Jump to content

Property/life advice needed!


shark_90
 Share

Recommended Posts

Ladies and Gentlemen of TSN, I call upon you again to sort my life out for me.

The situation is this: I got a new job within the company I work for back in August. After 5 months of arsing about, they have finally told me I can move into my new area. I currently live in Worksop, Nottinghamshire, and this new job requires a move to cover the South West.

I will be moving in with a friend for a while, until I get on my feet down there (or at least that's what he thinks grin.gif) and I can suss out the area and make plans on what I want to do property-wise.

The thing is, I can't decide what to do with my current property. It's not in the best of areas, but it's not bad. It was an excellent buy at £52,000 20 months ago, but it needed a lot doing to it, hence the bargain. Still, not bad for a 3 bedroom semi with off road parking. Loads of work has been done to the house and 6 months ago when it was valued for a secured loan, they estimated it to be around the £85,000 mark. Excellent increase in such a small time.

Since then I've done a little more work.. had a new bathroom and I'm yet to re-decorate, but I have time off mid December to tidy things up before I move.

Doing up the house and living life over the last couple of years has come with plenty of cost involved, and now I'm in quite a bit of debt. It's totally controlled debt, as it's tied into the secured loan that I spoke of.

Bearing in mind I am only 20, lead a (very) busy working a social life, I want your advice on what I should do with the house.

Obviously, all my stuff is in it. Which means whatever I do, I would either a) have to put my stuff into storage, b) rent the house furnished, or c) sell it all.

a) isn't a bad plan, as I'll have all my stuff to put in the new gaff when I sort it all out.

b) bothers me because I don't want my stuff to get wrecked. And let's face it, tenants wreck things.

c) Is also a good option, if I decide to totally liquidate.

So. Should I sell the house, or rent it. Selling means I can become nearly (and possibly totally) debt free and start from scratch with a cleaner bill of financial health. It also means another ~£800/month I can save towards the deposit (which I don't have) for the next place over the next few months. Renting it means, in the long run, I have a good investment. But it also means a lot of hassle for someone who is moving ~180 miles away.

Also, part of me tells me I'm only young and although I chose to buy a house, and will be buying another property, I really shouldn't be delving into being a landlord quite yet.

Answers on a postcard please! 169144-ok.gif

Link to comment
Share on other sites

Ben,

Welcome to the world of "what the feck should I do now?"

Its really difficult to know what to do in times like this, but from my own experiece, letting out a property wasnt a bad option at all. Well at least until I knew exactly where I was heading. And as you have already stated, also provides you with an extra bit of dosh to stash away towards the deposit.

A couple of things I would do first mate. First to get the house valued by a few agents. Just so you know the current market value. Secondly I would shop around the local lettings agencies, find out their rates etc. I would never let my house out without first having a RELIABLE lettings agent manage it for you. It can be on the expensive side, but there is piece of mind.

If you are going to let the place furnished, then everything you have there will be itemised in an inventory together with the considtion of the item upon letting it. This will all be covered by the tenancy agreement and of course covered by the initial deposit if anything is damaged, marked or destroyed. So you are covered.

I'm not against storage but have had some nightmares where stuff has got damaged and the insurance has covered the items completely. So I would never go down that route again.

I wouldnt sell everything either, cos the cost of replacing all of this when you need it again is not gonna be cheap.

Just a few thoughts mate, but personally I would let the place furnished, for an extra few quid like, with a lettings agent who is RELIABLE!! Shop about and get some prices!!

Link to comment
Share on other sites

Do not sell it!

The worse thing you can do is get off the property ladder mate, even if you end up being debt free. What happens in 6 months when you want to buy a place for £150k and they ask for a deposit? You are not going to have it.

I would rent it out unfurnished on a short term lease, if you only have a £50k mortgage you will probably get enough rent to cover the mortgage and any fees for storage of your gear. Then when you are ready to buy somewhere else either use the equity in your current property and continue to rent it or sell it and put down a nice deposit.

I pushed myself when I was twenty and now 10 years later I am so pleased I did, if my company went under I have enough equity in property now to buy a house for £250k out right pay off all my debts and have £100k in the bank which we could probably live on for 3 years if we had no mortgage. Just can't work out why I am skint every month though! smile.gif

You will kick yourslf if you let it go now.

