# Currently on Tracker / Need new mortgage in next 12 months



## gwen-ten (25 May 2010)

Hi

I would appreciate opinion on this. We're a bit confused.

We're currently have a tracker, ECB + 0.99%. About 92K left to pay. We've been overpaying by about E400 per month into it for the past year or so with the intention of clearing the debt asap. We also put in a lump sum in the past month. House is currently worth about 275K.

We now plan to build a new house for which we will need a mortgage of about 300K. We will then obviously be in variable or fixed rate land.

Someone has told us that we should *minimise* payments into the tracker, hold onto it for as long as possible and divert any additional funds we have into a savings account to reduce the amount required for the new mortgage.

Is this correct in all cases? Or does it come down to the specific amounts involved?

Thanks in advance.


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## niceoneted (25 May 2010)

That makes perfect sense what you are being told. it means you will have to borrow less at a higher rate. 
I can only assume you are going to hold on to this house. Will you be renting it out or keeping it for your own use.


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## gwen-ten (25 May 2010)

Hi

Thanks for reply.

Yes, preference is to hold onto the house and rent it out.


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## TRipley (26 May 2010)

gwen-ten,

why are you over-paying on the mortgage on the house you plan to rent (including lump sums). This is a very poor strategy.

If anything you should be going interest only on that mortgage, keep the principal high and maximise your tax write-off ability from your gross rental income. 

Then you have to borrow less on the next mortgage which looks as if it will be at a more expensive rate.


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## gwen-ten (27 May 2010)

Thanks TRipley

The notion of holding onto our current house and renting it out has only come into play in the last few months, so the financial options regarding it are fresh!

You make a fair point and something we need to look at seriously as soon as possible.

Cheers.


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## TRipley (27 May 2010)

no bother,

this is your own choice obviously but if it was up to me I'd sell the current house for 275K, bag the 183K and enjoy life having a much lower mortgage in your next house - go for 2 or 3 holidays a year and live for the now!

remember when you eventually sell what would become the investment property you'll have to pay capital gains at 25%. Unless your current property is in the centre of a major urban area I'd get rid of it (and by that I mean only Dublin and Cork).


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## Mixednuts (28 May 2010)

TRipley said:


> no bother,
> 
> this is your own choice obviously but if it was up to me I'd sell the current house for 275K, bag the 183K and enjoy life having a much lower mortgage in your next house -* go for 2 or 3 holidays a year and live for the now!*
> 
> remember when you eventually sell what would become the investment property you'll have to pay capital gains at 25%. Unless your current property is in the centre of a major urban area I'd get rid of it (and by that I mean only Dublin and Cork).



For what its worth would be my choice .


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