shall I rent out or sell and pay the early repayment charge

Unikuma

Hi all, please help me with advice?
We decided to move to Bristol from Nottingham for my husband's job. He got a new job as his old job (in the same company) was at a risk of redundancy.
If we decide to sell our house, we will be liable for early repayment charges, which are just over £7k.. If we rent it out, then we will have to pay tax on it obviously and also the price of the house if we then decide to sell at a later stage will probably be slightly lower due to depreciation of the interiors. Also, it's a lot of hassle to rent out, do tax self-assessment, look after the tenants, etc. Some people advised us to just sell it and pay the early repayment charge, then rent in Bristol for a bit, and then buy a property there.
But we are lost.. £7,000 is a lot of money. So, do you think it's usually worth doing it? Or is it better to go through this whole process of renting out?
Thank you so much!!

hazyjo

If you're buying a new house for the same or more money, can't you just port the mortgage and avoid charges?

greatcrested

If you keep it, and then buy in Bristol, you'llpay the 3% extra 2nd property SDLT. How much will that be?

If you sell, how soon might you buy? Savings rates are low (NS&I 1.1%) but compare that against the costs of letting (and potential SDLT). If 5+ years before you buy, consider investing for potential greater gains (and risks...).

But letting is a major undertaking, financially and potentially stress-wise, as I think you know, and not without risks too.

Post 7: New landlords (1):advice & information :see links in next post

Post 8: New landlords (2): Essential links for further information

Post 9: Letting agents: how should a landlord select or sack?

ps - how long is your tie-in? How soon do you escape the Early Repayment penalty?

Unikuma

hazyjo said:

If you're buying a new house for the same or more money, can't you just port the mortgage and avoid charges?

Hi, thanks for your reply. It will be pretty difficult to buy something in Bristol while being in Nottingham. We don't know Bristol at all. So, yes, possible, but extremely difficult and potentially super stressful..

AnotherJoe

Unikuma said:

Hi all, please help me with advice?
We decided to move to Bristol from Nottingham for my husband's job. 

.......
 Some people advised us to just sell it and pay the early repayment charge, then rent in Bristol for a bit, and then buy a property there.

Those people are very wise. Do what they suggested. 

You'll  lose some money by letting anyway for the reasons you mentioned. Plus, with the equity from your old house you will have a better LTV on the new mortgage which means lower interest rates thereby reclaiming some of that £7k as well. 
Plus Bristol is much pricier than Nottingham so you will likely need the equity in any case. 

Keep it simple, do you really want new job new location new house and then a lot of hassle and cost with a rental miles away ?

hazyjo

Agree with AnotherJoe. If you don't know the area at all and are too far away to thoroughly research and visit regularly, then you really are best off renting there for at least the first year.

blue_max_3

Do you work? Have you any children? Another option may be to keep the property and stay in it. Maybe your husband can find a low cost rental in the week and return at the weekends. It's about 140 miles, but not too horrendous. He could get a feel for the area (or you could join him at the weekend). That probably only works if you have a year or two left on the mortgage product at most and can afford the additional cost.

davidmcn

Apart from anything else, you're only going to avoid the ERC if your current lender consents to you letting the property.

zagubov

Another vote for hubby renting a room for the weekdays he's there while researching the city and getting to know where to buy.

foxy-stoat

You will have more than £7,000 worth of headache being a landlord, at distance, trying to get them ou, prepare and market the property when the time comes...not mentioning if they don't pay the rent due to Covid issues.....you may not even get consent to let.

£7,000 in home ownership over a couple of decades is really a small amount of money....£7,000 cash in the bank is a lot of money though, but paying a mortgage over years and years, not so much.

dimbo61

Could your husband look at spareroom for a Monday to Thursday rent a room.
Could he speak to the staff at the Bristol office to see if they have a spare bedroom.
They can earn upto £7500 tax free and he would have a base to check out Bristol.
He could send an email to all the staff at the Bristol office ( room wanted )
You could catch the train or drive up early Friday to search the local area and visit estate agents.
Rightmove and On the market.
Check out the T and C of your mortgage deal very carefully.
Does the ERC drop each year.