Advice please, sell or rent out???

jen14

Hi guys, would really appreciate your views. When I ask my friends and family it just goes over their heads!!

Just to give you some background

Bought our first house in Manchester for 137K in June 2007 (Ouch, I know).
My husband got a job in West Mids shortly after and has been working between two locations for years.
We made big over payments and have got mortgage down to 112K

I finally got a transfer with my job and we are now living together in rented house in Leamington Spa and very happy here.

House in Manc was put on market this March for £130K (on estate agents advice) a month ago we lowered it to 120K.
We've only had three viewings and no offers/further interest.

Ultimately we want to stay in the west mids and eventually have kids, which would mean me going to part time. We dont know whether to really push on the sale of the house and get rid of it, or to rent it out and keep it an an investment.

My concerns are that we can't sell it for less than 115K as we would have to fork up money for ea fees. But...... if we keep it on will we be able to get a second mortgage in the future?

I really want to be able to buy a house down here within 2 years as once I've had kids my earnings will half and I don't think we'd get lent as much as we need.

We have a combined income of 70K and after a year saving we could manage a 15 -20% deposit on a 200K house.

According to Nationwide's affordability calculator they would lend us another 200K as a second mortgage but after reading some of the stories of refused loans on the forums I know that may change.

Here's the prop we're trying to sell

rightmove.co.uk/property-for-sale/property-18214287.html (wont let me put www bit in as new member)

Sorry this is so long!!!

Any opinions welcome

CLAPTON

do you want to be an accidental landlord? not everyone wants the hassle.

what sort of rent could you expect from the property?

will it pay the rent and other costs?

if so you could look at converting the mortgage into a BTL (in due course) before buying a property in the west midlands

jen14

I think we could get 575 rent and we would use a letting agent that charges 10%.
Because were on a 2.5 SMR this would cover our mortgage but only just.

We don't want to be land lords but unless we can sell for 115K we might have to as I dont think its a good idea to leave it empty.

I would never rely on the rent tho so if we got nightmare, non-paying tenants in we could still afford to pay the mortgage.

Would we get a buy to let mortgage with so little equity in the house?

Thanks:)

GAH

It sounded to me from your first post that you don't want to be a landlord. It is a lot of work.

Even if you only got £110k for the house, surely it would be better just to get rid of it, even if it costs you a little bit

jen14

Thats what I've been thinking, I'm just really scared that I've bought at the top, will sell at the bottom and by the time I've saved for a new deposit the market will be on the up again!!

I know it may still go down way further so this is an option I think I might have to take:(

knowing my luck if we sell it, in two years the property market will be back to full strength:mad:

theartfullodger

If you can't afford a crisis/problem/emergeny repair/tenant from hell then flog it & walk away.

You can lose money renting out property ....

Good luck in't future!!

GAH

The property market is unpredictable, but its on a slow gradual slide down and will continue to do so. I don't think we will see the heady heights of 2007 anytime soon.

jen14

Thanks for the advice

What I want to hear was, 'Keep the house on, you'll make loads of money' and 'of course you'll get a second mortgage and then that house will go up in value too' or 'you'll be able to retire by the time you're 40'

Ha Ha, in my dreams

jen14

I've just been reminded that BBC are moving a lot their operation up to Salford, my house is 10 minutes walk from a tram stop so I wonder if that will get more buyers into the market?

G_M

jen14 wrote: »

I think we could get 575 rent and we would use a letting agent that charges 10%.
Because were on a 2.5 SMR this would cover our mortgage but only just.

We don't want to be land lords but unless we can sell for 115K we might have to as I dont think its a good idea to leave it empty.

I would never rely on the rent tho so if we got nightmare, non-paying tenants in we could still afford to pay the mortgage.

Would we get a buy to let mortgage with so little equity in the house?

Thanks:)

You need to do a proper budget.
Is £575 realistic? OK now multiply by 10 (NOT 12) for annual income. The property will be empty sometimes. Some tenants don't pay rent....
Running costs: EPC, Gas certificate etc etc
Agent fees
repairs
Mortgage: Some lenders will insist on switching you to a BTL mortgage: more expensive. Some will just add a one-off fee for Consent To Let
Tax: yes, rent is income so is taxable.

Read a good book to help you do a FULL budget.
Oh, and remeber the tenant from hell who stops paying completely, takes 8 months to evict, and then trashes the place when he leaves. Can you still pay the mortgage through all this......?

More here.

poppy10_2

Also - what happens when interest rates rise from their 500-year low and your monthly repayments go up from the current SMR of 2.5%