Sell or rent out house to move to bigger property

flutterby123

Hi,

It's my first time posting on here but we are confused about the way forward.

We currently live in a two bed terraced house and desperately need more space. We have two children of our own and I work from home as a childminder. We have very little room downstairs and are rapidly outgrowing the house.

There is an empty house nearby that would be perfect for us. It has three large bedrooms, front and back garden and a separate playroom for my work. The owner of the house is a friend of a friend and has been tidying and decorating ready to sell. Over the weekend he has offered it to us on a rental basis with a view to us buying when we are able to get a mortgage.

We know that in an ideal world we should stay where we are until we can get the bigger mortgage but we desperately need the space now. My husband and our own children don't have anywhere to go when I'm working and this other house would suit all our needs.

I think we've made our minds up about going for the house but our dilemna is what to do with this house - rent it out or sell it?
We reckon our house would be valued at about £85,000. Our mortgage is £62,000 with monthly payments of £354. Rental properties similar to ours are being rented out for around £450/month.

We wouldn't get much profit (if any) from renting ours out but at least we'd still own a house. We both work full-time, don't have any experience of renting out and don't have much in the way of savings for repairs/maintenance etc. This makes me think we should sell.

Does anyone have any similar experiences? Any advice would be greatly appreciated.

Werdnal

This question is asked here a lot!

There is a lot more to know about renting your house out, and I will try to give you some pointers!

First your mortgage will have to change to BTL or you may be able to get consent to let on the same loan, but they will add extra costs to cover the additional risk of you not living there. They may also refuse - have you asked?

House insurance will also have to change to a Landlord based policy - extra costs here possibly.

Then you have all the legal obligations of letting - gas safety checks, EPC etc. Are you planning to use an agent - extra costs again. Would you be able to afford the mortgage and cover your own living expenses if tenant stopped paying or you had a gap in lets? Could take 3-4 months to get a bad paying tenant evicted - are you financially stable enough to cope with this?

Then you have to declare your rental income for tax - doesn't matter if you are paying a mortgage, as only the interest portion of the payments is allowed as a tax expense.

Would you be able to cope with strangers living in your much loved former home and not looking after it as well as you do? Would you be prepared to attend to a burst pipe at 2am, or have the spare funds available to repair the boiler within a reasonable timescale - and possibly compensate your tenant or pay to rehouse them if the place was not habitable for a short time whilst work was done?

If you are only now contemplating letting, you must find out everything you can before you jump into it, as it can cost you dear if you get it wrong. Read some of the horror stories here and check out other threads along the same line for further advice.

flutterby123

Thank you for your reply.

We have asked the mortgage company and they waid they would change to a buy to let mortgage but didn't go into figures. They said the whole process would take a month. I have researched a little and understand the monthly payment would more than likely increase.

I guess I've been brought up to appreciate the value of owning your own home over renting but we simply can't carry on living in this house the way we are now. The only way we could do that would be if I went out to work instead of working from home but I'm not prepared to do that as I love what I do.

Sounds like selling may be the best option for us.

geoffky

If the market tanks,So many amateur landlords are going to high and dry.. They never give this a thought..Because its my pension innit..

and lp i have pressed the spam button for you...