Viability of Second Property and Mortgage

H

HPSauce

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Hi Folks

I'm wondering if anyone has knowledge about the likelihood of securing a mortgage for two properties at once?

Current PPR is on an ECB + 1.25% tracker with KBC, there's 200k and approx 21 years remaining. LTV would be less then 50%. This was a joint mortgage with a parent, fully paid for be me though.

The second property I'm considering and would like to move to is worth 625k, and I'd be in a position to fund half of that up front leaving a mortgage of approx 300k and an LTV of less then 50%.

I'd like to keep my current PPR and use it as a rental property. It's in sought after area and the rent would be around 1.75 times the mortgage payment at the moment, obviously if the ECB rate goes up it becomes less lucrative.

I'm 35 years old and earning in excess of €200k PA, no other loans and the the deposit for the second house would come from savings and cashing in an equity portfolio. Realistically I could cover both mortgages if I needed to in the event of a gap in tenancy etc... I'd prefer not to of course.

Is it viable to approach a bank to discuss mortgaging a second property? I'd hope to keep the tracker rate I have at the moment, not sure if that would be allowed though. Selling the existing property isn't really an option for personal reasons, I understand it's probably the "cleaner" option though...

Constructive input is appreciated, thanks!
 
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HPSauce said:
I'd like to keep my current PPR and use it as a rental property. It's in sought after area and the rent would be around 1.75 times the mortgage payment at the moment, obviously if the ECB rate goes up it becomes less lucrative.
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So in effect you'd have to subsidise the mortgage payment after tax, right?
 
NoRegretsCoyote said:
So in effect you'd have to subsidise the mortgage payment after tax, right?
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I probably explained that poorly, mortgage is €950 at the moment and I would expect rental income to be around €1600 looking at similar properties in the area.
 
HPSauce said:
I probably explained that poorly, mortgage is €950 at the moment and I would expect rental income to be around €1600 looking at similar properties in the area.
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That's a 5% gross yield, maybe net yield a little over 2% after expenses and tax.
 
Dare I ask sector of employment? Well done on a great income, and you must be one of the youngest with a tracker mortgage too.

I have been discussing the same thing with lenders, but seeking maximum amounts on another mortgage, while retaining current property. You won’t have any issue, particularly given your clear ability to save your income. I started a thread, the main theme of the responses were to consider reasons for holding current property as the tax on rental income makes the economics highly questionable, certainly in the short term. I too have reasons for wishing to hold current place.
 
NoRegretsCoyote said:
That's a 5% gross yield, maybe net yield a little over 2% after expenses and tax.
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I guess you're highlighting the fact that it's not a great return on the amount of capital I'd have tied up? I'd be with you on that one yeah, I don't particularly want to be a landlord either but just not possible to sell it in the short to medium term as I said.
 
With those figures, you can pretty much do what you want. You could even pay off your existing mortgage and easily qualify for a larger mortgage on the new property without any affordability concerns on over 200k a year income. I know if I had a parent on the hook for my debt, that's what I would be looking to do. Tracker or no Tracker.
 
HPSauce said:
I'd be with you on that one yeah, I don't particularly want to be a landlord either but just not possible to sell it in the short to medium term as I said.
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I guess this has something to do with a parent being on the mortgage. I don't know much about the legalities but I've seen people get good advice on how to sort this out on AAM, so if you ask...

Otherwise I think it's a miserable net return for the risk involved. Being a landlord (even with an agent) involves work when you least want it in my experience.
 
presidenttttt said:
Dare I ask sector of employment? Well done on a great income, and you must be one of the youngest with a tracker mortgage too.

I have been discussing the same thing with lenders, but seeking maximum amounts on another mortgage, while retaining current property. You won’t have any issue, particularly given your clear ability to save your income. I started a thread, the main theme of the responses were to consider reasons for holding current property as the tax on rental income makes the economics highly questionable, certainly in the short term. I too have reasons for wishing to hold current place.
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Yeah sure, I don't want to get into too much detail but it's a pretty niche technology sales role. 50% of the earnings would be through bonus/commission but it's at consistent levels so I'm confident they'll take it into account. Figures are conservative also.

I got my tracker mortgage back in 2007 / 2008 via Irish Mortgage Corporation with the help of some coaching from them and flattering salary certificates from my then employer. Back then I didn't know what a tracker mortgage was, or what I was signing in terms of trackers and rates, at that age I just wanted to buy a house. I was under huge pressure at the outset and thought I might have to sell it early on, but turns out it was a 3 year fixed rolling onto a tracker then, the payments dropped significantly overnight. I'd have been in serious trouble otherwise.

Thanks for your input, I'll check into your thread
 
NoRegretsCoyote said:
I guess this has something to do with a parent being on the mortgage. I don't know much about the legalities but I've seen people get good advice on how to sort this out on AAM, so if you ask...

Otherwise I think it's a miserable net return for the risk involved. Being a landlord (even with an agent) involves work when you least want it in my experience.
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Yeah it's nothing even close to a legal issue, just not the right time from a family perspective to sell the house.

I hear you re the work associated with being a landlord. I've enough on my plate professionally so it won't be something I enter into lightly.

Kicking this down the road a bit might make things a bit easier anyhow. Glad to get some clarity on the options either way
 
I'm in a similar position to @HPSauce with similar figures, so hope you don't mind me adding to this thread, I think it's relevant/related. In my case I'd like to keep the existing house for a period of time while we renovate the new one and to allow us buy without being in a chain of buy/sells that reduces our flexibility. We'd be telling the bank we would rent it, but 99% certain we would just keep it for 6-12 months then sell it and clear the first mortgage.

My question is are there particular banks that are better to approach for something like this or perhaps a broker? Having spoken to AIB they will consider the mortgage cost of the first property as an overhead, but will not consider the possible rental income at all, unless you have 2 or more other rental properties successfully rented out. When I took the mortgage on the first property with KBC a few years ago they did take the rental income into consideration and actually allowed us a larger mortgage if we kept the previous property and rented it out.

Any experience appreciated.
 
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