AIBU to ask if it would be a good idea to sell house and rent instead

[Telematics1234]

I have got this idea we could sell the house and put proceeds of house sale in the stock market.

We are in our late 50s and have paid off our mortgage. We are both still working. The idea of selling up and investing the capital in the stock market is appealing.

We are both still working, so have wages coming in to cover everyday expenses and rent.

I like the idea of the flexibility of renting. ie we could move house much more easily.

It seems to me that the stock market probably out performs the housing market for the most part.

Has anyone done this?

Only invest in the stock market an amount you are prepared to lose!

It would be a very risky thing to do.

I wouldn’t want to be beholden to a landlord after being a homeowner.

A compromise is a possibility though. For example, DH and I have toyed with something like this in early retirement:

• sell our house for around £800k
• buy a small ‘lock up and leave’ apartment nearby for around £300k
• invest the bulk of the balance
• take long term (3-6m) lets in other countries over winter
• take lots of holidays!

Your house will double in value every 10 years. That is all that needs to be said on the matter.

@whatisheupto

Your house will double in value every 10 years. That is all that needs to be said on the matter.

Bit optimistic.

If you've really got an itch OP then take out a mortgage on your current house and invest that money in shares.

Given you are considering this you are definitely not the right people to play the stock market. First, the stock market is massively overvalued at the minute, second, things are unstable - 5% got wiped off the The US stock exchange the others week. Third, at your age any good financial advisor would be diversifying you into safer assets with guaranteed returns. As for getting rid of your home to do this - madness..

Two reasons why this is a bad idea.

In the UK, renting is for many reasons a second-best option for almost everyone who can afford to buy. Lack of security and lack of ability to tailor your home are first two reasons that spring to mind.

Also, looking at it purely in financial terms, by buying you are hedging your future need for housing with an asset that is price-matched with the cost of housing. For this reason, I would say everyone who can should own one house, even if they don't live in it. Although it is more tax-efficient to live in the property you own, as you are not taxed on the rent you pay yourself, or on any capital gain.

The only time I'd choose to rent is if I had a short life expectancy and wanted to use up capital.

It doesn’t have to be all or nothing. That’s the crazy part. You can decide to sell your house and downsize even if you have to take on a small mortgage that’s less than 10 years and invest the rest of the money you have.
That way, you’ll be paying the new small mortgage instead of paying rent and you still have the security of the new small house and stocks as well.

@Tricked2003

Only invest in the stock market an amount you are prepared to lose!

It would be a very risky thing to do.

This, absolutely this and I speak as an investor heavily into shares, but I would never risk my home.

@Telematics1234

Oh well, you've all talked me out of it!

Back to the drawing board then!

The drawing board for what though? What are you trying to achieve?

@MrsSkylerWhite

Good grief, no. Professional brokers with decades of experience sometimes call it wrong. It’s generally not their money, though.

Only do it if you’re potentially prepared to lose everything.

@MrsSkylerWhite - this a million times over. I inherited a bit of money in my mid twenties and made the mistake of investing in areas where I had no experience with medium to high risk. Lost a small amount of money but got vast majority out - when Iraq war happened it impacted it a lot.

I recall speaking to my older uncle who I should've spoken to before about this and he said unless you have experience and know what you're doing (like he did) then either choose low risk or get a good savings account etc.

The amount of worry I did have watching shares etc fall wasn't worth long term investment.

To OP - you would be completely and utterly mad to risk your house which you own on this hare brained scheme.

It isn't quite a crazy as people are suggesting here, it's an investment decision like any other.

It's not an investment, its a gamble, you don't risk your house for anything. Even pensions start to move towards lower risk investments as you get older.

Op don't be stupid. Downsize if you must but don't risk losing your security on the stock market.

