Advise needed to sell or buy to let

neha9

Hi all,

I’m in a bit of a difficult situation and would really appreciate some perspective.

The housing market is down, and we’re trying to sell our place but not getting anywhere near the value we expected. On top of that, our child’s school catchment is a big factor, and we need to sort things out before end of October which is the national dead line for secondary school applications.

To make matters harder, both my partner and I are facing job uncertainty, and there are some health concerns too, hence planning to downsizing. If something goes wrong with our health or jobs, it would be harder to keep up with the monthly mortage payments.

Not sure if it’s better to sell now at a lower price, rent out the house, or try to hold on longer. We have 3 children.

Current mortage installment -£1900
Balance mortage-£326000
Income- £4000 monthly

Has anyone else been through something like this?

Thanks so much.

El_Torro

Can you afford to turn your property into a Buy To Let? By that I mean do you have somewhere else to live when you do this?

Based on the limited information you have provided it seems to me that turning your current home into a BTL will only increase the riskiness of your situation going forward. I would be tempted to sell, though that will depend on how low the selling price is. 

neha9

Hi Torro,

Thank you for your reply.

We purchased this property in 2022 for £465k, did renovations for around £20k, paid stamp duty £13k. Total mortage payments made £56k. Selling was never part of our plan, but because of health and jobs risks, we're now having to think about it.

Thanks.

Emmia

Do you need to move for the catchment area? i.e. your current house isn't in the right place to qualify for the school you would like your child to go to?

If so, you'll struggle to sell, buy and move in a month.

neha9

Hi Emmia,

We are already in the catchment. 

Emmia

neha9 said:

Hi Emmia,

We are already in the catchment. 

In which case, unless you're willing to drop the price substantially for a quick sale, I'd sit tight, and see how things unfold.

If you sell or convert to a BTL, where will you live?

neha9

We’re in catchment and my child has already done the exam. Results are due next month and offers come out on March 1st.

Our agent says the market is down and we’d only get around £480K for the house, which feels like a loss compared to what we expected. If we sell now and move within catchment, we’d be locking that in.

But if we stay and something happens with our jobs (there’s some uncertainty) or health, we could end up really struggling financially.

Do we sell now and cut our losses, or hang on, hope things stay stable, and wait for the school results before making a move? The school places will be offered on 1st March.

RogerPensionGuy

1.9K mortgage payment per month, is the 4K income gross or net?

Reference selling it, price paid, SDLT, fees, renovation costs and payments to mortgage company are of little interest to a current sale price, what price has agent said its worth or price to secure a sale and what is the current asking price?

My initial thought is that 1.9K & 4K monthly data looks a bit heavy going.

Just imagine renting it out and for any number of reasons the rent stop getting paid, can this risk be managed?

Below is a link for info that maybe helpful.

***

https://www.unbiased.co.uk/discover/mortgages-property/buying-a-home/what-percentage-of-your-income-should-your-mortgage-be

RipleyG

neha9 said:

Our agent says the market is down and we’d only get around £480K for the house, which feels like a loss compared to what we expected. If we sell now and move within catchment, we’d be locking that in.

More positively, any house you buy in the same area will also be cheaper now than when prices go up. That will also mean you'll pay a bit less stamp duty than if you wait, and presumably savings on your mortgage and other bills if you move somewhere cheaper to run.

Given the factors involved, it seems like the priority is to de-risk your life. Letting out your home doesn't do that - in fact, given the numbers you quote it seems extremely risky. It generates income, but you'd need that income to cover agent fees, wear and tear/maintenance, pay tax on it, and then hope that whats left is enough to pay rent on wherever you move to. It's harder to sell properties with tenants in, and your tenant isn't obliged to allow property viewings. You'll need to serve notice for tenants to leave, and do so well before a predicted completion date - so could easily end up with a rent void and still have to pay the mortgage in that time. It doesn't seem you could cover the £1900 mortgage on top of your own rent, particularly if one of you lost a job due to ill health. 

If your child has already sat the entrance exam and you're staying in catchment, moving is unlikely to be a problem. 

I speak from experience when I say the last things you want when dealing with ill health are the stress of high bills that stretch you financially, or uncertainty about your home life. I was in a similar position to you about 4 years ago, without the ill health factor. We decided to move and I became seriously ill just a week after the move, resulting in job loss and permanent disability. I'm so glad we moved - had we not done so, the financial stress would've been enormous at an already horrendous time, and would have made a big dent in savings that have propped us up. 

Emmia

neha9 said:

We’re in catchment and my child has already done the exam. Results are due next month and offers come out on March 1st.

Our agent says the market is down and we’d only get around £480K for the house, which feels like a loss compared to what we expected. If we sell now and move within catchment, we’d be locking that in.

But if we stay and something happens with our jobs (there’s some uncertainty) or health, we could end up really struggling financially.

Do we sell now and cut our losses, or hang on, hope things stay stable, and wait for the school results before making a move? The school places will be offered on 1st March.

There is no guarantee your child will pass the exam though. Hopefully you're still in catchment for a good alternative 

neha9

RogerPensionGuy said:

1.9K mortgage payment per month, is the 4K income gross or net?

Reference selling it, price paid, SDLT, fees, renovation costs and payments to mortgage company are of little interest to a current sale price, what price has agent said its worth or price to secure a sale and what is the current asking price?

My initial thought is that 1.9K & 4K monthly data looks a bit heavy going.

Just imagine renting it out and for any number of reasons the rent stop getting paid, can this risk be managed?

Below is a link for info that maybe helpful.

***

https://www.unbiased.co.uk/discover/mortgages-property/buying-a-home/what-percentage-of-your-income-should-your-mortgage-be

We take home about £4k a month, but with 3 kids and everything getting more expensive. Biggest strain is the mortgage and we do not want our child to loose his place just because we moved houses.
so we’re leaning toward selling and moving somewhere cheaper. That way we could get the mortgage under £1k a month, which would take a lot of pressure off.

Main goal is to lower stress (for health and job reasons) and still give the kids a decent lifestyle.