Housing dilemmas any landlords out there ?

[Thedilemma111]

Hi all

I have just over 40 percent equity in a small house . I am able to pay off the mortgage if I wanted to .

I am
Also able to use the savings I have to place a deposit on a new house .

We do need a bigger house .

The initial plan has been to keep the house we own already and convert it to a rental property and buy a new primary residence .

The question is that from what I understand about being a landlord is that there is a lot of stress involved and perhaps diminishing returns.

I don’t want to be a career landlord but just to have something to fall back on in retirement .

Does anyone have any experience on buying a new primary residence and then letting out there old house ? Was getting the mortgages sorted very complicated ?

Are we just better off paying off our house and then saving for a new one ? Ideally we want to love within a few years so we can’t save masses in that time , though , we would be free of interest on the mortgage

What are the pitfalls and financial implications or things to watch out for ? It seems there is a lot to think about !

The immediate one that’s comes to mind is the extra stamp duty. If you buy a new primary residence assuming the property is over £125,000 you’ll be liable for an extra 3% stamp duty on top of the normal stamp duty.

You’d have to convert your old mortgage to a buy to let. These can have higher interest and there’s different lending criteria, but if you have a lot of equity may be ok. It’s not a hassle just takes a bit of paperwork and talking to your lender. Remember you can no longer claim the interests payment for tax relief and this can mean the difference between making a profit or not. Insurance is important. You’ll need to get gas safety certificate and an EPC rating of E or above (I think it’s E). Your boiler etc must be serviced every year. Smoke detectors hard wired on every floor and a carbon monoxide detector. Most people want houses unfurnished.
I’m not sure what you would consider stressful. I let out five properties of which two I get managed because I live a long distance from. The ones I manage in the last seven years have only had a handful of emergencies (boiler breakdown, blocked drains and leaks for example). Not a problem. I have varied tenants from singles to professionals and students. I don’t do HMOs.
You need to do your own calculations about if you would be financially better off letting or selling up. How much rent can you get compared to outgoings on the property (mortgage/agent fees/insurance/upkeep/void periods). Don’t forget you will also have to pay an extra 3% stamp duty on your next purchase if you keep your old house.
Personally I would pay off my old mortgage and get a new mortgage on the next house. Then build up equity in that. I wouldn’t want two mortgages as no tax advantage and I’d have to be pretty sure the value of the house was increasing by the cost of the mortgage every year.

Thanks pipandmum
wow you really know your stuff.

Would you do it if it if you in my position?

My OH would rather have two mortgages as we need to move soonish as our family is getting bigger , we have enough to put around 40 percent deposit on a house that is a good size for us without selling the one we have ? He thinks we can’t wait too long to build up a deposit if we pay off our current house now . What do you think to that ?

The estate agent tells us our current house would rent out in a day because people want to move here -

I just feel a bit nervous taking the step , my dad used to be a landlord but he’s not around anymore so I can’t depend on him to hold my hand .

Just so scared of losing out in some way , as want the kids to know we are self sufficient in our retirement so we don’t have to depend on them in any way ...

Worked really hard to save for all of this too , and now that I’m SAHM feel even more worried about things going wrong ( though I do hope to go back to work eventually )