To buy or rent when I already have a property?

Ojb

I have got my finances back on track after paying off several debts. One thing that helped was letting out my flat and moving back in the family home for a few years.
Now I want to get my own place again as I'm not getting any younger.
I own 30% of my flat with a 5 year buy to let mortgage on it interest only. The rental income is double this. My tenant is desperate to stay and doesn't cause any major issues.
Due to the recent re-mortgage I now have 80k in my bank.
Due to my tenants situation and also the idea of that flat being part of my retirement income I am thinking if either renting or buying a different place to live in.
The pros of renting as I can see are:
- I am single with no commitments and few possessions
- I only need a small place to live in so rent I would pay would be no more than what I receive
- I won't have to pay a 3% stamp duty surcharge
- I could over pay my existing mortgage instead of having two mortgages at high LTV.
If I was to buy I would pay less for a mortgage than rent and should long term get the benefit of prices going up
I've had a brief look at what I could buy and I'm looking at one bed house or two bed flats in my area, so not ideal properties but I'm in a good area for prices to increase in the future (crossrail).
Any thoughts on my situation would be very welcome.
Thanks
Olly

dimbo61

Stay where you are in the family home and save
Why have you borrowed another £80,000 ? Will this buy another property or at least put down a 25% deposit.

Ojb

I borrowed up to 70% via buy to let re-mortgage to get a better rate as I was on over 4.2% s.v r now I am paying 2.6%.
The 80k I have now would be around 30% deposit for another property with maximum borrowing on a residential mortgage with my overtime included.
This is my concern that I would be overstretching initially but in 5-10 years I may end up with more equity if prices go up.

Ojb

I borrowed the extra to keep my options open. As it was I had a smaller mortgage but no chance of buying another property. As my question above I may or may not do this but just wanted the option. I can always overpay the first mortgage again.

turtleneck

Buy anything if you think the price will go up as the mortgage will stay the same. Live in it then rent It out later. If you rent the price will only go up.

Ojb

Thanks turtle I have had a look but struggling to find anything I like. My investment head says buy the most rooms you can (2) but in reality i only need a 1 bed. I am wondering whether to just rent so I'm not highly leveraged in case interest rates go up. Any other thoughts?

AnotherJoe

Sell the rental.
Buy a new place for you with 2 bedrooms since that is more flexible and makes it more salable later.
You will get
No CGT when you sell.
No rental hassle
No tax forms
Lower mortgage on own house due to better LTV (since equity from what was renatl is now in your house)