Sell or rent out?

Robbyposh

Hi all,

My first post a keen money saver so thought I'd get the view of those with more experience than myself.

I am 30 and have a mortgage with my wife on a property worth 130k, I have been overpaying for 10years and have 35k left on mortgage at 1.99% and now looking for a larger home due to expanding family! Wondering wether it's worth keeping hold of our house and renting out whilst purchasing a new home? Renting out is totally new territory so would appreciate any advice. Believe we would get 600 per month in rent minus any fees. Is it worth the risk or just sell up and move on?

For our new home would be looking around 250k and would like to pay around 700 per month. Our combined annual income is around 60k

amnblog

The first thing you need to know is that holding on to your current property raises your stamp duty on the new purchase by 3% of the purchase price under new rules due in on 1st April.

You should be considering holding the current property long term therefore to stand any chance of getting this money back.

Thrugelmir

Robbyposh wrote: »

For our new home would be looking around 250k and would like to pay around 700 per month.

The amount of deposit you put down will have a bearing on the interest of rate you'll pay, and obviously then the monthly payments.

AnotherJoe

First of all you'll have to pay an extra 3% SD on the next house you buy.
Then you need to learn and follow all the legal requirements for being a landlord.
Then you have the hassle, and the risk and the tax forms.
Then you pay tax on any profits you make, and capital gains tax on any profits when you sell it.
Don't imagine employing an agent to run it for you absolves you of most of these things.
It's not the easy route to moneymaking many think it is

If you think all that is worth it, then go for it.

Otherwise just buy a bigger house which will likely appreciate more in value in absolute terms and get you back some if the money you might have made on a BTL with far less risk plus you get to enjoy it every day.

getmore4less

Deposit: without one it's a not starter or a remortgage of the current house to raise one.

Gross yield 5.5% not that hot so a long term washing it's face with rent maybe earning a bit.

£700pm for a mortgage
25years(55) @ 3% £148k
30years(60) @ 3% £166k
deposit again
NOTE: 3% is low a stress test needs to be much higher rate.

On the face of it you parameters are a bit(loads) too tight for keeping the property


Sell up and after fees costs etc you will have about £85k. leaving £165k to mortgage.