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Sell BTL to afford dream house?

(13 Posts)
MsConfused123 Fri 06-Nov-15 21:42:56

Live in a tiny 2 bed in a great location. Have a tiny 2 bed in a not so great location on BTL mortgage.

Around 50k equity in it and it makes us a reasonable return each month. Very low maintenance, dream tenants, we are very lucky that it has been hassle free.

We are about 25k short to offer on our dream home. We have a buyer for our 2 bed, but can't afford the next step up to a 3 bed in a great road where we live. I have completely fallen in love with a wonderful house, but it is over budget and the only way to fund it would be through the BTL being sold.

Husband doesn't want to do it as he thinks we should buy a cheaper 3 bed in a not so great road, but still in the same great city where we live and keep the BTL. He quite rightly doesn't want all our eggs in one basket in case the market corrects and feels we should be patient (for another 10 years!) and then sell the next house we will move into and maybe sell the BTL and buy a bigger place as a 'final' move. He also feels that as we are 'only 20k' short to afford the 'dream house', we shouldn't lose such a big asset (BTL) to finance such a 'small' shortfall.

He wants to keep the BTL as it may help us make a huge move in a decade or so, it gives us a decent return now and he wants the option of keeping it as part of our pension.

I want my dream house that I have waited so long to buy and it signals so much more - great secondary catchment, the possibility of expanding our family and an idyllic way of life.

Would appreciate your thoughts? Has anyone done this?

ChunkyPickle Fri 06-Nov-15 21:54:49

We may be in a similar situation soon.

I think, that for such a small sum, I would find that 20k somewhere, by hook or by crook, on credit cards if necessary....

Bearbehind Fri 06-Nov-15 22:10:35

I think, that for such a small sum, I would find that 20k somewhere, by hook or by crook, on credit cards if necessary....

hmm

You can't just whack £20k on a credit card and use it to buy a house.

The repayments on servicing that debt would reduce your affordability on a mortgage and you'd be back to square one.

Have you done the maths on your BTL based on the forthcoming tax changes OP?

Once the ability to offset mortgage interest on rental income is removed, BTL become much less inviting, if not untenable for small time landlords.

I'd choose the dream house over the BTL every day of the week.

Alanna1 Fri 06-Nov-15 22:11:33

I'd keep the BTL.

lalalonglegs Fri 06-Nov-15 22:19:06

Can you not increase the mortgage on your BTL and get the money that way?

MovingOnUpMovingOnOut Fri 06-Nov-15 22:25:37

Wouldn't selling the btl also reduce some of your income? The income necessary to get the mortgage on your dream house?

Have you seen a good broker to see if there's any potential there?

Piratespoo Fri 06-Nov-15 22:33:00

Actually you can Wack it on a credit card. We did. Similar amount. On a 0% interest one and then that deal ran out we changed it to another 0% deal for several years chopping and changing until you have paid it off....which you obviously have to do!

Bearbehind Fri 06-Nov-15 22:36:28

The fact that you said it took you several years to get rid means you did this before the MMR rules piratespoo.

It's a different world now and if the OP is £25k short of raising the funds for this house, trying to raise it in the form of unsecured debt is not going to help.

ReallyTired Fri 06-Nov-15 22:42:12

Is not an option to remortgage the Btl?

If you sell the buy to let then your income will reduce and you might not be able to borrow as much to buy the dream house. It is possible to get a loan that is not a mortgage for 20k. You need to do the maths to work out that you can afford the repayments.

lighteningirl Sat 07-Nov-15 06:34:27

Keep the btl he's right

mulranna Sat 07-Nov-15 18:49:07

What are the sunk/lost costs of selling the BTL ?

What are the sunk/lost costs of moving twice?

Have you factored those figures into your calculations?

I would look to get the extra 20 from somewhere if it gives you so much lifestyle benefits.

Would extending the term of either mortgage to say 35 years help?

Really nosey - what fab city do you live in?

Bimblywibble Sun 08-Nov-15 16:27:40

First thought - it's just a house. It is really normal to compromise on a slightly less than ideal road. You'll have 3 bedrooms either way; would a nicer house really give you a whole different quality of life experience? Bearing in mind kitchens and decor can all be changed.

Second thought - depends on where you are in life. If you have a 9 year old the secondary catchment matters. If you have small children or are pre-kids, being patient and waiting makes more sense, and you have years ahead to get and enjoy the dream house. What will your DH's choice of house now actually stop you doing?

Third thought - pretend your monthly return from your BTL was salary. Would you give up that £x of your salary to live in a naice 3 bed house rather than your DH's choice?

hereandtherex Mon 09-Nov-15 10:56:20

A couple of thoughts.

If you are scrabbling around for 25k how of earth will you manage any medium to large expenditure on your OO and/or BTL? What would you do if the roof needed worting, or the boiler broke?

Are you up-to-speed on the budget changes related to offsetting BTL mortgage interest against rent? Basically, its going to be removed. If you are in the 40% then it'll hit you very hard. If you are 30% then you will alos be hit.

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