I know this question has been asked before but I guess each case is probably different.
We own 2 properties at present.
Property 1: our existing PPR, bought in 1998 for 127k (euro), now worth approx 300k.
Property 2: Investment property, bought in 2002 for 186k now worth approx 300k. Yielding 800euro pcm rent.
Property 3: We are currently buying a new PPR costing 670k.
We have released equity on our existing PPR (property 1) to purchase the new PPR (property 3) and so our mortgage on the new PPR (property 3) will be 550k.
This equity release will leave the mortgage on the existing PPR (Property 1) at 196k. If we decide to rent property 1, it should yield 900euros pcm.
We have changed our mortgages on property 1 & 2 to interest only for 3 years. Our original intention was not to sell any of the properties, at least for 3 years so that the rental income from these properties could supplement our mortgage on property 3.
With the recent rise in interest rates it now appears that these properties will yield very little after the mortgages and other expenses are paid.
For this reason, we are now considering the possibility of selling at least one of the properties (1 and/or 2). I am aware that if we sell property 1 now that we will not incur any CGT as it has always been our PPR and has never been an investment property.
Given these facts and the fact that we are probably over exposed to the property market I am wondering what course of action we should take. I suspect the most logical one would be to sell property 1 and to use the excess cash to reduce the mortgage on our new PPR (property 3).
Is this a no-brainer or are there other options I should consider? E.g. would also selling property 2 be a course of action worth considering? If we do sell property 1 should we put all the profit into our PPR mortgage or would it be advisable to invest some of it elsewhere? We both have SSIAs due next year but have no other savings.
Many thanks in advance for your advice.
We own 2 properties at present.
Property 1: our existing PPR, bought in 1998 for 127k (euro), now worth approx 300k.
Property 2: Investment property, bought in 2002 for 186k now worth approx 300k. Yielding 800euro pcm rent.
Property 3: We are currently buying a new PPR costing 670k.
We have released equity on our existing PPR (property 1) to purchase the new PPR (property 3) and so our mortgage on the new PPR (property 3) will be 550k.
This equity release will leave the mortgage on the existing PPR (Property 1) at 196k. If we decide to rent property 1, it should yield 900euros pcm.
We have changed our mortgages on property 1 & 2 to interest only for 3 years. Our original intention was not to sell any of the properties, at least for 3 years so that the rental income from these properties could supplement our mortgage on property 3.
With the recent rise in interest rates it now appears that these properties will yield very little after the mortgages and other expenses are paid.
For this reason, we are now considering the possibility of selling at least one of the properties (1 and/or 2). I am aware that if we sell property 1 now that we will not incur any CGT as it has always been our PPR and has never been an investment property.
Given these facts and the fact that we are probably over exposed to the property market I am wondering what course of action we should take. I suspect the most logical one would be to sell property 1 and to use the excess cash to reduce the mortgage on our new PPR (property 3).
Is this a no-brainer or are there other options I should consider? E.g. would also selling property 2 be a course of action worth considering? If we do sell property 1 should we put all the profit into our PPR mortgage or would it be advisable to invest some of it elsewhere? We both have SSIAs due next year but have no other savings.
Many thanks in advance for your advice.