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My mortgage has gone up significantly: Should I keep my rental properties or sell?

Oct 9, 2023 | Finance, Industry News, Landlords

As a landlord, you’ve likely experienced the ups and downs of property ownership. You’ve enjoyed the steady rental income, watched your property appreciate in value, and maybe even weathered a few tenant turnovers. But now, you find yourself facing a common dilemma: your mortgage has gone up significantly, and you’re wondering whether it’s time to reevaluate your investment strategy. In this article, we’ll explore the factors to consider when deciding whether to keep your rental properties or sell, helping you make an informed decision that aligns with your financial goals.

Evaluate your current financial situation
The first step in deciding whether to keep or sell your rental properties is to assess your current financial standing. Take a close look at your income, expenses, and overall financial health. Consider the following questions:

  • Can you comfortably afford the increased mortgage payments without sacrificing your own financial stability?
  • Are your rental properties consistently generating positive cash flow after accounting for all expenses, including maintenance, property management, and taxes?
  • Do you have an emergency fund to cover unexpected expenses or periods of vacancy?

If you’re struggling to meet your financial obligations or facing cash flow challenges due to the higher mortgage payments, it may be time to consider alternative options, such as selling one or more properties.

Reevaluate property appreciation and market conditions
Property values fluctuate over time, and local real estate markets can be influenced by various factors, including economic conditions, supply and demand, and neighbourhood developments. It’s crucial to reassess the current value of your rental properties and research the local real estate market trends. Consider the following:

  • Have your properties appreciated significantly in value over the years?
  • Is your area experiencing a seller’s market with high demand and rising property prices?
  • Are there upcoming developments or infrastructure improvements that could impact property values positively?

If your properties have appreciated substantially and your market is favorable for sellers, selling now could allow you to cash in on your investments at a profit.

Review your long-term investment goals
Your decision to keep or sell rental properties should align with your long-term investment goals. Consider your objectives and priorities:

  • Are you looking for short-term financial gains, or are you focused on long-term wealth-building and retirement planning?
  • Do you want to diversify your investment portfolio or explore other opportunities?
  • Are you prepared for the responsibilities and challenges that come with property ownership, such as property maintenance and tenant management?

Assessing your investment goals can help you determine whether holding onto your rental properties aligns with your broader financial strategy.

Explore financing options
If the primary reason for considering a sale is the increased mortgage payments, explore potential financing options. You may be able to refinance your rental properties to secure a lower interest rate or extend the loan term, which can help reduce your monthly expenses and improve cash flow.

Consider tax implications
Selling rental properties can have tax implications, including capital gains taxes. Consult with a tax professional to understand the tax consequences of selling your properties and explore strategies to minimise your tax liability.

Deciding whether to keep or sell rental properties when your mortgage has gone up significantly is a complex decision that requires careful consideration of your financial situation, market conditions, investment goals, and tax implications. Take the time to evaluate these factors thoroughly and seek advice from financial professionals and real estate experts to make an informed choice that best suits your unique circumstances.

Whether you choose to hold onto your rental properties or sell them, remember that your decision should align with your overall financial strategy and long-term objectives.


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