Should I rent and buy or sell and buy?

Eazynow

Hi there. I currently own a home which has a mortgage with an outstanding balance of about £95,000 left on it over 10years. My partner and I are looking at moving in about a year and I'm trying to decide if it's better to sell this property or rent it out. I reckon it's worth around £150,000.

I have a very good paying job and savings of around £50,000.

A friend was mentioning it may be better to release the equity in this house, rent this property out and use the rental payments to pay the mortgage to minimise tax outgoings.

I have been brought up on the idea that even in tough times its worth owning more property, but does this sound wise?

The current house is not in a great area however where we move to would be a lot nicer.

Is it better to invest more money in a nicer property in a nicer area or have a smaller place but also have the old property?

Thanks in advance and have a great christmas everyone!

Eazynow

Hi - has no one got any advice on this? I'd really appreciate it.

mackemdave

According to this mornings papers house prices are likely to drop by at least 10% this yearI was in a similar position to you the middle of last year and decided I would rent my property out rather than sell.....A HUGE mistake...tenats caused the house to be flooded by the time its going to be habital anything I would havemade in rent will be wiped off house price....my advice SELL SELL SELL

CloudCuckooLand

To turn your current place into buy-to-let, to rent it out, would need 25% equity. On £150k, that means £37.5k to be left in it as "security".

Making a maximum you could borrow - assuming the rent met their conditions - of £112.5k. You already owe £95k. So it would provide a fresh £17.5k in cash.

Not going to be much use to buy a nicer house in a more expensive area, when you want at least 15% deposit on the new purchase to get an affordable mortgage product. You are going to have to use savings to even start that scheme up.

So, unless you have some special long-term fixed savings product, earning around 4%+, is there much point paying 5% or 6% on a second mortgage for the new house? Or going for a cheaper tracker with interest rates about to go up at last?

Personally, I'd like the best house I can get for me. I've got to live there, 24/7...having a second place in an iffy area that may not sell for as much as I hope this time next year, or any year, would be low on my list of priorities.