I've got a (small) problem which I hope you can help with.
I've got a three bed terraced house. It has three decent sized rooms. Due to being single, and the house being far too big for my needs, I want to move out of this, and purchase a flat in London.
Ideally, I would like to hold on to this house and useit as an investment. I've been told by local letting agents that there shouldn't pbe problems in getting tenants for the house.
Obviously, I could just sell it and trasnfer the mortgage to the flat (the flat costs more than the house), but I'm not sure which would be the better option.
I will be speaking to my financial advisor about this but any heads up from people here would be great.
It is your decision, but I would be careful not to stretch yourself too far financially. With talk of interest rate rises and property prices falling as a result of that, I would be very concerned not to over commit.
If you were without a tenant on your house for a period of say 3 months, would you cope financially? Would it put too much strain on you? If rates were to rise 1% would it be affordable? If your tenant called saying work needed doing, could you afford to pay for it?
These are the questions I would be asking myself. A Financial Advisor can tell you the options, and hopefully show you the 'worse case scenario', but you are the one who has to find the money!
Me - I would keep the house and enjoy the space and laugh at all those in pokey one bed flats. Or you could rent out one or two of the bedrooms so the house would not seem so large as you'd have company and an extra income.
Keep the house and rent it out. Move to room type accomodation in London or small flat. If it all goes wrong either financially or job wise you can reverse your situation easily without any stress or financial cost to yourself.
Stateofplay has made a good point about rising interest rates and voids. Personally if it was me, I'd sell, especially as prices are unlikely to rise any further and as there are a glut of properties to rent. Why have the bother?
Originally posted by vbland: But I'm going to sell. I have no mortgage and so the money is mine to invest. And, at the end of the day, I don't need more than one home.
And with rates rising, you will get a good savings rate!!
And with rates rising, you will get a good savings rate!!
This is true .
The EA gave the usual spiel about prices doubling in a decade, which may well be true but assumes the only alternative is a bank account. But other investments have potential to do the same.
Also, gross rental figures may sound high but net yields are not great now that capital values are high.
I would sell. There are an increasing number of people doing what you are suggesting, and the market is getting saturated. There are plenty of properties in popular areas for students and professionals where I live that reamin 'to let' for months. There are more to let signs than the for sale and sold signs put together. Wouldn't wish to struggle financialy if I couldn't get tennant. Servicing 2 mortgages doesn't sound like much fun to me. And it does look like the next interest rate change is going to be up. GGordon Browns fudged inflationary measures...........but that's another subject altogether!
Do what you are financially comfortable with. House prices are not going to rise another 20% in the near future. Pressure is being exerted downwards if anything. (-6% in North Cornwall over the last quarter according to Land Registery). Not an investment I would like to back at present.
If you are at the margins (such as having no equity), then I would not do it.
I've seen a number of people keep a first and buy a second because that was the "done thing", only to come a cropper when something bad happened. They ended up losing both.
These are the people that you don't hear about in the current mania for multiple property ownership .
Originally posted by Aryldi: Keep it... you never know when you will fall in love with a Norgegian Belly dancer and wish you had a nice big place to share with her....
Nah, you do it the other way, of course. Fall in love with a Norwegian belly-dancer with her own nice big place .
i would normally say remortgage to 70 percent max and rent out but at the minute its looking like selling would be wiser, especially as it sounds like you are in no massive rush therefore less risk of selling considerably below market value by a keen BTLer.
Maybe use any excess cash to invest abroad, there are plenty of places available, some with good incentives and guaranteed rental for several years, much better prospects than the UK if you still want to be a landlord, just takes more research.
Obviously if you are financially in a good position put a large deposit down for new place incase of value fluctuations and interest rate movements. You may want to consider purchasing the london property with a buy to let mortgage in case you wanted to rent it out in future without changing mortgage type. usually interest rates are slightly higher but some lenders now have more or less identical rates for residential mortgages and buy to let mortgages.
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All Hail the mighty hamsters! 
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