Author Topic: Sell or hold property?  (Read 710 times)

mr crumbs

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Sell or hold property?
« on: June 05, 2017, 09:27:56 AM »
Hi MMM people, longtime UK reader, looking for some input on my house purchase plan.

Situation: looking to buy a house in the city where I currently rent in UK. I used to live in a smaller town, where I own a flat - this I currently rent out and make around 100 pm from. It is reasonably low maintenance, and tenants are nice. Flat is worth about 120k and I owe 58k on the mortgage.

I have around 40k cash for a deposit, and can borrow a max of 280k. I work as an IT contractor, take home is around 3500-4000 pm, savings rate could be better, but hovers around 50%. Nice 2 bed houses I am looking at cost around 300k and I plan on sharing with a friend to save on bills. A 260k mortgage would cost me around 1000 pm, and a lodger would bring in 500 pm.

Buying seems a good idea and workable on paper, but then I am not exactly happy about getting such a large mortgage, even if I can get a 5 year fix at 2%. House prices in the UK have just started to plateau and are bound to crash at some point - but should that stop me from buying now? I am currently paying 500 pm to rent a room in a shared house with 3 other people, and owning my own place just feels better to me with regard to repairs etc.

I am wondering if it makes more sense to sell up the old flat and get a cheaper mortgage? Or given low interest rates, go for a 90% LTV mortgage and invest in other things? I have a small amount in an index fund, but it also seems like a bad time to invest in markets...