A bit of a pickle!

Winteriscoming

Hi All,
really need some advice on this..
We are looking to free up the equity in our house to buy or rent another to live in. We will then rent this one out.
whats the best option?
Do we remortgage, get another lender and get the other house, does this free up this one to rent?
Do we just rent another one for a year, keep this one to do up then sell in a year and purchase a bigger one?
We are relocating and need to do whichever process by September.
Any advice would be welcome...
Thanks

agrinnall

Why do you want to complicate your life rather than sell the current house and buy another in your new location?

G_M

Winteriscoming wrote: »

We are looking to free up the equity in our house to buy or rent another to live in. We will then rent this one out.
whats the best option?
Do we remortgage, get another lender and get the other house, does this free up this one to rent?
Do we just rent another one for a year, keep this one to do up then sell in a year and purchase a bigger one?
We are relocating and need to do whichever process by September.
Any advice would be welcome...
Thanks

Shop around for mortgage for either/both properties and take the best deal. Speak to mortgage broker.

RentVs sell Vs do up and sell? Who knows? So many relevant factors we are not privy to! Whichever suits you best.

Are you familiar with what's involved with letting a property?



* New landlords: advice, information & links

* Letting agents: how should a landlord select or sack?

whiteybt

Also don't forget you may have to pay extra 3% stamp duty if you are buying an additional property. Your second option seems a lot simpler.

Winteriscoming

Hi, Well it's to hang onto the one we have and possible generate an income from renting

Winteriscoming

G_M wrote: »

Shop around for mortgage for either/both properties and take the best deal. Speak to mortgage broker.

RentVs sell Vs do up and sell? Who knows? So many relevant factors we are not privy to! Whichever suits you best.

Are you familiar with what's involved with letting a property?


Yes we went to the mortgage adviser but they weren't very clear in our options.
I think we will end up renting short term, gives us a chance to sort the other house out..

Cakeguts

You are doing the lettings bit wrong. You are assuming that the house that you bought to live in will make a good rental property and sometime they do but if it doesn't you are in for a lot of hassle and probably a wrecked property.


If you want to start a business like letting residential property you need to research your market in your choice of area and then buy a suitable property for what your research tell you will let well and with the minimum of hassle for you.



If you cannot pay off the mortgage on the rental property you need to make sure that you can pay two mortgages for at least 9 months with no rental income because this is how long it can take to get possession of a property where the tenant has stopped paying rent.

AlexMac

Your house may or may not be an ideal letting property in terms of its type, suitability, location, access to transport, % rental income return on investment (ROI) whether it's easy to maintain, has a reliable boiler, etc...

or in terms of local demand and your target market; family, DSS/Housing Benefit, young professional commuters, students and/or HMO (multiple occupation- pluses include high rents; downside; licensing & high maintenance/wear and tear)...?

Put another way, if you really want to become a Buy to Let landlord, might you be better off just selling your existing home, buying another to live in, but on a bigger mortgage while retaining a wad of the equity which you have realised by selling? Settle in to the new home, while researching how to be a landlord, and what the market is like in the new area.

Then use the cash you have kept back as a deposit on a Buy to Let mortgage, likely to require 25% or more deposit- have a look at the many offers online or via brokers; such as the RLA's -
https://www.rla.org.uk/landlord/mortgages/buy_to_let_mortgage_service.shtml

... and choose the ideal rental property as a business proposition, rather than your current home, which you will still mabe be emotionally invested in?

We did that, in effect, because locally, we decided the optimum letting option was a tidy low-rise ex-Council flat with minimal maintenance costs and low service charges, close to a London Zone 3 commuter station. Good rent-to value ratio. So, having sold our own (overpriced, thus highly unlettable) 2-bed flat and a seaside holiday home (also a useless letting proposition as wages, and consequently rents, were low on the east Kent coast, so only 4.5% ROI) we bought a house we liked.

Then, a few months later, bought an ex Local Authority 2-bed flat with a terrific (then) ROI of nearer 7%.

That was before the 3% SDLT hike on second property, but if you do have a second one, best to pay the extra on the cheaper one...

Food for thought?