Canada seems to be a popular destination for UK citizens looking to start a new, more fulfilling life. Over the past few years I’ve known 3 or 4 different couples who’ve taken the plunge and made the tough decision to leave their life in the UK behind and start a new one living in Canada. As a former mortgage advisor some of those friends have questioned me regarding the biggest dilemma they face as they organize the big move to Canada, ‘What Should I Do With My House?’ Should I sell or rent out my house?
If you’re a homeowner the decision of whether to sell or rent out your house has likely been plaguing you as you progress toward emigrating. In this article we’ll take a closer look at the option of renting and hopefully it will help you decide if becoming a landlord is the right option for you.
Emigrating Is No Ordinary Move
As you’re going to be moving to the other side of the world to live in Canada, renting out your home becomes more complicated than it would ordinarily be. Unless you can arrange for a family member to regularly check on your property, you will likely have to leave it in the hands of a rental agent to deal with all aspects of property rental. Using a rental agent means you’ll have more fees to pay and less control over the quality of tenant you will allow to rent your home.
What About Your Mortgage?
If you have an outstanding mortgage on your property, could you afford to pay the mortgage if the property is unoccupied for a lengthy period of time or if the tenant decides to stop paying the rent? It’s possible to insure against these eventualities but again this will lead to even more fees and less rental income.
You’ll also need to talk to your current mortgage lender and find out where you stand in regards to renting, make sure you get firm answers to the following questions.
- Will your mortgage lender allow you to rent out your property on your current mortgage deal?
- Will they only allow you to rent out your property for a certain period of time?
- Will they want to increase the interest rate payable if you do decide to rent?
- Will you have to switch the property to a buy to let mortgage?
If your mortgage lender won’t allow you to rent out your home, you’ll have to look for a buy to let mortgage. Buy to let mortgages often require large deposits so you’ll need to have sufficient equity in your property to qualify for a buy to let mortgage.
I don’t only want to point out the negative aspects of property rental because there are also some positives.
If after considering the potential problems outlined above, you still feel you’re in a position to rent out your house rather than sell it, this could well prove to be a good long term investment. The UK housing market is really suffering at the moment. Although house prices haven’t dropped as much as many might have expected, the reality is that if you want to sell your UK home in this market, you’ll probably have to accept an offer substantially below previous or even current market valuations. If you can afford to hold on to your house and rent it out for a while, it could prove to be a nice little investment for future years.
One final thing that shouldn’t be underestimated is the mental impact of your decision.
You may want to rent out your UK home so that you’ll have something to come back to if things don’t work out as you’d hoped in Canada. In theory keeping a safety net is a wise course of action. On the other hand when you’ve made the decision to start your life over in a new country, your UK home might prove to be as much of a stumbling block as a safety net. Emigrating to Canada is never going to be easy and some people would argue that it’s best to have a clean break and fully commit to your new life.
What Do You Think? Is It Better To Have A Clean Break When Emigrating Or Should You Have Something To Fall Back On?
Editor’s Note: When I moved to Canada I sold my house and almost everything in it. Life in Ontario, Canada is amazing, I love it here and all the opportunities that it has given me as well as a loving wife. I had and still have no desire to move back and I’m glad I did sell as the mental impact would have been too much with all that I had going on here. Since then the house has dropped in value so I’m happy I didn’t hang on to it.
One last thing I would say is, don’t procrastinate, embrace the changes and go with the flow. It’s never going to be an easy move, always have a “Plan B”, mine was just cold hard cash. Although I’ll be back to visit the UK I’ll be shacking up with the relatives.
Guest Post By: Adam is the voice behind the blog Money Bulldog UK where he blogs about finance and more.
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