Let or sell? Help me decide!

[silenceisadistantmemory]

I own a small property which I lived in years ago. I rented it out since and it has a mortgage.

My family and I live elsewhere in a house with no mortgage and we want to move to a better area.

Plan A: sell both properties and move to nice area and live mortgage free.

Plan B: sell house we live in, rent out small property, move to nice area but have two mortgages.

Plan C: sell neither, have a larger mortgage on new place, rent out both properties and use proceeds to pay the two mortgages.

I can't decide. Inclined toward A as have had two nightmare tenants- think damage and not paying rent etc. Stressful!

Help!

[AnaWinter]

I would sell both. The interest you pay on a mortgage is so high.

[silenceisadistantmemory]

We would end up with three properties in our old age and the mortgages would essentially be paid by the tenants.

It's the stress of dealing with said tenants which puts me off.

[Angryosaurus]

We are in a similarish situation. We sold our home, increased mortgage to buy another, but decided to keep the property we rent out. We realised that it will be so much harder to get back into renting in the future if we ever wanted to with stamp duty changes etc. Plus it will give us a great nest egg when we come to retire (either by selling it or continuing to rent it out). We use an agency which takes away a lot of the stress of tenants.

We both also made a decision we would not want to evict our tenant to sell (rather wait until they decided to move on) but obviously that is a our personal view.

[silenceisadistantmemory]

We have an agency but you still have to evict them yourself which is a pain.

[EssentialHummus]

I’d keep them but get tenants who are acceptable to Rent Guarantee insurers. And make sure you have the funds and contacts to deal with repair and maintenance promptly.

[lalalonglegs]

I wouldn't take on a large mortgage for BTL purposes at the moment - the new tax rules on off-setting your mortgage interest are making it very difficult for people with high LTV.

[SandLand]

Or plan D. Sell current house, pay off blt mortgage, but new property with larger mortgage.

Personally, plan A. DH would go for plan C.

[JoJoSM2]

I think plan D makes sense. BTL mortgage rates are high and so are the initial costs so I'd pay that one off but have a higher residential mortgage on the new place as the interest rates are lower. That could increase your income tax but would be easily offset with higher pension contributions. I'd be reluctant to take out 3 mortgages as the rates are only going one way + it can all be stressful.

[silenceisadistantmemory]

It's not BTL mortgage.

Still leaning towards plan A as lettings agency are trying to rent it to some daft kid. Argh!

[Watto1]

Not Plan C unless you have a huge amount of savings. If you get a tenant who doesn't pay their rent, it can take months to get rid of them. Unless you can cover all the mortgages without the rental income, you could be putting your own home on the line.

[butterfly56]

I would agree with you OP....plan A.
If you can go mortgage free then that is the most stress free option and all round good idea.

[JoJoSM2]

If you're renting a place, you need a BTL mortgage. If you have a residential mortgage on a rented flat, you need permission from your bank or a buy to let mortgage. Otherwise it's a breach of contract.

[silenceisadistantmemory]

Very true, Joho. 😎