Property/DIY
Bigger mortgage or sell BTL to fund
Royalsingingseal · 29/03/2023 11:06
We have found a house we love which would need some work and a mortgage so looking at around 70k, we have recently paid off our current mortgage.
We also have two BTL properties with long term lovely tenants.
However selling one would fund our move and the renovations meaning we are again mortgage free.
DH doesn’t want to sell and says it makes better financial sense to keep both BTLs.
I can’t get my head around the figures and which is the best option.
DH is lovely and I’m wondering if he feels guilty for the tenants and it’s clouding his judgment.
The tenant did mention she may be moving on a few months back but hasn’t mentioned anything since but would be given as long as they need to find somewhere so wouldn’t be made homeless.
Any advice would be much appreciated
BakeOffRewatch · 29/03/2023 11:15
My opinion is that if you can afford the mortgage, then keep the BTL as it is not a good time to sell. Part of the investment in them is selling at the right time for the capital increase.
However if the mortgage might be unaffordable, or if mortgage increase rates might be too much for you, then those are things to consider. Also building supplies and labour rates are increasing a lot too - could jump a lot in the window of completing the purchase.
SonicLego · 29/03/2023 11:27
As @BakeOffRewatch mentions, depends how affordable the mortgage is. I would probably keep the BTLs is possible, unless the yield is not great?
Also, is a mortgage on the BTL an option? Might be tax efficient if you can get a 20% tax relief (obviously depends on rate difference between both!)
Royalsingingseal · 29/03/2023 11:28
@BakeOffRewatch thanks. We can afford the mortgage but I’ve gotten used to not having one. The BTL is in a lovely area and not typical of a rental area so would sell as a FTB for a decent amount. It does have a small mortgage on it and we pay the full rent amount to that to pay it off so not taking any money that would cover our mortgage costs. I just keep going back and forth.
Cottipus · 29/03/2023 13:07
What’s the EPC rating of the BTL? Look into the proposed minimum EPC regulations being planned for 2025. Do you make a profit on your BTL (are your mortgage payments repayment or interest only?)
We are selling off our investment properties gradually. I am concerned about further meddling/tax/regulations from the government down the line. I would rather sell the properties and pay down debt on our main residence with interest rates rising. If the conditions for small private landlords improve in the future we may re-enter the market if we’re in a position to do so.
It all depends on your personal circumstances/risk appetite/investment goals/income I guess.
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