Selling Rentals to pay off Residential

Little_Miss73

Hi I’m very new to this but I’d love some advice & guidance please?

I’m 51, hubby 54.  We have approx 5 years left on our residential ..owing around  78k. 

Have 2 rentals which are now on interest only at around 6% with 19 years left on each .  Rents are below market value. 

If I sell I should make around £120-£130k profit.. Should I sell & clear the residential with the profits from each ?
Then start to invest/save what we would’ve paid on our residential every month of over £1000 but for the next 10 years or so ? 

Thanks 

Brie

Being mortgage free is great.  And having rentals with all that means is a pain and worse if you aren't actually making a profit on it.  

Sell, sling some money into ISAs and put the rest into more for your pensions.

Hoenir

Little_Miss73 said:

If I sell I should make around £120-£130k profit.. 

Have you made allowance for the Capital Gains Tax that will be payable? 

theartfullodger

Yes, how much CGT owing under current rules?  Needs declaring and paying in either 30 or 60 days.

Bookworm105

- rents below market rate so below average return 
- 6% interest rate on borrowing compared to below average return 
- interest only mortgage so "wealth increase" relies wholly on rental property value increase less CGT

compared to

- no mortgage on residential
and 
- presumably a residential property with much better property value growth potential as it will be a nicer property than the one you are letting and it will CGT free 

do you really need help in deciding?

ReadySteadyPop

Little_Miss73 said:

Hi I’m very new to this but I’d love some advice & guidance please?

I’m 51, hubby 54.  We have approx 5 years left on our residential ..owing around  78k. 

Have 2 rentals which are now on interest only at around 6% with 19 years left on each .  Rents are below market value. 

If I sell I should make around £120-£130k profit.. Should I sell & clear the residential with the profits from each ?
Then start to invest/save what we would’ve paid on our residential every month of over £1000 but for the next 10 years or so ? 

Thanks 

Why don`t you charge rents at market value?

ReadySteadyPop

Little_Miss73 said:

Hi I’m very new to this but I’d love some advice & guidance please?

I’m 51, hubby 54.  We have approx 5 years left on our residential ..owing around  78k. 

Have 2 rentals which are now on interest only at around 6% with 19 years left on each .  Rents are below market value. 

If I sell I should make around £120-£130k profit.. Should I sell & clear the residential with the profits from each ?
Then start to invest/save what we would’ve paid on our residential every month of over £1000 but for the next 10 years or so ? 

Thanks 

Getting rid of BTL interest only debt sounds smart, but there is risk involved if the tenants leave and you can`t sell for a long time, that might also involve double council tax?