Down size
Buy a rental
I get £2k a month from rental ( £700 actual profit after mortgage is paid )
How on earth could you earn £ 700 from the stock market? What a huge risk
SEEK PROFESSIONAL ADVICE

You could remortage for a small amount, say £20k, and then invest that and see how you get on? Reinvest any growth. Repay the small mortgage before retirement.

It really would be very reckless to use the value of your home, no financial adviser would advise you to do that.

Is it possible you are just having a bit of a midlife crisis or something? It is such a wacky idea.

I have a mortgage and would do anything for it to be paid off-you dont risk your house for anything these days it wold be madness

even my sister who rented for ten years has managed to buy now luckily and shes so relieved its halved her bills

You could get some quotes for removal costs as that will also help indicate how much moving somewhere temporary and then on again would be?

Our move last year cost more than £4k and we'll hopefully be moving again once we find somewhere to buy. It won't be as much as this next time (first time was 200 miles) but I'm expecting moving twice within a year to come in at at least £6k, plus all the additional costs of renting, having money tied up in deposit etc.

Christ, that is a terrible idea! I thank my lucky stars I have a house I own- with a mortgage in my case. Imagine being 70 odd and renting,with no security. Makes feel sick.

Can you downsize, move to a cheaper area and then put the remaining money in the stock market?

Or, mortgage your house and put the money in the stock market?

Don’t rent. Trust me, you don’t need that stress at this age,

@Telematics1234

TBH we don't need to re-mortgage to get the money out of current home really. We took out an offset mortgage to buy this house. Therefore, although we technically still have a mortgage, there is sufficient funds in the associated offset account to pay off the whole sum of money owed on the mortgage.

In practice, we could therefore just take money out of offset account to get at the capital invested in buying the house.

We could obviously just downsize. However, what made me post this, was the giddy excitement that for the first time ever, we don't need to be tied to a specific area. DH works from home so can work anywhere. I have a professional qualification that means that I can work anywhere as more jobs in my field than people to fill them.

This is a different question and one we’re thinking about too.

Our mortgage is 1.85% and if we think we can make a higher return than that by investing the money in our offset account, then repaying the mortgage early is not necessarily the best financial option.

As long as you can be mortgage free by the time you retire. All pp are right imo about renting.

No way would i go down that route we are early 60's age and been together 8 years and due to my OHs redundancy package and drawdown on his very good pension we went the other route came out of rented and bought cash a small house, best thing we ever did as rent would have been half of his private pension alone, now we do not have to find that extra money each month which gives us not a luxury but a very comfortable lifestyle

This is one of the worst ideas I've heard in a long while.

Fuuuuuck me. Have you been getting your financial advice from that poster who's just withdrawn all her savings and hidden them under her mattress?

In my experience house prices foibles in 10 years.

I bought at £124k . 22 years later, it's £525k. I spent £40k doing it up over the years, so maybe just under doubling!

Actually, I just read your update. I was in your position exactly 4 years ago. I took the money out ( mine was an endowment) then remortgaged the house a little. I used the money to buy elewhere with another mortgage. I now rent out my original house.

So I went from no mortgage ( as I could have paid it off) to having 2 mortgages! It's the best thing I've ever done, my life has transformed. I live in a beautiful area, by the sea.

I really wouldn't risk my home for anything. We paid it off early and it was the best thing we ever did. Security that whatever happened we had a roof over our heads! We are now quite comfortable. We have substantial cash savings, which aren't doing a lot, and a good pension pot. My husband has started investing extra bits of cash we have in stocks and shares. It is a hobby that he takes very seriously. He has written a computer program to track his investments. Some of his early investments (BT?) have fallen and after several years are still lower than when he bought. We don't need the money so we are hoping they will go up in the long term. Some give good dividends. Recent advice from a financial adviser are that he has all his (share) eggs in one basket. Financial institutions have access to more options. You might be much better off investing through a reputable investment company where you can specify the level of risk you are prepared to take. However, I would only do this with spare cash as it is still a risk (gamble) and you should never gamble more than you can afford to lose! Please don't gamble with your home.