Are we stretching too much?

sangior

housebuyer143 said:

sangior said:

[Deleted User] said:

Have you considered selling your first flat, putting the money into the new flat purchase thereby reducing the mortgage? I would be surprised if letting the first flat is a lucrative investment in view of tax implications: capital gains, tax on the rent received, second ghome stamp duty. Other investments are likely to be superior and would not involve becoming a landlord.

We did think about selling but considering that it will take a lot more time for us to find buyers than renters and the fact that most of our neighbours are renting, we thought it might be a good idea. 

Or you can move and sell it afterwards? You can claim back the extra stamp duty then and pay pay down your mortgage once it's sold.

Thanks for mentioning this. We actually didn't know that we can claim back the extra stamp duty if we choose to sell after buying the second flat. This is a good point.

sangior

AlexMac said:

…go with your gut..? Or

…go with your head (or a spreadsheet, risk analysis and view from us random nobodies on the interweb..?

tough call? 

I know what I did; getting on for 50 years ago. Skint mesself to buy a place. (Option a?). Lots of work. Some financial and other stress (never more than modest incomes… redundancy…ups and downs … divorce - luckily only one ,,). Sweat equity. inflation. Traded up (5 places at 8-10 year intervals). A trio of second homes. Two BTLs (never a duff or problem tenant). 

Now? Sitting pretty. Not a regret. 

GO FOR IT

Thanks for sharing. It's great that it worked out well for you.

sheramber

fourmarks said:

[Deleted User] said:

Have you considered selling your first flat, putting the money into the new flat purchase thereby reducing the mortgage? I would be surprised if letting the first flat is a lucrative investment in view of tax implications: capital gains, tax on the rent received, second ghome stamp duty. Other investments are likely to be superior and would not involve becoming a landlord.

My God, are they taxing garden ornaments now!   Nobody mentioned that in their manifesto.

That made my morning. Thank you!

FreeBear

sangior said: Currently, we live in our first flat, with a mortgage of approximately £2000 per month(2.7%, 13 years more to pay it off). After moving, we plan to rent out the first flat for about £2000 per month.

£2000 in, £2000 out, and that is before factoring in maintenance costs and all the other expenses. Certainly no where near enough to generate any profit to cover void periods. What would you do when interest rates rise ?

Bigphil1474

A lot of small landlords are getting out of renting as it's expensive, and the margins aren't so good now. Personally I wouldn't go there, but if the figures add up for you, then why not. Once the first place is rented out, will be more difficult to sell on quickly though. If you are worried about stretching yourself, think about what you could gain versus what you could lose and weigh up those options.

ReadySteadyPop

sangior said:

sammyjammy said:

How many months can the flat be empty before you can't pay the mortgage on it?  It doesn't sound to me as if renting out a property (particularly one you've previously lived in) is right for you to be honest.

We can manage paying for both morgages without renting one flat out I guess with our current income as we don't have children, our jobs are quite stable. We will just have much less in saving.

Working just to pay offf mortgage debt doesn`t sound like much fun to be honest, what happens if rates rise again, or your fix ends, or house prices crash, or the tenant leaves or refuses to pay rent? People talking about what they did in the market conditions of 30, 40, 50 years ago has no relevance to your situation now.