Not sure what to do, please help

bfc_wurz

I own a property outright that's worth 170k (3 bed semi) (the mortgage company have a legal charge on the property which I kept open after I paid off my mortgage in case I wanted to borrow on it again as it would make it easier). Anyway -  Ive seen a property I want to buy (offers over 325k) and I have approx 160k cash to put down on the new property (I'm in a very lucky position I know but I've worked hard and saved to get here). 

But I'm not sure what's best to do, these are my options (and there may be more if you enlighten me!!)
1) Remortgage my existing house to release some equity to use towards my new house, rent my existing out and pay for the new house outright
2) Sell my existing house and buy my new one with cash.
3) Rent my old house out obviously with no mortgage on it and then I get straight rental and get a new mortgage on my new house but putting a substantial deposit down.

Now just to add, Ive never rented a house out before and I believe its not as profitable as it used to be. Can anyone please advise me on what's best to do in my position.
I just can't get my head round which is the best way to go!!
Many thanks
Chris

mark55man

I think Option 3 needs a bit of explanation I'm not quite clear why you would buy a new house and then let it out, if that's what you mean.

Being a small BTL is time consuming and many would prefer just to stick the money in investments and let others do the work, but if its local and you're handy and don't mind paying for (and taking notice of) agents advice, then still a lot of people are choosing this.

In terms of choosing an option, do you really want to become a landlord?  I would say 95% of people in your situation would sell the current house and buy the existing house, without varying the mortgages too much.  Ie end up with same equity and same savings, just a bigger mortgage.  If deploying some of the savings gets you a better rate then do that, but at about 50% LTV you would be fine 

bfc_wurz

Hi, thanks mark55man, option 3 was a typo and I've corrected it as it should have said, rent my old house out.

So basically what you are saying is transfer the equity and keep my savings, I was always under the impression if you had spare savings you should always pay off your mortgage first (and keep a rainy day amount) then look at investments. Are you suggesting otherwise??

Thanks

JGB1955

I would take Option 2.... unless you've always had some weird, bucket list, sort of idea of being a landlord....

ACG

Option 2 for me personally. 

I have never really understood the whole moving to a new house and renting out the old one. If you want to invest your money in property do it based on the figures. I imagine you would be better off selling your place and buying a different property or cheaper properties to get a better return on your money. Personally, I would look at holiday lets or commercial property. 
Buy to lets are still a business - you cant just play at it. You are dealing with individuals who usually do not care about your property and have so many rights on their side, you are fighting a losing battle (or an expensive one) if the tenants stop paying. 

I would never be a landlord again.

enthusiasticsaver

I would not be keen on being a landlord so I would choose option 2 as well.  There are pitfalls and you run the risk of getting bad tenants and I am not sure it is as profitable as it used to be as it is not at all tax advantageous now. 

getmore4less

If income supports  a mortgage big enough to buy before sell that may open up options with more flexibility on timings.
Plenty of mortgage options that allow unlimited overpayments.
Although the rate should be good and investment strategies should be considered as an alternative to just overpayment.

lonibra

OP, whether Option 1 is worth considering depends on the numbers that tell you what profit you could make from renting out the house, what tax you will pay on it, etc.