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Future Plans
Ljc80_2
Posts: 113 Forumite
Hi,
We are considering moving to a bigger house but I have been toying with 2 options. Interested to hear what people think would be best and the hidden costs involved as I have never been a landlord before (see one of the options below)
We currently own a 3 bed semi worth approx. 180k. Remaining mortgage 39k.
Option one is to simply buy a bigger house (approx. £250-£260k as per ones we have been looking at), and sell current house and take on the larger mortgage.
We have approx. £30k that can go towards the new house also to keep mortgage down.
Option 2 is to stay put for a further 3-4 years, keep saving and also pay off existing mortgage. Then rent out current house which would achieve circa £1100 per month. Then purchase the £250-£260k house and take on the full mortgage (minus the approx. £30k deposit).
In theory in option 2 the rent from owned property would cover the mortgage on the new bigger house, so that seems like an attractive option. I'm sure there are costs/tax which I wont be aware of as have never done this before, and also the risk of losing tenants/rental income for periods.
What would strike you as the best route to go down?
We are considering moving to a bigger house but I have been toying with 2 options. Interested to hear what people think would be best and the hidden costs involved as I have never been a landlord before (see one of the options below)
We currently own a 3 bed semi worth approx. 180k. Remaining mortgage 39k.
Option one is to simply buy a bigger house (approx. £250-£260k as per ones we have been looking at), and sell current house and take on the larger mortgage.
We have approx. £30k that can go towards the new house also to keep mortgage down.
Option 2 is to stay put for a further 3-4 years, keep saving and also pay off existing mortgage. Then rent out current house which would achieve circa £1100 per month. Then purchase the £250-£260k house and take on the full mortgage (minus the approx. £30k deposit).
In theory in option 2 the rent from owned property would cover the mortgage on the new bigger house, so that seems like an attractive option. I'm sure there are costs/tax which I wont be aware of as have never done this before, and also the risk of losing tenants/rental income for periods.
What would strike you as the best route to go down?
0
Comments
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With the increased stamp duty cost and decreasing tax breaks, small-time BTL such as you propose in option 2 will become decreasingly attractive, plus there's the increased hassle of being a landlord (even if you do it through a letting agent) - you need to run it as a business, rather than sitting back and watch the cash come in every month...0
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Option one is to simply buy a bigger house (approx. £250-£260k as per ones we have been looking at), and sell current house and take on the larger mortgage.
We have approx. £30k that can go towards the new house also to keep mortgage down.
Option 2 is to stay put for a further 3-4 years, keep saving and also pay off existing mortgage. Then rent out current house which would achieve circa £1100 per month. Then purchase the £250-£260k house and take on the full mortgage (minus the approx. £30k deposit).
In theory in option 2 the rent from owned property would cover the mortgage on the new bigger house, so that seems like an attractive option. I'm sure there are costs/tax which I wont be aware of as have never done this before, and also the risk of losing tenants/rental income for periods.
What would strike you as the best route to go down?
I would be very surprised if that rental income would consistently pay the repayments on a £230k mortgage.
What views have you taken on future interest rates, mortgage term, percentage of void months, etc.
Are you, or are you likely to be, a higher rate taxpayer?
I wouldn't do it personally.You can pick your friends and you can pick your nose but you can't pick your friend's nose.0
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