To Move or not to Move.......

[moonblushtomato]

We currently live in a spacious 5 bed house, we have 3 DCs.

Life is good but neither myself or DH have a private pension or anyway of affording to pay into to one.

DH has the idea of down-sizing locally so that we'd have no mortgage but then use a mortgage to invest in a buy to let.

Me, being me, am seeing things from a very emotional angle and would really miss the house we're in but I can also see that his plan makes sense.

Also, I think that because we have so much space we've all got very used to it. I also know that we could be happy in a smaller house too.

Is a house just bricks and mortar or is the ideal of the "forever house" what it's all about?

My gut instinct is that you don't (yet) know enough about the buy to let market to make a properly informed decision. I think with a single property this would be a risky way of trying to create yourself a pension fund. We make less money on our rented property (not bought as a buy to let) than we would do if that money was sitting in the bank. And that is with no mortgage on that property to worry about.

How old are your DCs? Wouldn't it make sense to consider downsizing when they leave home?

My feeling is you should probably do a thorough overhaul of your finances to look for less extreme ways to start paying into a pension. Bearing in mind how expensive - and stressful - moving is, then acquiring and managing a second property on top of that ... despite the way some landlords make it look, it's not money for old rope :)

We don't plan to make any money whilst the property is being rented, it would be an investment for the future, to sell when the mortgage is up. We envisaged just about breaking even in the meantime.

DCs are 4, 5 and 14.

The downsizing would be so that we could buy another property as I don't want to borrow against this or any other house IYSWIM.

Another reason DH wants to move is noisy students!

I do realise it's not money for old rope. My parents have let properties and I know of the possible pitfalls.

I have a flat that I let and there is also the hassle factor to consider. If we have good tenants it is no trouble but when we have bad tenants there is a world of problems, breakages, neighbour issues and paperwork to issue..... Just something else to consider

Yes I know Nevercan, I can imagine it can be a potential nightmare!

So all your wealth would be invested in property: the home you live in & the BTL property you rely on as a pension.
It's not a wise strategy; you're better of having a diversity of investments: say shares and cash and commodities and gilts & bonds & gold & fine wine AND property. Buffers you against volatility in any one sector.
If you can't bring yourself to invest in anything but property I'd stay as you are.

It's really hard to make much money from rents alone, btw, and hoped for Capital gains because A) CG on BTL quite taxed; B) taxes on the rental income; and C) tend to have interest-only mortgages because of the CG implications which cuts the total CG since debt never reduces. So you only make real money out of BTL IF property prices rise lots between buying & selling; well, you may as well stay where you are now & enjoy the property as well as suffer/benefit from future property price fluctuations.

Could you take in a lodger? Another income stream to explore, still a tax free allowance in it, I think.