Sell or let question

GraniteMum

Hi all,

I am not looking for an answer to this, but rather help in how to work it out and justify my answer. I need to be able to break down the bigger picture into smaller parts but I cannot see where to begin.

Here is the problem

property 1 is worth £150,000, can be rented out for £500 a month easily enough. Probably more. Current mortgage is £40,000 and has 11 years to go

property 2 is the real home, mortgaged for £90,000 and has 10 years to go.

So if property 1 is sold it will clear both mortgages and maybe have £10,000 left over after all fees. Plus monthly outgoings drop by £1300 a month.

So if property 1 is kept, outgoings remain at £1300 a month but there is an income to offset of at least £500 - minus tax of course!

So far it looks like an easy one to answer, but if the property owners have no financial diffiiculties and are happy to play the waiting game, in 10 years time the monthly outgoings drop by £800 and in 11 years time the monthly outgoings drop by another £500 as the mortgages are paid off. So in 11 years time they own outright 2 properties with a monthly income of £500-tax (not allowing for inflation).

The final part of the question then adds in a bit about mortgage endowments but that is something I will (hopefully) be able to think clearly thorugh when I have the first parts dealt with.

ianian99

sell it buy a £100,000 house and rebnt that out for £500 a month

MickMack

What about Capital Gains Tax if you sell one of the properties???

Have you considered this?

MickMack

I would say, hold on to what you have, from a quick glance at your explanation it sounds like you are not struggling to maintain your current financial state so it makes sense to me to hold on to the properties and in 11 years you have alot of equity and a regular rental income.

Unless house prices take a plunge in the next decade ?????