Case study 3 investment properties but renting our family home

Rudolph13

Registered User
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Hello, this is my 1st time posting here so apologies if I repeat questions that have already been answered here. Basically I am in a financial mess or so it seems and I am at a loss as to what to do next and I hope someone here might be able to advise me or direct me to someone who could help. I just keep going round in circles never finding the right answers..

Here is my situation,
I own one property worth approx €120k ( no mortgage)
Currently rented earning €500 pm
Also another property worth approx €150k (235k mortgage)
Currently rented for €650 pm

The rents from both properties covers the monthly mortgage.

I then own 50% of a vacant property with an estimated value of €300k(also no mortgage)
This property is vacant as its owned with a family member and there are domestic situation that must be sorted before the property can be sold, I unfortunately have no indication of a timeline on when it can be sold.

I rent a house with my family costing us €1200 pm.
We have a combined wage of approx 50-55k per Annum ( both permanent contracts) and our wages cover our rent and basic costs. It's a struggle every week to make ends meet and provide for our children. Although, I do know we are in a better situation than many people out there!

We spoke to our bank(ub) briefly who told us we had no chance of getting another mortgage as we fell into arrears last year( arrears are cleared but icb shows missed payments). Also there is a mark against us for a credit card that payments were missed on, the balance was cleared and it's due to be on the report until nov 2014.

I would like to be able to find the easiest solution to buying a family home whether it means selling what we can or otherwise.
I had intended on selling property no.1 and hoping once the bank saw we had cash that they might enter discussions with us but I'm terrified ill shoot myself in the foot by selling property one and then not having enough money to cover the mortgage and the bank giving us another no.

Should I sell everything and just hope for the best or would I be better off just sitting tight for a few years and carry on renting? Would any bank/broker consider us for mortgage with our current situation or what could we do to make us more attractive customers?

My end aim us to have just one house and that would be our home for life.

Sorry for babbling on & I hope my post makes sense, I'd appreciate any options or views on this. Thank you in advance.
 
Financial mess, I don't think so, assets of €420k loans of €235k sell up and have €175k odd to buy a family home with no mortgage.

You are very lucky to be in that position.
 
In table form for ease of understanding:

|Value|mortgage
Property 1|€120k|0
Property 2|€150k|€235k
50% of property 3|€150k|0
Total|€420k|€235k
Net equity: €185k

What is the interest rate you are paying on your mortgage? I am guessing that it's a cheap tracker from the figures you have quoted. If so, you should keep Property 2 and the mortgage on it.

You have no chance of getting a mortgage to buy a house for some time.

Can you move into Property 1 or 2 ( or even property 3)? This would be a lot cheaper than renting.

When the problem with Property 3 is resolved, you will have €270k with which to buy a house. Is that enough?

In the meantime, you should probably just sell Property 1 and use the proceeds to pay your rent and normal living expenses. After a few years, your credit record will mend itself and when you eventually sell Property 3, you would be in a position to buy a family home.

Could you proceeds of the sale of Property 1 help to resolve the ownership problem with Property 3? If so, then you should sell Property 1 as soon as possible to have the money ready in case it's needed.

You might consider using the sales proceeds to pay down your mortgage
This depends on the rate of interest you are paying. If it's a tracker, you probably shouldn't do so.
 
Thank you both very much for your replies, yes I am in a lucky position but like everyone else I paid top prices for the houses and now have lost most of the future I had invested in for my kids. It's a hard pill to swallow either way.

Yes I am on a tracker although I'm not 100% of the rate.
Unfortunately I do not have an option to live in the area where the houses are as the issue relating to the 3rd property is a local one meaning its not possible to raise a family there, so ill have to continue renting for the meantime.
So really I'm best to keep the mortgage that I have and try sell the others as soon as possible and then relook at our situation?
Thank you again for your help
 
It's very clear that you should sell Property 1. It will give you cash with which to meet the mortgage repayments, meet your normal living expenses in comfort, and have the deposit to buy a house if things change.

It's possible, but unlikely, that Ulster Bank might offer a deal to tracker mortgage holders at some stage in the future where they will give you a discount for repaying the tracker early. In case such an offer is made, it would be handy to have the proceeds of sale of Property 1 available to take advantage of this offer.

You probably should not sell Property 2.

€235k @ say 2% interest is €400 per month in interest.
You are getting around €650 per month in rent, so this is very profitable.

Of course, your repayments are much higher, but that is because you are paying big lumps off the capital every month. Over time, your mortgage will be reduced to the value of the property. And over a bit more time, you will pay down the mortgage and own the property mortgage-free.

You and your family should get used to the idea that you will be renting for some time to come. But you can be renting a nice house in comfort.
 
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