Should we sell our house and rent?

[freakazoidroid]

We live in a pretty affluent city where a 4 bed house usually sells for well in excess of £500 000.
We live in a small 3 bed and we have totally outgrown it. We have just had it valued at £400000. At the present time we cannot get a big mortgage.
Would it be sensible to move out and rent & keep the equity made on our house as a deposit which is about 60-90k
Would we get a better mortgage deal going back in as a first time buyers?
Any advice?

I'd be worried that you wouldn't be able to get back on the ladder in the future. Do you have space to extend?

could you rent it out - and then rent something?
then sell it when you are in a position to get another morgage

I wouldn't feel happy renting it. The roof does not have much height for a conversion. There are other things to like the garden. We want a flat one!

Hi OP, I think that once you've had a mortgage, even if you no longer have it, you're not entitled to the first time buyer deals, so you may not get a better deal.

However, if you think you can save money by renting, you could use this to increase your deposit and get a better deal that way?

I'm not sure what you're trying to achieve from your post....

• Are you trying to lower your outgoings in the short term with rent cheaper than mortgage?
• Are you hoping you'd get a better mortgage deal as a first time buyer than existing buyer (better how? better rates or bigger loan?)
• Trying to live in a bigger house now by renting as you can't afford to buy bigger?

If the first or 3rd I think you will probably struggle to rent for less than you pay in mortgage (unless you are tied in to a stupidly high fixed rate, in which case you'd struggle to move anyway).

Please don't do it unless you really have to. It's pretty shit being a renter, constantly under the threat of moving (not great when kids schools are involved). Worrying about the Ribena stain you can't get out of the carpet, you can't get a pet without asking (every right to say no). Our landlord loves a visit, so que three days cleaning and preparing.
Some you can't paint, some you can't put pictures up. Every time you plant a plant in the garden you don't know if you'll see it bloom.
Don't give your hard earned cash to someone else's kids to inherit.

That might all sound melodramatic but its the shit reality, unless you've no choice don't do it.

No, I think it is more sensible to have a total declutter (which you need to do in order to move anyway), sell as much as you can on ebay, and try save money to add to a deposit or have work done at your new house when you move.

How many children do you have? Do you both work?

Renting is pretty pants! You would be throwing your money away.

I rented out a property I owned and lived in another rented property for three years. I loved it. You would be surprised how quickly the first property becomes a house that you own, rather than your home, iyswim. If you really need more space and devluttering etc can't achieve that for you, that's what I'd do. I definitely would not sell as I think you'd have to be superhuman not to spend any of the capital ... And like other posters have said, you may never be able to get back on the ladder.

Could you not just buy another 3 bed but one which not only has the flat garden but potential to extend?

Google maps is always a good place to start as you can see from above where people have extended their property.

Also if you are willing to roll your sleeves up and crack on with stuff you can get a house that wouldn't be lovely inside but could be made lovely, and I speak from experience where our last house cosmetically was dire.

You only have to watch stuff like Homes Under the Hammer to see the potential of a house lived in by an elderly couple where it is stuck in the 1970s!

Having rented in the past and not known from one 6 month tenancy to the next if the owner was going to sell it or not, I just wouldn't do it. It would be too tempting to spend that equity if you wanted something.

I wouldn't do it. We considered it and were told that the chances of us getting back on the property ladder would be slim. We also had a similar level of equity. House prices are not set to fall dramatically so I can't see the advantage in doing this.

If you really need a larger property perhaps you should consider relocating if that's possible.

I wouldn't. House prices are still going up especially in London and the SE. I would be worried of being priced out of the market whilst you're renting. Rental prices in the south east are expensive, more expensive than a mortgage.

It depends what you're looking to achieve. If you need a bigger property, then it might be to the way to go if you can't afford to buy one of similar size in the meantime.

We came off the property ladder for 2 years and it worked out very well for us - we sold just before house prices came down quite dramatically and bought 2 years later when the market had flattened a little bit. We rented a house for the 2 years that we probably wouldn't have been able to afford to buy (bigger) and the rent was £600 less than our mortgage. So whilst it is wasted money in the overall scheme of things, we probably broke even (reduced rent + interest on equity in the bank v paying a mortgage down + losing out on potential increase in value of property). But, we also gained from not having any maintenance costs whatsoever for 2 years (all down to the landlord) and more time (no DIY) and when we did buy, I think we got a better deal (not with the bank but with the seller) because we were well placed to move quicky and had no chain. We found the landlord to be lovely, didn't feel like he was likely to boot us out because we were good tenants, OK we couldn't put the children's pictures on the wall etc but we really made it our home for 2 years.

With the interest rates as they are the moment, you're not gaining anything by sitting on your equity for 2+ years. I would be very surprised if the rent on a 4 bed house was cheaper than a mortgage down south. Our current mortgage is 450 pm, I couldn't rent a shoe box for that much let alone a house!

Thinking of doing similar, we have a house in prime area, close to much desired schools so there is definitely a premium. But our kids will have shortly moved on, considering moving close to the private school we want our kids to go to and closer to DH work.

Selling and buying is one solution, but with stamp duty, and a move to an a more rural area not totally convinced. So more sensible and cost efficient would be to rent ours out and rent in more rural area. If we love it then we can sell ours at a later date. Can't imagine we will lose out in the big scheme of things!

I wouldn't do it.

We were thinking of selling our house, a couple of EA's suggested we sell and move into rented as there was nothing we wanted to buy available. We refused as to rent an identical house to the one we wanted to sell would have been twice our monthly mortgage payments! Most importantly we were advised by people who had sold then rented not to do it. EA's prioritise those who are selling through them so we would miss out on properties.

The cash you have won't hold its value - you would pay tax on the interest (such as it is!) and in the meantime, inflation will erode it.

We had to move for jobs a few years ago. We rented out our 3 bed (nice house on the coast) and moved to a MQ (DH was in forces) which was dull but practical and in London We lost our emotional attachment to the old house, and realised that we would be staying in London for the forseeable. We put it on the market after about 2 years. At that time we were actively looking to buy. A cash buyer (with mortgage offer) is more attractive. But I wouldn't have sold unless I knew we wanted to buy more or less immediately.

I think it goes back to your individual circumstances - if you don't have much equity (would suggest you don't if you have £60k on a £400k house) then you've probably got quite a substantial mortgage (presumably you owe £320k+ and you'll then have to pay estate agents fees for selling) your rental payments would probably be less than your mortgage payments. And if you look around, there are still some decent deals to be had savings wise if you look around for deals and are prepared to switch accounts after a 12 month bonus rate finishes.

For me personally, I don't know anyone who as regretted coming off the ladder temporarily. Good luck with whatever you decide.

In your shoes I'd sell and buy another 3 bed house that could be extended when you eventually have the money - be it into the attic or into the garden