We have a 1-bedroom flat in north-east London, which we bought in 2007 for £187K. Now the mortgage outstanding is £140K and we should probably be able to sell the flat for £185-190K.
We now want to buy a house in SW London. In the area I like the houses start at £400K (the ones needing renovation which I am generally OK with). We have about £100K for a deposit and our total income is about £85K a year before tax.
The dilemma is: do we sell the flat (which shall give us another £40-45K, so we would have around £140K for the deposit) or do we keep the flat as a buy-lo-let for our retirement as we do not have any other savings.
We should be able to cover the BTL mortgage payments using the rental income from the flat, so keeping it should not be a burden (theoretically), but then (i) we will have less money for deposit; (ii) the flat is in a Victorian converted house and it likely to require some proper renovation works at some point in the future (it already had some mould on the bedroom wall); (iii) there may be problems with the tenants etc
But if we sell it now, we won’t even return all our money (we spend another £15K on top of the purchase flat on it buying the freehold and doing some renovations) so may be we should keep it for some time until the prices rise?
To be honest, we don't really need to buy the house right now, but I am concerned that the prices in the area I like are rising quicker that we are saving the deposit (whereas in the area our flat is the prices are not rising at all) and in a couple of years time when we would need the house we may not be able to buy it…
Would really appreciate any views on what shall we do!
Thank you all so much in advance!
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Want to buy a house - do we sell the flat or keep as a BTL?
5 replies
tashka · 27/09/2013 11:14
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