Accidental landlord. Should I now sell?

sunnywalk

Registered User
Messages
70
  1. Age:
    51
    Spouse’s/Partner's age:
    41

    Annual gross income from employment or profession:
    E67400
    Annual gross income spouse:
    E27000

    Type of employment:
    Both private sector employees

    Expenditure pattern:
    We are both generally 'spenders' we did save in 2018 to buy our current home.

    Rough estimate of value of home
    E171000 ( just purchased house) 15 year mortgage term.
    Mortgage on home
    E153600- we've been paying our mortgage for 1 month now.
    Mortgage provider:
    Haven
    Type of mortgage: Tracker, interest only, fixed rate
    Variable
    Interest rate
    3.15%

    Other borrowings – car loans/personal loans etc
    2 car loans. Mine 358 per month. Out standing balance : 15K.Partner 219 per month.outstanding baalance 10k



  2. Do you pay off your full credit card balance each month?
    No. Outstanding balance 6k

    Savings and investments:
    None

    Do you have a pension scheme?
    Yes, I pay 6 % into personal pension prsa. Matched by employer. Current pot worth 90k.I also have a frozen uk defined benefit private pension worth 380k which I need to consider what to do with.Spouse does not have any pension arrangements set up.
  3. Do you own any investment or other property?
    Yes.became an accidental landlord a few years ago. HOUSE in my name.Worth 300k. Mortgage on this house is 173k tracker rate of 1.05% 14 years left on this mortgage.
My questions:
Should we sell the rental property. We have used u p our savings to buy our current home. I never intended to become a landlord, but I had to move for work and house did not have enough positive equity at the time. The tax from the rent is very eyewateringly high and as a result does not cover my mortgage payments and associated costs with the house. So it is costing me significantly each year to keep the house.
House rises seem to have slowed down in the area.
If we were to sell the house now, I was thinking of using the equity too take a lump sum of current mortgage, clear loans,put some funds into savings and use the release of monthly payments to increase my pension contributions. Also my partner wishes to start a pension too.
Any advice/ suggestions?
 
You haven't provided some critical info:
How much is house rented at?

If you sell, is there any CGT due?

Which bank is old mortgage with? Can you sell and keep tracker in new house?

If I was going to sell, I would:
Sell, net say 120k after mortgage and expenses.
Pay all short term debt (credit card and cars). Leaving 90k.
Pay 80K off mortgage, reducing balance to 75k.
Make one off pension contribution for last year, and increase pension contribution to max tax relief.
Switch mortgage to <50% LTV rate (2.75%), and aim to pay it off before you're 60.
 
Thanks red onion.
Rent recieved is 1300 pm
No cgt as house is worth roughly what I paid for it.
I am with UB and they do have a tracker mover mortgage that I did enquire about 2 years ago.
They made a lot of noise over the timings off completions of sale of my house and future house would have to be right to be eligible. That could be a possibility now. Is it possible to switch mortgages this soon after drawdown?
 
CSO agrees with me.

They only have regional indices for houses (not apartments) since 2010.

The increase from trough ranges from 57% in the midlands to 114% in Dublin City.



It's a very special house that hasn't been lifted on a rising tide like that.
 
House was 290k when I purchased in 2005. It was a new build and the value dropped significantly during the crash. It is now " roughly back up" to about 300k.
Prefer not to state location on here. Have been keeping an eye on houseprices so pretty confident 300k is current value.
 
@NoRegretsCoyote
Apologies, I completely misread your post. I thought you were suggesting house must have cost 600k - I missed the key word 'only'!
(I still can't see where 600k came from.)
 
@NoRegretsCoyote
Apologies, I completely misread your post. I thought you were suggesting house must have cost 600k - I missed the key word 'only'!
(I still can't see where 600k came from.)
The OP (@sunnywalk) said his house was worth €300k, and then said "No cgt as house is worth roughly what I paid for it." . Separate posts.

I expressed scepticism about this valuation and the OP has since clarified that he paid €290k for it and it is worth €300k.

@sunnywalk : FYI your CGT bill (if any) is calculated on the basis of purchase and sale prices. The mortgage is irrelevant.
 
Thank you for your comments and especially the link to aprevious similar thread.
I dont know why 600k has been brought up as I did not state this in my post.I am assuming it was a misunderstanding of my post.
The idea of keeping the rental property is attractive, however at my time of life it might be smarter to sell, cut my current mortgage and increase my pension contributions and ensure my partner sets up pension provision too. The link posted looks like it could be useful in helping me decide.
I also need to consider what to do about my uk pension especially in light of Brexit.
 
if your rental property is costing you money perhaps you should sell. On your salary you should not have a credit card balance of 6k - look at how much that is costing you. I see your mortgage is very new only one month - can you see yourself being able to pay that out of your current income without letting some other bills mount up. Regarding the rented property are you happy to be a landlord, from your post it appears you would like to sell so that may be the best option.
 
The rental property isn't costing you money, it's making a packet. You absolutely should be trying to get rid of your expensive debt -- credit cards, maybe car loans. But you said you were able to save last year. Why can't you do that again and pay off the credit card? You have over €90k of gross income and a very modest main mortgage. If you are able to hang on to the rental property, and you think the rent is reasonably secure, the tracker rate is gold dust.

At 1.05% you will only pay €186k back on the €173k over 14 years. In other words you will only pay an average of less than €1k interest per year (slightly more now, slightly less later). Meanwhile you are getting €15.6k rent per annum. Even if you pay 50% tax on the lot plus some other costs, it is still a large whack of free money getting paid off your principal. This is all profit! You need to weigh this up against what you would save by selling up and paying down some of your debt. I suspect it will turn out that if you could get rid of your expensive debt (like the credit card) by other means, then hanging onto the rental makes a lot of sense.
 
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