advice on property please,?

Question

what makes better financial sense.I own a property that would fetch offers over 70k [scotland ] i am mortgage free.I Want to buy a new property at offers over 80k should i -
(option 1) sell my property and stay mortgage free (option 2) rent out my own and rely on the rent paying 80% of the mortgage payments on new property [not sure if i would even get mortgage for this amount even using my house as colateral as i am on very low income at the moment ] (option3) buy new property out right and obtain small motgage for family members council house [would get full discount ] this property is in higher priced area than my own, has one less bedroom and fetches offers over 70k in resale, but would not receive any financial returns from it for many years. In an ideal world would love to be able to own all 3 but wouldn't want to risk losing my own or family members home p.s have no pension. would be really !!!! grateful for any advice hope all this makes sense

still have over 30 years till retire

Answer 1

Having more property is better long term but option 2 doesnt stand well if you have a low income. How do you pay both mortgages if your old house is not rented out. You always have to budget for months when you have no tenant. Could you afford the cost if say the house wasnt rented out for 4 months of the year?

Sometimes you have to take risks. Option 1 is safe. No worries.
Option 2 is not an option if you couldnt pay both mortgages for a period of time.
Option 3 is a risk but relatively safe as the is only i mortgage to pay.

Good luck.

Answer 2

Sorry, don't really understand option 3. It sounds like you want to have your existing property, buy the new property outright (does that mean you have the cash somewhere?) and then take a mortgage to buy a council house. If this is the case, I'd say go for option 3 as long as you can meet up all the repayments on the council property. Though you get no returns yet, you will in time esp since you still have a number of years before retirement.

But out of option 2 or 1 I'd say go with 2. Option 1 only makes sense if there's somewhere you could invest the money you make that will pay for your rent (you'll still have to live somewhere except you're living rent free somewhere) as well as give you a bit extra income.

Good luck

Answer 3

In financial terms it may make sense to hold on to several properties for a long period of time - in excess of 10 years.

If you are going into this blindly trusting to luck rather than looking at property as a business then you are taking a big gamble. So what is the answer? Study investing in property. Sounds daunting but it means talking to other landords & property investors & studying your local property market very carefully. You will have a local landlarods assocation that you could seek advice from. Think about the financial risks. What will your income from the properties be? Are the properties in an area of high rental demand? Is your property equipped to attract the best tenants? You will pay tax on any profits from the letting. You need to understand what expenses you can offset against tax. Finally when you sell-up you need to understand any capital gains tax implications.

You should aim to make a profit from your letting. If you don't or if the profit is low then it is a bad investment property for letting purposes.

When you buy look to buy as cheaply as possible from someone that needs to sell up & move on quickly.

In addition the the money - which is great you need to be aware of practical reality regarding letting. You become a landlord. This is work. You have the risk that tenants will not pay & will damage your property or be a nuisance to the neighbours. That is a pain. You can usually make more money by letting out as many individual rooms as possible rather than the whole house. This is a lot more work thought because you have more tenants & they come & go much more often. Letting agents eat a significant part of your money.

I should sell this pricess information!! Good luck

Answer 4

If you are currently low income, you should rent the existing house to help pay for the new mortgage. Over time, the value should increase, and then you could sell it and pay off your new mortgage, or keep it for extra income. You shouldn't have any problem getting a mortgage, a bank would be crazy to pass up this opportunity. But you should also do what is realistic. Maybe wait until your income is better. Really a decision only you could possibly make.

Answer 5

It is always a better deal when money or property are working for you. Scotland has different laws governing mortgages and finance so you would have to speak to a Scottish Mortgage Broker - even though you are on low income you can self certificate your income on the back of the mortgage free property. Technically you have £70k in the bank (in the form of a property). Two properties are growing in value rather than one = more profit long term.

Answer 6

....option 2 is better sense becauseonce it finishes paying for ur house it will then give u more value. attempt to get the mortage but i would consult with your own financial advisor in scotland im unsure of the laws there and ur full financial condtion

Answer 7

If you are close to retirement, safer route is the best route. :) good luck!