Idea needed Sell or Rent

tara2013

Hi,

I purchased a flat at peak of the market in 2007/08 valued at 135K. I pay variable rate mortgage.

I was thinking to sell this flat to buy a 2 bed house.

The two local state agents have valued it 120K to 125K in the current market situation.

The state agents suggested if you put this on rent then you can get up to 650 per month.

I can understand I will have to switch to Buy to Let mortgage with at least 25% deposit.

I can arrange 25% deposit for buy to let mortgage and also have another 20K cash which I will use to buy 2 bed house for my residential purpose.

Would it be good idea to rent out my current flat or sell it?

Also I am high earner and I can understand I will have to pay income tax on property.

My wife is home maker. Could I transfer my flat in her name so she become sole owner to save income tax on the property. This will help her with some income.

Thanks

tara2013

any help....

Fire_Fox

Can your wife get a BTL mortgage with no income? What would the yield be? Do you really want all the hassle of landlording, do either of you understand the reams of legislation you must comply with?

tara2013

No, she cannot get BTL mortgage on her own...

We will apply jointly.

There is cost of selling flat around £3,000.

Also I lost 10K from the initial purchase as property is de-valued.

There is high demand of rent in the area I live as it is close to the station.

I can get £650 per month rent on property price of 125K.

tara2013

Really complicated to decide what to do.

I will speak with mortgage broker this week...

Werdnal

Are you aware of all the other legal and financial implications of letting a property, including declaring tax on your rental income, and CGT liability when you eventually sell it as it is no longer your main residence?

You need to understand what you are getting into, the complications that can arise and how to make sure you are complying will all the laws and regulations, so have a read of this:

http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

and all the links it contains. There is much more to it than sorting out your mortgage!

Is it leasehold? Have you checked the lease to see whether you are permitted to let it?

Fire_Fox

tara2013 wrote: »

No, she cannot get BTL mortgage on her own...

We will apply jointly.

There is cost of selling flat around £3,000.

Also I lost 10K from the initial purchase as property is de-valued.

There is high demand of rent in the area I live as it is close to the station.

I can get £650 per month rent on property price of 125K.

If you are both on the mortgage you will generally both be on the deeds and therefore both landlords. Again calculate your yield, it's not for us to do that for you. Wanting to avoid crystallising a loss is a poor reason to become a landlord, there is a lot of work involved in being a professional, a lot of legislation to comply with.