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Not sure what to do, please help

bfc_wurz
Posts: 12 Forumite

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
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
0
Comments
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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 fineI think I saw you in an ice cream parlour
Drinking milk shakes, cold and long
Smiling and waving and looking so fine0 -
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??
Thanks0 -
I would take Option 2.... unless you've always had some weird, bucket list, sort of idea of being a landlord....#2 Saving for Christmas 2024 - £1 a day challenge. £325 of £3661
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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.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.1 -
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.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
The 365 Day 1p Challenge 2025 #1 £667.95/£162.90
Save £12k in 2025 #1 £12000/£70000 -
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.0 -
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.0
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