What would you do?

Whoop

Hi

I am a long time lurker after other people's opinions please

My partner owns a flat which he bought for £160k at the height of the market. He has a mortgage of £133k left on it.

We would like to buy a house and are able to borrow up to £250k but probably wouldn't go above £220k. We have had the flat valued at between 135k to 140k and with the cost of moving we have decided to wait 8 months so we can save some more.

We currently have £32k saved and hoping to have reached £40k before we sell. However my partner would really like to try and keep the flat and rent it out as well as buying a house.

We would obviously have to apply for consent to let but I am really worried about the risk of having two properties and the possibility of having an empty flat and having two mortgages to pay. Obviously if we were able to rent it and keep it for 10 years then brilliant but part of me thinks it is all a bit too risky.

What would you do?

Guest101

U really need to save 6 months of mortgage payments if you going to do this. There's every chance it'll sit empty for a month or two + non payment of rent. It's a risk, and it's a business.

Are you thinking you want to do this to regain some of the lost value or for sentimental reasons?

Thrugelmir

Personally I would sell the flat. Your concerns are spot on. Two mortgages, with over £300k of debt. That's £3,000 of additional interest for every 1%% rise in interest rates.

With your home you will have a good exposure to the property market. Your investments should be held through ISA's and pension plans in a variety of other types of investment. More tax efficient too.

In the meantime if the interest rate is higher on the mortgage than your savings, overpay the mortgage.

ERICS_MUM

could you live in the flat for a couple of year until (hopefully) you build up more equity and can save more. At that stage you might be able to do as you suggest but until you are in a more secure position I'd not chance it.

Rapished

Hi I'm about to do what your thinking of, we have rented our old house out and have switched the mortgage to buy to let, we have a agent managing our rent, they have a structure in place that if the current tennent wishes to leave after 6 months they source a new one and the old one cannot go until the new one which we have to agree on is found,

It allows us peace of mind, or as much as being a landlord allows, its a risk but in the long term, you will have a nest egg and it'll hold your money better than a bank, when you get to a stage with more equity in the flat re consider your options, just make sure you have a piggy bank for potential issues, that you don't use, and set aside for the flat, new boiler etc etc. Go for it and when it all comes off you can retire in style.

Also get landlord insurance to cover any unforeseen issues.

martinthebandit

Rapished wrote: »

Hi I'm about to do what your thinking of, we have rented our old house out and have switched the mortgage to buy to let, we have a agent managing our rent, they have a structure in place that if the current tennent wishes to leave after 6 months they source a new one and the old one cannot go until the new one which we have to agree on is found,
.

Oh really? Tell me something if you were renting somewhere and, for whatever reason, you decide you want to live elsewhere, what would you do if your landlord said 'sorry you cannot move out till I find suitable tennant's to take your place'?

Whoop

He wants to keep it as he feels it is a good investment but if the interest rate went up then we would be screwed.

I think selling it would be a better option and a lot less risky.