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Selling house: keep mortgage or pay off & rent???
smudge33
Posts: 34 Forumite
Hi! please excuse this looooong post, I'll try to be brief:
DH and I bought 4/5 bed victorian terrace in nr Edinburgh coastal town in autumn 2008 after Dd was born. Long story short, work meant it didn't suit (20 min train from Edinburgh but DH has awful hours). We returned to our unrented out flat in Edinburgh & have been happy here til we looked at schools & nursery. Coastal property has been rented out for a year, now our tenants are leaving to buy their own place round the corner! Mid-April, it will be empty.
We have a 305k interest only mortgage with v low rate (0.5% above BoE base rate tracker) on property valued at 355K in late 2008 (25k below original asking price). Surveyor valued it at 355. Last year, next door sold for 350k, although it had 'garden room' and much smaller garden. Not sure what Home Report value will be but prob. 340-345k? Area not really affected by dip too much, just slowed down. (East Lothian)
DH is 50, self-employed architect (oh joy), I am a painter but at home with DD so we are not likely to get that type of deal again - if we were to try and borrow that just now, I think we'd be paying at least /double/ which we could, almost, manage, without me getting a job.
So: we want to sell, accept that we will 'lose' on it but don't want to try and rent it out again because we need to move from our current part of town to closer to DD's nursery, where property is (wait for it) twice as expensive. We're keeping our current flat (60% LTV) for a few more years in case it all goes tits up and renting has really picked up here, so it'll wipe its face no problem.
Should we
1. keep the mortgage deal we've got, keep our fingers crossed we get enough from the sale for a 15% deposit and tighten our belts when rates go up (to rent somewhere would cost at least £300 per month more than our current mortgage!)
2. pay off the mortgage, pay higher rent and hope we'll be able to borrow again to buy in the future (safer in the short term?)
3. keep the mortgage, borrow a bit against equity in current flat (raising the LTV to no more than 75%) and get a bigger deposit for new house, where we'll have to stay for at least length of DDs schooling
(by which time DH will be 70 and not interested in moving LOL!!)
SOO sorry this is a ramble. I've not been able to sleep waiting to hear from our tenants who I like and have been great but want to settle themselves and their 4 (count em) kids... I should add that the Edinburgh market is extortionate compared to the rest of Scotland and hasn't suffered terribly in comparison with a lot of areas in the UK. It isn't a total bubble but it is different.
Cheers!
DH and I bought 4/5 bed victorian terrace in nr Edinburgh coastal town in autumn 2008 after Dd was born. Long story short, work meant it didn't suit (20 min train from Edinburgh but DH has awful hours). We returned to our unrented out flat in Edinburgh & have been happy here til we looked at schools & nursery. Coastal property has been rented out for a year, now our tenants are leaving to buy their own place round the corner! Mid-April, it will be empty.
We have a 305k interest only mortgage with v low rate (0.5% above BoE base rate tracker) on property valued at 355K in late 2008 (25k below original asking price). Surveyor valued it at 355. Last year, next door sold for 350k, although it had 'garden room' and much smaller garden. Not sure what Home Report value will be but prob. 340-345k? Area not really affected by dip too much, just slowed down. (East Lothian)
DH is 50, self-employed architect (oh joy), I am a painter but at home with DD so we are not likely to get that type of deal again - if we were to try and borrow that just now, I think we'd be paying at least /double/ which we could, almost, manage, without me getting a job.
So: we want to sell, accept that we will 'lose' on it but don't want to try and rent it out again because we need to move from our current part of town to closer to DD's nursery, where property is (wait for it) twice as expensive. We're keeping our current flat (60% LTV) for a few more years in case it all goes tits up and renting has really picked up here, so it'll wipe its face no problem.
Should we
1. keep the mortgage deal we've got, keep our fingers crossed we get enough from the sale for a 15% deposit and tighten our belts when rates go up (to rent somewhere would cost at least £300 per month more than our current mortgage!)
2. pay off the mortgage, pay higher rent and hope we'll be able to borrow again to buy in the future (safer in the short term?)
3. keep the mortgage, borrow a bit against equity in current flat (raising the LTV to no more than 75%) and get a bigger deposit for new house, where we'll have to stay for at least length of DDs schooling
(by which time DH will be 70 and not interested in moving LOL!!)
SOO sorry this is a ramble. I've not been able to sleep waiting to hear from our tenants who I like and have been great but want to settle themselves and their 4 (count em) kids... I should add that the Edinburgh market is extortionate compared to the rest of Scotland and hasn't suffered terribly in comparison with a lot of areas in the UK. It isn't a total bubble but it is different.
Cheers!
0
Comments
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0.5% above BoE base rate tracker
Keep that deal at all costs.
It's inconceivable that you'll be able to get a mortgage like that again, it's a once in a lifetime opportunity.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Coastal property has been rented out for a year, now our tenants are leaving to buy their own place round the corner! Mid-April, it will be empty.
How much are you renting it for currently?
How much do you *need* to rent it for to cover the mortgage?
How much are you willing to drop the rent and subsidise it yourselves in order to attract a new tennant and keep the property?0 -
Hi Fiddlestick & Hamish
We rent it out for £850 per month and the mortgage is currently £645 per month. I've been putting the extra money into savings which we blootered to pay the stamp duty, rather than borrow it.
I'd be more than happy for the rent to stay the same or a bit lower, no problem, and we've had a lovely family there who just wouldn't be able to get a house that size themselves, so it's not about making money.
I think we're unhappy about having so much debt to be honest, especially given it's interest only right now...
p.s. I double posted, because I didn't see the 'mortgages' board. Doh.0 -
HAMISH_MCTAVISH wrote: »0.5% above BoE base rate tracker
Keep that deal at all costs.
It's inconceivable that you'll be able to get a mortgage like that again, it's a once in a lifetime opportunity.
Thing is, it's interest only - if we want to fix, it'll zip to one of the new and improved rates :shocked:
Should we still keep it? That's my gut feeling, even if things are a bit squiffy for a while...0 -
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It's in Dunbar - beautiful house, great part of town (near tennis club, swimming pool, park, sea cliff walks... gorgeous :-)!) and we're just not sure about hanging onto it for another year or so in the hope that we can get back what we bought it for. It's the knowledge that, if it all went wrong, we'd be liable for /three/ mortgages plus rent. !!! Highly unlikely but it doesn't hurt to look at the worst case scenario.
If you know someone looking to buy or rent please let me know ;-)0
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