Advice on house options

Bulla

Current situation is below and I would love to hear peoples opinions on the best course of action.

All figures are best estimates

Current house value 245k

Current mortgage 135k

Monthly mortgage £819 a month.

Potential capital after sale circa 110k.

We are looking for a new property but are very very picky about what we want. The potential to rent a really nice place from a friend has arisen and we would like to take it. This would give us plenty of time to find the right property to buy.

Rental per month would be circa £1500

The conundrum is whether to sell the house above and place the 110k into ISA and savings. Or to rent the current property and sell up once we've found the right place.

Pro's of Selling up and Renting

No chain when buying
110k in easily accessible ISA and savings account.
No hassle of being landlord.

Cons of Selling Up and Renting

Poor return (2% ish ?) on 110k investment
Potential for interest rate rise between selling up and buying a new property.
Potential house price rise knocking value of the 100k deposit.

Pro's of Renting existing place whilst renting another property

Keep equity in existing house and continue to pay down mortgage.
Based on other local properties rent would cover the mortgage with some extra. Circa £950 a month rent.
Any house price rise would benefit when we come to sell.

Cons of Renting existing place whilst renting another property

All the hassle of being a landlord !

Getting consent for lease from my lender lender
Maintenance on existing property
Insurance on existing property

As above any thoughts welcome....

Hoploz

What is the point of renting another property while you let yours? Just live in it!

There is a danger if you let your house while you look, that a tenant may not be made to leave at the right time. First they will have an initial contract, usually 6 or 12 months. Then they will require two months notice to leave, then they may or may not leave when you want them to. If you find a house after a month or two then you are stuck.

So if you actually want to be chain free then you need to make your decision to sell as soon as you are ready to move out.

Or you just sell no buy simultaneously like most people do. That way you don't lose out if the market rises - your house is going up in value while you look at other houses (which are also potentially going up)

Bulla

Hoploz wrote: »

What is the point of renting another property while you let yours? Just live in it!

thanks Hoploz,

Sorry I should have said in the original post that there a few good reasons why we need to move out (none of which I really want to divulge but they arent financial).

As I said before the criteria for our next property are very narrow so renting would allow us to move out of our existing property (a must) and then be able to take some time finding the right next property. The only question is over selling and banking the equity until we buy or renting the existing place. As you've pointed out though the question of tenants probably means we'd be better of just selling and putting up with the poor interest return on the equity in ISA or similar.