Link to comment
Share on other sites

Regarding selling all your furniture etc. That's got to be a bad move. You'll get nowhere near what you paid for it and when you come to buy it all again, you'll pay full price again (unless you're the type who buys second hand). So, imagine you spent eg. £10k on you stuff. Come to sell it and you'll probably get £3k along with the hassle of actually doing it (sums are hypothetical but you get the idea).

So, my advice is rent the house out furnished, and be prepared to take a loss on the condition of the furniture. If it survives the attentions of the tennants, then all's good. If it doesn't, then you'll have made a bit of profit from it being a furnished house rather than un furnished, and it'll still be worth around the same figure.

Don't sell the house until you've got a new one lined up. You'll never get back on the ladder.

The secured loan is the bit that concerns me. You'll have to get that sorted mate, as the mortgage company will have to be told you're letting the house, and will need to change the mortgage. You might have to pay that off when you do, and lose some of the equity.

Just my thoughts, and probably worth exactly what you paid for them. 169144-ok.gif

Link to comment
Share on other sites

[ QUOTE ]

Just my thoughts, and probably worth exactly what you paid for them. 169144-ok.gif

[/ QUOTE ]

smile.gif Excellent!

I think you have a good point on renting the place out furnished, probably a wise move, unless his furniture is worth thousands.

I wouldn't bother to tell the mortgage company that you are renting it out, for now anyway, play dumb on that one, they may make you switch mortgages over, for a start it may be a higher rate, and more importantly you may have to pay your secured loan off and put down 25% deposit on a buy to let mortgage, will you have 25% left after that is done?

Get a letting company round to see what sort of figure you would be looking at to let it furnished, it may cover the mortgage and the loan?

Link to comment
Share on other sites

[ QUOTE ]

I currently live in Worksop, Nottinghamshire, and this new job requires a move to cover the South West.

I will be moving in with a friend for a while, until I get on my feet down there (or at least that's what he thinks grin.gif) and I can suss out the area and make plans on what I want to do property-wise.

Loads of work has been done to the house and 6 months ago when it was valued for a secured loan, they estimated it to be around the £85,000 mark. Excellent increase in such a small time.

Doing up the house and living life over the last couple of years has come with plenty of cost involved, and now I'm in quite a bit of debt. It's totally controlled debt, as it's tied into the secured loan that I spoke of.

Bearing in mind I am only 20, lead a (very) busy working a social life, I want your advice on what I should do with the house.

It was an excellent buy at £52,000 20 months ago,

So. Should I sell the house, or rent it. Selling means I can become nearly (and possibly totally) debt free and start from scratch with a cleaner bill of financial health. It also means another ~£800/month I can save towards the deposit (which I don't have) for the next place over the next few months.

Renting it means, in the long run, I have a good investment. But it also means a lot of hassle for someone who is moving ~180 miles away.

Also, part of me tells me I'm only young and although I chose to buy a house, and will be buying another property, I really shouldn't be delving into being a landlord quite yet.

[/ QUOTE ]

Ok, I've considered this a lot, broken it down to what I consider the salient points (above), and here's my thoughts.

At the age of 20, what you don't need is to be starting a new job and life in the south-west and trying to run a let house in Nottingham, with all the hassle, stress, tax implications etc. You also want to avoid a situation where if you have bad tenents or no tenents you're supporting renting a place in the SW and paying your mortgage and loans.

From your figures (house £52K, now worth £85K, selling just covering debts and mortgage) you've got circa £30K of debt! Now I don't know how much you earn, but aged 20 I'm guessing it's not absolutely huge, and £30K of debt seems an awful lot.

Now I'm big into owning property, but in your circs (and with the property market generally felt to be unlikely to make any big increases in the short term) I'd say sell the house. This will free you from the hassle and responsibility and more importantly zero your debt and free you from the interest you're paying each month.

Live with your friends and put that £800/month you mentioned into saving a decent deposit up. Just six months at that rate will nett you nearly £5K, 12 months (if your friends would put up with you that long), nearly £10K. The bank will be paying you interest instead of the other way around.

Good position then to start afresh with a decent deposit on a place and away you go.

I know you've got some equity in your current place, but it's entirewly mopped up by your additional debt. Given your move to another part of the country and your age, zero it all and start again from scratch would be my advice.

Put your stuff in storage, get yourself straight financialy and in your job, new life etc then move forward without the debt millstone.

