Keep the house or sell it?

keith_45

I am 35 years young and have a mortgage at 0.79% + base rate. I owe 75k and the house would sell for 115k. This house is solely in my name.

I'd also like to buy a house worth approx 250k with my fiancee. I have about 45k in savings. Partner has 2k. However, this 45k is also my current savings for retirement. I have no separate pension.

So, I'm thinking that using the 115k house as my "pension fund" could be an idea, speculating that the rental income of about £500pcm would cover the mortgage even if rates went up to say 5%. The offset is that it would cost me money if the house is empty and there are associated costs with having a rental property.

So, the options are to sell the house and take the money and use it as a deposit on a new house, or to take up a mortgage for the new place with 85-90% LTV.
My earnings are currently 45k and fiancee is on 30k, both in "secure-ish" jobs.

1) what would you do in this situation? Keep current house or sell it?
2) would we than be first time buyers for the second mortgage?
3) would it be possible to keep the current mortgage and not tell lender? What are the risks? I doubt they'd give me such favourable rates as I currently enjoy. But I know this is also probably illegal!!

It's really a big decision,but I see it that house prices are currently low, so buying a new place at low prices and keeping another house should be the best but riskier option

getmore4less

You want to try to keep the mortgage rate.

Will they give concent to let(if not the rental numbers change)
Do you want to become a landlord?

Will they let you port the deal and top up, what rates for the topup.

Any penalties?

Will port/topup be better than a new mortgage from cuurent or another lender

£500pm on a £115k house is gross yield of 5.2%, a bit on the low side after costs voids, remember you need to accounts for interest on £115k worth of borrowing.


How realistic is selling your place how long do you think it will take.

Thrugelmir

Personally I would remain where you are for the time being and "make hay while the sun shines".

Any profit made from letting the property will be subject to income tax. On your salary level that's 40%. So not tax efficient.

So while you remain in your existing property.

Save maximum cash into your ISA's ( earning a higher rate than your paying on your mortgage)

Start a pension plan.

Use regular saving plans for any other spare cash.

Worth checking if your lender will allow you to port your mortgage.







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keith_45

Thanks. I asked the lender and they said it is possible to port the mortgage but only at 70% LTV which would put too major a dent into my savings.
I also think upon reflection that keeping the house is too risky if there is a long period without tenants or if something out of our control happens.

Thrugelmir

keith_45 wrote: »

Thanks. I asked the lender and they said it is possible to port the mortgage but only at 70% LTV which would put too major a dent into my savings.

You will only be able to port £75k at your existing rate.

The additional borrowing will be at current rates.