Should I try and sell or remortgage?

missmoon

I own a flat which is being rented out through an agent.
Cost £120k, morgage £96k, valued today at £125k, rent £625pm

The current mortgage is a residential mortgage with an agreement to let until January 2012 (due to relocation). It's a repayment mortgage at £625 a month, which means all other expenses are coming out my pocket - it costs me about £164 a month, maybe more when you include renewal fees etc.

I have found out I'm expecting a baby later in the year (I'm in my late 30's so this was something that could not be delayed). So I'm looking at my finances to try and save some money as i will be on very small income while on on maternity leave (basic SMP for me) as my OH doesn't really earn much, and 20% of what he gets goes to CSA for his children from a previous marriage.

If I sell, I would release the equity which would cover my expenses during maternity leave, which would be handy but then I will have lost this investment which I was hoping would someday become the deposit for a family home where I live now.

If I contine to rent and remortgage as interest only, it would probably mean all expenses covered by rental income.... but I won't be left with any capital to live off during my maternity leave.

What should I do?

I've worked out that we will be £900 short a month to cover our direct debits - an that's before food costs!

Doozergirl

Sell Flat

It sounds like the flat is only the first of your worries.

You are achieving nothing by letting the place out, and in fact you're liable to be going backwards if you're £900 a month short and subsidising. Even if you go IO, there is expenditure you have to find - insurances, gas checks, service charge and ground rent, general maintenance repairs and voids when it's empty - it sound like that could break you. House prices won't be rising to any degree for a long time to come, this flat will continue to be a burden to you. I wouldn't be worried about losing the "investment".

It's a no-brainer to sell it, IMHO.

Are you in debt at the moment? How long will you be on maternity leave? It sounds like you might have to go back pretty quickly to keep your heads above water.

CloudCuckooLand

Sell Flat

missmoon wrote: »

I've worked out that we will be £900 short a month to cover our direct debits - an that's before food costs!

:eek:

Sell. No brainer.

missmoon

I do have debts (got a £10k loan) that is in control and will be repaid in 3 years time. But I can see that they could soon become out of control if I do nothing about it!

I only asked on here as my friend thought I was mad to consider selling the flat and just wanted peoples opinions.

Yes, I will be returning to work asap, it's my first so I've no idea how this will change my life! Just wish OH had a better paid job (he is looking) as at the moment I earn double what he does. He may have to become a house husband!

Thanks