Link to comment
Share on other sites

Ben, just some observations to chuck into the melting pot.

Don't forget that if you rent the place out and make a profit it will be taxable! Also you will probably have hassles (trust me I have 2 properties I let out).

If you rent it out and want to buy somewhere else then you may run into trouble since you will be (i assume) keeping your existing residential mortgage, rather than getting a buy to let.

Normal Buy to Let mortgages require c. 20% deposit, and need the rent to cover the interest payments +20%.

Debts penalise you when applying for mortgages since they deduct the amonut need to service the debt each year from your annual salary THEN multiply by their multiple. Thus assuming someone earned £25k a year, but had a personal loan costing £500 per month then a mortgage company who applies a 3.5 X multiple would say.

£25k less (£500*6) = £22k X 3.5 = £77k maximum loan.

Have a look at the property down here before making a decision, because there isn't much around for less than £150k.

I'm not sure that Worksop has got far to fall, since it is a lot lower than many other parts of the country.

Personally I would get off the housing ladder, clear your debt, and exercise all self restraint to save getting yourself in the brown and sticky stuff financially once you are debt free, sure you have no property, but you are a young guy in a skilled profession thus your payrises should start outpacing inflation rapidly, in a few years all this will seem like a drop in the ocean 169144-ok.gif169144-ok.gif

Setup a standing order for the amount of your current mortgage to a savings account, and forget about it for 6-12 months.

Link to comment
Share on other sites

Agree with Ari and D@nks. Sell - especially as you are [by the sounds of things] having a complete change of lifestyle and will not be moving back: seem to remember you saying at the Windsor meet that you don't have family there but picked it as a value area for your foot onto the ladder. It has served you well and was an excellent decision!

I would personally sell up and invest your 30-35k into a mini-renovation project in the South West. With the boom over, this will be a good way to stay ahead of the game and might even soften the blow if the market falls.

Ian

Link to comment
Share on other sites

I think I would follow all of the above !

I would let the house for 6 months while I decided that the move south had definitely worked out then I would sell the property up North, clear the debts & svae for a deposit.

I would use a letting agent due to distance involved, under "rent a room" don't pay tax on first few thousand eearned.

My concern would be the estate agents fees, stamp duty etc. if you decide you want to move back in a few months.

If you were sure you will be staying down south I would sell the house, clear the debt & start saving towards a new place

HtH

Martin

Link to comment
Share on other sites

I can't see what age has to do with this issue. You are 20 years old and as such you can do anything you like as long as you can be bothered to do it.

I would rent the house out on a 6/12 month contract with an agent. How much hassle is that? Probably not alot more hassle than actually trying to sell the place?.

If, after this time you decide its not for you, then sell it. Once I got on the property ladder, I would never get off it. For a long term investment you'll never lose money.

Link to comment
Share on other sites

What area of the South West you would be moving to? If it's Bristol area, then you've got no chance buying a pile of bricks down here for less than £100k. Would be lucky to get a 1 bed flat for that unfortunately! So if you're looking for a similar property to your current one then you're looking +£130k. The horrible fact is that the further south you move, the more expensive property gets.

Have you scoped out what you could expect per month from renting out your gaffe? If it were me, I would rent it out as long as doing so would;

Cover your mortgage

Cover maintenance

Cover agent fees

Put £50 in your back pocket per month

Ideally, could you rent out to a couple of mates? Work out an amicable agreement so that your stuff can stay up north and you can extend the empire southwards! In the meantime, durely any area in the north yet to hit the £100k mark must be due another rise? In which case, your already great investment just got better!

In an ideal world I think it would be wise to keep your place up north if you can afford it.

Good luck!

Link to comment
Share on other sites

If I was in your position, I would keep the house, take only the good furniture with me and leave the rest in the house, get a reliable local letting agent to let and manage to the property for you part furnished.

You can then get a 'let to buy' mortgage for a new place in your new area. This mortgage is not to be confused with a 'buy to let' mortgage though, it's very different but can still offer you 100% of the value of your new property. I would also suggest using Natwest for a second mortgage, they are the only lender who do not ask you if you already have a mortgage, sneaky but worth the risk wink.gif

Hope it all works out well for you! 169144-ok.gif

Link to comment
Share on other sites

Please sign in to comment

You will be able to leave a comment after signing in



Sign In Now
 Share

×
×
  • Create New...