moving forward..

ttaylor

I've owned (with a mortgage) a two bedroomed maisonette for 7 years. I have rented it out most of the time and lodged/shared/parents myself. The property is now vacant and I am finishing refurbishing it, but I don't know what to do next.

I agree with advice to stay on the property ladder, but I'm not sure whether to keep this property. The big problem is the lease is down by a third from the original 99 years and is going to cost £15k or more to extend. The other factor is, it is my property, but I don't actually want to live there myself!

So I could try and sell it and (guess I'd have to extend the lease first to get full price) and buy somewhere I want to live? That would sort myself out and I could concentrate on getting a better job but I would lose the rental income and potential future retirement income.

Or I could rent it out again and pay off the mortgage asap which would mean my own living situation is less comfortable but I have more freedom to move and also I keep the rental income which is a nice backup to work income. Without extending the lease I could get this income for the rest of my life (unless I live over 100), I'm not bothered about passing anything on.

I am here to ask for advice on the above and welcome all comments, I'm sure one of the two ideas is better but I am finding it hard deciding.

Richard_Watters

I'd definitely extend the lease. If you decide at any time to sell, you'll have to do this (or take a real hit on the price of the property, and the shorter it gets, the bigger the hit). The longer you leave it the more expensive it will be to extend it.

After that it comes down to your own personal situation and lifestyle which it's hard to advise on. I would definitely stay in the market as long term property is the best way of creating wealth.

The only other factor would be your existing mortgage. If you've had it for 7 years, if it's a base rate tracker it might now be base + 1% or base + 1.5%, in which case, financially, you might be better off holding this property rather than getting a new mortgage on another property at a higher rate.

ttaylor

it's on a 3.49% deal, 2 years until early next year.

if i sold without buying somewhere else i'd be hit with a 3% early repayment fee.

what i am trying to work out is, is there any merit in holding on to the property but not giving the satisfaction to the freeholder of a cash lump sum to extend the lease, considering i'm not worried about passing the property on to anyone?

ttaylor

I know you advised to extend the lease, I am just wondering what is wrong with NOT extending it, and just renting out this property for the remaining lease term? This would mean 64 years of rent income (which would rise in time) and a mortgage paid off well before this, resulting in an income for me for doing very little? Is there anything bad about that idea apart from not having an asset at the end of it? (remember by this time I'd be nearly 100 years old if I am still here)

G_M

Given my intimate knowledge of your personality, your age/relationship status, your aspirations, career prospects, your parental intentions, and your dreams (not forgetting my understanding of your various phobias, foibles and hobbies), and bearing in mind my close friendship with your parents....

I think you should sell.