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For work reasons I have to relocate. I currently own (it's been just over a year) a house for which I am paying a mortgage.

I'd like to make something good of this purchase so I was wondering if waiting for a better time to sell is worth it or the interest I'd be paying would outdo the gain.

NOTE: there is lot of renovation works in the town and a big shopping mall should be built in a couple of years. Also the price of properties in the UK is on the rise (in the order of 15k per year). This makes me think the value of my property will also raise.

FURTHER UPDATE: since it seems relevant, I live in the South East of UK (Kent) and my current rate is 2%. I currently pay around £8000 a year in mortgage. How higher should the price go to compensate that?

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    Do you have any inside information that suggests that your house will appreciate given time? (If so, let me know so I can sell some options...) (On second thought, perhaps insider trading laws would make that a bad idea)
    – Joe
    Commented Feb 20, 2017 at 21:52
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    @Joe - The UK tag means that the house will appreciate given time. The UK housing market is not a sane market. It's not possible for house prices to continue rising at a much higher rate than inflation for ever, but they've managed it for the last century or so, and no one knows when it will end.
    – AndyT
    Commented Feb 21, 2017 at 10:33
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    Re council tax for empty property: I'm afraid that you do now have to pay some or all of it: gov.uk/council-tax/second-homes-and-empty-properties
    – Steve Melnikoff
    Commented Feb 21, 2017 at 16:55
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    That's the normal practice, yes.
    – Steve Melnikoff
    Commented Feb 21, 2017 at 20:59
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    @algiogia - the amount you pay for the mortgage, plus all other fees associated with the unused house. Taxes, insurance, heat, maintenance, etc. Basically whatever it will cost to own the home that you won't be living in. And when you are comparing it to the other side, remember that houses that have been unoccupied for years tend to sell for a discount compared to occupied homes.
    – Joe Strazzere
    Commented Feb 21, 2017 at 21:06

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You are making an assumption that the house will appreciate in the short term, which there is no way you can know. You will probably take a bath financially selling a house after one year into a mortgage even if you sell it for what you paid for it.

If there is any chance you might relocate back it is definitely worth keeping it, otherwise I'd say cut your losses. The only upside might be if you could rent it out, keeping in mind that you generally need to rent for about double your mortgage payment to get positive cash flow. Letting it sit empty while you wait for it to appreciate is undoubtedly going to cost you big-time.

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Usually, sell.

Every month -- arguably every day -- you own the house it is costing you money for mortgage and taxes and upkeep. Unless it is also producing income, or you are actually living in it, that is a serious problem. In any sane market, it is extremely unlikely that the house can gain enough value to offset that loss.

Renting it out, even if you lose money versus the costs, would at least slow the bleeding... But unless you actually want to deal with rental, or strongly expect to return very soon, selling rapidly for a good price is usually optimal.

Of course when setting the asking price, and negotiating offers, you are going to have to consider exactly this trade-off.

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You are weighting a certain cost of the mortgage interest versus the possible gain of the value of the house.

Take the interest you pay per month and divide it by the current value of the house. Say your interest is 3% of the value of the house (may be more or less depending on the balance owed and the interest rate of your mortgage).

Say the average appreciation in your area is also 3%. But that means that there's only a 50% chance that the actual appreciation will be more than that (assuming the odds are equal either way), and there's a 50% change that you'll be worse off.

Generally, trading a risk-free loss for a risky gain of equal size is not a good investment; you generally can find better average returns on risky investments, so your best bet is to sell now and pay of the mortgage.

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    Mortgage rates are around 3% in the UK. Across Southern England you're looking at 5-10% appreciation in the past year. Further North, and into Scotland, and you're looking at 3-5% appreciation. Much depends on where exactly OP lives/owns.
    – AndyT
    Commented Feb 21, 2017 at 10:39
  • @AndyT The question is not 'would it have been better for me to sell last year or wait to today?', it is 'will it be better for me to sell today, or wait another [x] year(s)?' Whether or not you think last year's return will continue, you must accept that there is risk that next year will be different. If you ignore that risk, you still take it on regardless, and you may become undercompensated for the true nature of your risk.
    – Grade 'Eh' Bacon
    Commented Feb 21, 2017 at 19:57
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    @Grade'Eh'Bacon - I don't disagree with anything you've said. But DStanley has assumed 3% appreciation, and then made a conclusion and recommendation ("your best bet is to sell now and pay off the mortgage") based on that. I was objecting to a recommendation based on what I took to be a poor assumption. Further research suggests that maybe 3% isn't a bad number to work off; if DStanley edited this in then this would be a good answer.
    – AndyT
    Commented Feb 22, 2017 at 9:20
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It depends where you are going to live and how you are going to pay for your new accommodation. If you are moving within the UK and intend to buy another house you run into the problem that you will find it hard to get a second mortgage. If you rent out the house in Kent you will probably have to change the mortgage basis on it to a mortgage that allows for letting - normal residential mortgages exclude that entirely - which would allow you to take out a residential mortgage.

It depends how much equity you have in the house. If most of the value of the house is mortgaged then you'll (1) find it hard to re mortgage on a commercial mortgage (2) may find it hard to cover the costs by letting and (3) are very sensitive to house prices falling.

Also bear in mind that for the past three months in a row, house prices in the UK have mostly either stagnated or fallen... so you cannot guarantee any increase in value of the house in Kent.

What I'm saying is ... there is no crystal ball that will tell you what's financially the best thing to do. Talk to estate agents, find out how much the house would sell for / how much it would rent for. Talk to your mortgage lender and find out if they will let you rent it out. Talk to other mortgage lenders and find out how much a commercial mortgage would cost. Do the sums, find out if renting the house would cover the costs, in which case you can gamble on the housing market continuing to rise. Don't rely on house prices continuing to rise as they have done before. Certainly where I live due to the number of new houses being built and other economic issues house prices have fallen appreciably over the past few months and may well continue to fall as more and more new houses come on the market.

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