Help please! Should I sell or rent out my house?

mr&mrs

We are in a very lucky position that we have been offered a house with a peppercorn rent with my job at approximately £150 per month. We can move in anytime from March onwards.

We currently live in our own mortgaged home which has a fixed interest rate of 2.69% running out at end of September 2015.

Our outstanding mortgage is currently £240,000 and the house is valued at £320,000. We pay £1450 pcm for our mortgage.

We wondered which of the following options made the most sense to us? We understand that markets may change, and that interest rates can and may change too.

1. Sell our house when we move out, and pay the early settlement fee. Save the equity, paying a monthly amount equivalent to the mortgage (minus peppercorn rent). I think the fee would be @ or 3% of the balance paid to date I think, but am going to ask next week.

2. As 1. but sell our house at the end of September to save the settlement fee.

3. Sell our house either now or end of September and stay on the property ladder by buying a holiday home / second home (actually our only home) somewhere for family holidays.

4. Rent out our house paying the difference between the rental income and the mortgage payment. We would move onto a higher fixed rate I assume as this would be a letting mortgage not an owner mortgage? Is renting out as fraught as it sounds?

We love our house, but financially have been pretty stretched for the past few years. We are okay though - not many luxuries at all though!

This was our first house too, so we do have an emotional attachment. Equally we're not sure where to start, what the pitfalls might be and what the best option would be for us. We're a bit confused to be honest.

Any advice would be most gratefully received. I know we are in a lucky position too.

With thanks.

Rambosmum

If the tenants wreck it and you'll get upset then don't even consider renting it!

Pixie5740

You shouldn't really let out a property that you have an emotional attachment to.

If the rent won't cover the mortgage payment then it's not much of an investment and you might not get consent to let. Unless you're on a repayment mortgage and can switch to interest only where the rent will cover the repayments. You'd still need to do your sums though to make sure it was worth while.

allylou2002

If you do Number 2 - put equity into an account and add to it monthy with your former mortgage payment, when the time comes to buy a property of your own you should have a pretty hefty deposit and will be a cash buyer so desirable?

Renting sounds hard going if it not a business house - espcially if your tenants are not caring or respectful?

I do know tho...am just a normal person - not experienced or an expert in the field.

mr&mrs

Thank you for the helpful replies. Regarding option 2 and stepping off the ladder and saving the equity (and former mortgage payments) should we worry about price rises in the housing market? Would we lose any gains we make by saving for a larger deposit by having to fork out for a house that is now more expensive? Crystal ball gazing I guess....

Renting would be possible as we wouldn't have any mortgage payments and so could make up any shortfall quite easily. I'm not keen about switching to interest only - seems to defeat the object?

Finally, you are definitely right about the emotional attachment. Moving on seems so much cleaner.