To sell or rent?

[Virtual Chrissy Wissy]

By way of an update and to clarify the previous posting, we have just renegotiated our mortgage and have decided to go on BMR (for now) @ 2.5%. When this happens there will be no redemption clause left. As we are long standing customers of our lenders we can go back on to a fix at any point. We have 48K debt remaining. We are now in a quandry as we have approx 240K in savings to put down on a new place and are not sure whether to sell our current house (in an unfavourable market but obviously good for buyers) or rent it (with an extra landlord rate of 1.5% on top for that part of the debt deemed as buy to let). There is also the aggro aspect to this of having a nightmare tenant at some point. The portable product means we can put the new property on it but at a rate to be decided at the time of moving. Any advice would be most appreciated! I would imagine that in our areas of choice we would be lucky to get a decent 3 bedroom property for £300K.

[KDWALKERMS]

Thank you for the update and congratulations on your new arrival by the way.

Whether to sell or rent depends on your personal circumstances. This would be where you would need professional guidance to take all your circumstances into consideration. There are also pros and cons of doing both.

If you sell then you may have enough funds to purchase in cash your next home depending on the equity in your home. So no more mortgage repayments. You will only have one property to worry about and maintain.

On the reverse side of the coin if you rent then you will have rental income to help with your finances (dont forget to pay tax if applicable). Have you check to see how much you could get? You will also have the future value of the property if property values increase. I would also speak to a qualified accountant to help with the tax implications of renting to include the mortgage scenario as well as having a mortgage on the rental property may be advantageous.

Regarding your mortgage(s) I see no reason why you couldn't, when moving home port your existing mortgage to your new home and redeem the mortgage on your existing home out of your savings. Top up the mortgage amount (another £60000) on your new home with a product off Nationwides portfolio at the time of application and use a deposit of £192000 to purchase at £300000. This would then leave your existing home mortgage free so you have the choice of sale or rent at a time convenient to you and a mortgage of £108000 on your new home part (£48K) at 2.5% and the rest at whatever rate is applicable at the time of application. This should get around the enhanced landlord rate (+1.5%). As always, please check this with Nationwide or a qualified professional prior to doing anything.

Regarding the hassle of renting there are companies who will take over the management of your rental property for you to minimise the hassle albeit for a fee usually 5-10% of the monthly rental amount plus maybe an one off admin fee.

I hope this helps and let me know how you proceed.

Regards

[donnaphipps49]

Congratulations! Moving up to a brand new house can be a complicated thing. There's actually no definite response for this. The answer may really depend on your situation.

[Sean Hughes]

Thats great info from KDWALKERMS