Time to move: Sell or rent your house?
In this hot property market, property decisions can be a bit complicated. By the end of 2020, Kiwis were seen making some pretty critical changes to their lives post-lockdown. According to Infometrics New Zealand data, more and more Kiwis are considering lifestyle suburbs and regions outside cities – a trend triggered by housing affordability and work-life balance priorities.
If you own your house, and are looking at moving to another city or region, you might be thinking: Should I sell or rent out my home? Here are some things to consider.
Clarity over your financial situation
Before making any decision about your property, it’s a good idea to have a clear understanding of your financial situation and needs. Try to really think about why you’re moving in the first place, what your financial and lifestyle priorities are, and why you may want to sell your house or rent it out.
A good place to start is to get a property valuation, so you know how much your property is worth if you sell it, or how much equity it may have accrued since you purchased it. These numbers can give you clarity as to what the next step could be, whether you’re considering renting out the property (and use the equity as a deposit on your next home) or selling it (and free up some cash instead, to put towards a deposit or other expenses, for example any renovations your next property may need).
Have any questions for us? Please don’t hesitate to contact us. We can help you with the mortgage process and help you gain an approval if you decide to rent your existing house and buy a new one – but we can’t tell you whether renting out your property is the right thing for you.
Pros and cons of selling your house
One key advantage of selling your house is that you could cash up the equity in your home and use it for a deposit, other expenses (e.g., renovation costs), or even add it to your retirement savings. If you sell before buying your next home, you may be a step ahead of other home buyers who make a conditional offer and don’t have cash on hand.
On the other hand, you may need to factor in other costs, like pre-sale renovations (if needed), real estate marketing, and perhaps time spent living elsewhere while you look for your next house.
That brings in factors like your budget and financial capabilities, current regional and national trends, and gauging the appropriate time to sell to maximise your sale price. As mortgage advisers, we’re here to help you with the finance side of the process, so if you have any mortgage-related questions, please don’t hesitate to contact us.
Pros and cons of renting out
Depending on your circumstances, keeping your house and putting it up for rent may allow you financial freedom in the future and a comfortable retirement.
According to financial expert Mary Holm, renting out your property if you’re moving to another region may be a good idea in the current housing market. For example, if you’re looking at moving to a region where house prices are lower, you may choose to rent your current property to keep a foot in the 'door' (otherwise, if you decide to move back there in the future, you may not be able to afford a house in that more expensive market at a later stage).
On the other hand, managing a rental comes with its own set of pros and cons. You may have to consider many things, like, does your house make for a good rental property? What does the return look like? Would maintenance costs and responsibilities be something suited to you? Would you need to hire a property manager, and if so, at what cost?
Like some advice about your mortgage?
Get in touch today - making decisions about your mortgage can be challenging, and as financial advisers, we can help you navigate the process. We are here to help you make the most appropriate decision for your financial needs and situation, so please feel free to reach out.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.