we've thought of is to sell our current house which will give us about £250,000 in cash after clearing the mortgage/fees etc, and then invest in a safe, high interest monthly interest paying account and use that to pay for a rental property. Does anyone think this is a good idea or a bad idea?
I'm thinking that house prices can't really go too much higher, if anything they could go down a bit so it's possible that we wouldn't lose gains with property. Plus if our capital is paying the rent then that would mean much cheaper outgoings each month. Another bonus I can see is that if property does go down we'd be in a great position to re-enter the market.
Has anyone here done this? Am I missing any points?
thanks

Dan29

It could be a good idea. However people were saying on this and other fora a couple of years ago that they were selling to rent. As we now know, prices continued to rise over that period, so those people could now be worse off.

Personally I do think house prices will at current levels or lower in five years' time, but my basis for thinking this is as good as most people's, i.e. guesswork.

Angela_D_3

We sat down and did the maths and it costs £150k to put three children through private education or £300k to borrow £150k required to move into the catchment of a good school. We choose the private school for more reasons than financial but there's some food for thought.

abaxas

Just to add...

Good results does not mean a good school. It's always dependent on the quality of the kids (which is usually dependent on the parents).

Eg a reasonably performing school in a really crappy area is usually a much better school than a performing school in a good area.

Also bare in mind class sizes, 'good' school tend to have larger class sizes, this actually may disadvantage your kids, especially at younger ages.

If you have any teacher friends, get them to input into this. Note that a head teacher is secondary education is usually not invloved with the kids education so would not be able to give any advice on this.

Sorry to burst people's bubbles, but exam results and ofsted means little to guarentee your kids education. Good teachers do that.

(I'm not a teacher myself however the rest of my family are! Luckely I avoided a career in teaching, mainly due to family advice)

rolo

thanks for replies so far, we're ok with all the issues re schools, it's the using capital to rent question that causes confusion. I'm really hoping that other people here have done it and can offer some tips.

mrsS_2

make sure you factor in the tax rates when you do the calculations-obvious point I know but if you are paying tax at 40% the return on your £250k may not cover your rental costs. Also cost of 2 moves need to be budgeted for.

Is it a good idea?

Brilliant idea if house prices crash
Useless idea if they go up at 10% a year

there is some debate on what is going to happen-and no one really knows, however adamant they are about impending price crashes!

still a good idea if you havent found somewhere to buy yet as you are in much stronger position in the chain when you eventually come to buy.