Recently married - should we keep our properties

Crashy_Time

Victim_Of_Fate wrote: »

Embarrassed to say, I'm not even sure what that means. Does that refer to the amount of rental income I would get as a percentage of my mortgage, versus the cost of the mortgage? Based on my current consent-to-let mortgage (which I would assume is cheaper than a BTL mortgage), the rental income would barely cover the cost of the mortgage, so actual rental profit would be minimal.

The only advantage would be keeping hold of a property which might rise in value, but the sense I'm getting is that most of you would advise against keeping a property in order to profit from increasing house prices alone?

You are trying to keep three properties though, with mortgages, if interest rates rise you will be in a very tricky position.

Mojisola

Crashy_Time wrote: »

You are trying to keep three properties though, with mortgages, if interest rates rise you will be in a very tricky position.

Or you have a spell without tenants - or tenants cause a lot of damage which you have to pay to repair......

Crashy_Time

http://www.telegraph.co.uk/personal-banking/mortgages/charts-600-monthly-profit-200-loss-buy-to-let-tax-biting/

Jenniefour

With that amount of equity in the flats you definitely do have options, and if I were in your shoes I would be making sure I get educated enough to understand what the above figures could mean for your much longer term future. Which depends on what your joint income is as well as your attitudes to risk. No harm in contacting a mortgage broker and/or independent financial advisor to take a good look at possible options and do some number crunching. I would strongly recommend doing absolutely nothing until you have a clear, realistic and detailed understanding of all this.

Pixie5740

Not smart enough to use the search function on the forum though.

There have been several other threads this week alone from would-be landlords. If you read them it might help you understand the financial side of letting property better and the legal obligations of being a landlord.

alex_163163

As someone has mentioned above, have you factored the higher rate stamp duty on your new purchase together, if keeping both/ either flat? How long would it take you to recoup the difference in stamp duty payable compared to if you just sold up both flats.

alex_163163

Also, am I right in thinking that you would be liable for capital gains tax on the BTL properties when/ if you sell them in the future and they have increased in value?
I don't know lots about that area though so someone correct me if I'm wrong!

mysterymurdoch

In your shoes I'd sell them both and buy outright in the burbs, go part time at work and enjoy an easy life. Screw losing out on property value rises...you only live once and life is short. I have just lost a dear friend who I love to bits to suicide and it's reset my thinkibg. I already have a tiny mortgage and work part time and have no intentions of changing that. Plus I get loads of time with my kids.

sheff6107

There is a lot to said about keeping things simple. I'd sell and pool my resources.
What would your position be if Brexit really did hammer house prices and they only returned to current levels a decade later in 2029?

skint_chick

As the current mortgages are both repayment there that is a possibility for a deposit for a new home - but this also means that your rental profit is higher than you think because you should be looking at interest paid on mortgages vs rental income (not total mortgage payments including capital repaid). Taxation of this profit is changing so you need to do some research on this to see if after tax your net profit on the rentals will cover interest only BTL mortgage/service charges/putting aside some funds for voids/gas and electric checks/landlord's insurance etc at BTL rates with any additional borrowing for a deposit for new home.

You will also have 3% additional stamp duty on your new home together, which you need to include as well as your deposit.

If you sell you'll have about £270k after fees towards a new home. Does that work for a forever home in your chosen location? You have strong incomes so if you sell you should be able to buy a family home and not need to move again for a long time, and overpay the mortgage for the next few years to reduce your balance.

Other considerations are whether you intend to have a family at some point and how that will impact your income - cost of childminders etc/working part-time/maternity pay - as you'll want to take this into account when factoring in new borrowing for a new house.