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I'm guessing it's the done thing for newbies to introduce themselves on the forums so Hello!I've from Scotland and currently living in Aberdeen but moving to Edinburgh for a new job soon. I've been lurking on these forums for a while to try and decide what to do with my flat. I used some inheritance money as a deposit when I was a student nearly 12 years ago and have been living here ever since. I have paid off around 75% of the mortgage so far.I was thinking of selling and maybe using that as a deposit for the next place but the market in Aberdeen took a big hit during the recession and hasn't recovered as much as I would like. If anything, I would be losing slightly if I only consider purchase price, repairs and renovations over the years (I know I have been living here for all this time so it's not a fair comparison but still )So I'm debating renting the place out but I'm not sure if it's a good idea to be an absentee LL as I'll be nearly a 3 hour drive away.What's the opinions?
I would definitely look into turning your flat into a BTL property by taking a BTL mortgage out on it up to around 60% LTV.This would redeem the remainder of your residential loan and leave you with some money left over as a deposit on your new property in Edinburgh.You can use your residence as a stepping stone into BTL. So rather than kill off your current property by selling it, you take a clipping (equity release), and use that to grow another asset. And then you have two properties.See - Using residence as stepping stone to BTLEmploy a reputable lettings agent in Aberdeen to fully manage the property for you.Property Tribes' lettings partner, Northwood, who have been in business over 20 years and are one of the most trusted names on the High Street, have an office near you and would be able to let your current property for you on a fully managed basis.Aberdeen
207 - 211 Rosemount PlaceAberdeenAberdeenshireAB25 2XS
Get in touch with them to appraise your property for rental, as the monthly rent you achieve will determine what loan to value BTL mortgage you can take out, and this in turn will impact how much equity you can release from the Aberdeen flat to help you fund a residential purchase in Edinburgh.Using a tree analogy - most people arrive at their retirement with one tree that they have to cut down to fund their retirement. Buy to let investors arrive at their retirement with an orchard.Make your flat in Aberdeen the first tree in your orchard. In 10 years time, you will look back and think it the best thing you ever did.BTW - the above is exactly how I got started in property 15 years ago - by changing my flat in Finsbury Park, London to a BTL mortgage, releasing equity, and buying another property to live in, so I am speaking from experience!Hope that helps and good luck!
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Not disagreeing, Vanessa, but just playing devils advocate.
Would you ever consider selling the place in Aberdeen? For example, if you thought that the place in Aberdeen was in a particularly bad area or that Aberdeen did not have good prospects in the near future, would you consider selling the place in Aberdeen and getting a BTL in place with better prospects, possibly where the OP is moving to? Yes, there will be more expenses, additional stamp duty etc but the return from a BTL in an area that does well should offset these over the medium to long run?
Additionally, how about selling the place in Aberdeen and using that money to buy the biggest place in the best area that the OP can afford in Edinburgh, with a couple of spare rooms that you can be rented out?Personal mortgage rates should be less than BTL and you should be able to borrow at a higher LTV? Relatively effective from an expense perspective (no additional stamp duty, managing agents not necessary, no RGI etc) and avoids concerns about being an absentee LL? May be effective from a tax perspective as well with rent a room relief?
Good idea in theory, but the OP mentioned in the opening post that the he had taken a hit on the flat financially, and was not too keen to crystallise that ... hence keeping it as a BTL seems a good option. The market is very stagnant at the moment as well, so it may take a long time to sell and/or not achieve a good price.
Thanks for the replies, very helpful!I was hesitant in selling mainly because I'm not sure I'll like this new job in Edinburgh as it's a slight change in career path. It would also be a financial hit but I've saved in rent for the last 12 years in Aberdeen so not really in the grand scheme of things. I should also wait till I pass the probation period before making such a big financial commitment!The BTL mortgage at 60% LTV is a bit of a game changer, I never thought of that. Would hopefully provide some financial stability long term. I tried the absentee landlord thing with a friend when I was working away for a while but it didn't turn out too well. Will definitely check out Northwood if I go that route.