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Sell or rent out?

Robbyposh
Robbyposh Posts: 1 Newbie
edited 24 February 2016 at 9:41PM in Mortgages & endowments
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

Comments

  • amnblog
    amnblog Posts: 12,603 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    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.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    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
    AnotherJoe Posts: 19,622 Forumite
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    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
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    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.
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