Letting to rent

jamels2

I am letting out a 2 bedroom property long term (800 a month), and until now have been lodging at a mates (400 a month). I have to move out at the end of next month and wondering what to do.

I would like a flat to myself, but don't need 2 bedrooms (I wouldn't want a lodger), and as my tenants want to stay for a few more years I want to leave it as it is.

So I have a couple of options:

1. rent a one bedroom (600 a month) and keep on overpaying on my current mortgage. once it's paid off i've got a nice income from the rent.

2. buy another property (one bedroom), this sounds good, but i worry i'd be taking on too much. what if house prices go down (although could go up) and what if interest rates go up etc.

so basically wondering which option makes most sense, what are the pros and cons etc. would be very grateful for any replies as i am no expert in property.

want2bmortgage3

I'm in a similar situation, and I'd say go with the first option. As long as the rent you are receiving on the property you own is more than what you will spend for your own place to rent then it sounds ok.

Unless you want to end up with several properties rented out and run it like a buy to let business, which could be a full time job in itself, then I'd say stick with one property and keep overpaying the one mortgage.

jamels2

Thanks Want, I don't want to become a property tycoon, I think one mortgage is enough. I should still be able to overpay on it. At the end of the day I can rent out my 2 bedroom with no mortgage and that alone will pay my own rent and probably bills as well.

sandsni

I would check with HMRC about the tax implications of each of your ideas before deciding on anything. I'm assuming you're already declaring your current rental income for tax purposes.

jamels2

yeah i pay income tax on any profit i make , after i deduct the interest on the mortgage.

with the housing market stagnant, and interest rates low, what is going to happen?

should i buy another flat while prices are relatively low? or should i "half buy half rent" and rent a new place while letting out the flat i own?