Advice Required regarding financial situation

Hi all just wondering if any of you would be kind enough to make some comments on my situation and offer me some advice. All replies appreciated.

We are a married couple with combined income 118k. Cash Savings 110k and other savings shares etc 40k. We own a 3 bed apartment D13 with positive equity 50k roughly on a tracker of .25 above ECB rate with 130k left on mortgage. We have debts of 20k for car and marriage.

We are purchasing a home for 365k and hope to take mortgage of 275k.

I would like to keep apartment and rent out. Is this financially viable, would rent a room be a better way to go. The rental in area is about 1350 per month, Mgt fees 1320,

Thanks for your time.

Please give me your opinions about keeping tracker etc

I can certainly see why you are interested in retaining your apartment as a rental.

You would be looking at a long term net yield of over 6% (70% of €1,350 x 12/€180,000) on a property that you are financing at a phenomenally low interest rate of 0.3%. That looks like a fairly healthy return in the current low interest environment.

I have described the assumptions underlying this net yield calculation in more detail in this thread:
http://www.askaboutmoney.com/threads/buyers-remorse.196291/

On the basis of your figures, your overall debt level would then equate to around 3.6 times your gross joint salary, which is probably ok.

If you do decide to enter the property rental business you should maintain a decent cash reserve at all times (I would suggest the equivalent of 6 months rent) to meet repairs, voids, etc.

I would also suggest that you should start to focus on diversifying your investments (stocks and bonds), ideally through a tax deferred pension vehicle.

Finally, is there a particular reason why you are carrying personal, unsecured debts while you have significant cash savings? That usually doesn't make financial sense.

http://www.askaboutmoney.com/threads/ltv-75-and-provider-choice.196226/

This thread may of assistance in choosing a mortgage provider for your new house.

Ulster Bank might be best option in your circumstances (3.4% APR for a loan of over €250k with an LTV of less than 80% and €1,500 cash back).

Why are you servicing high debt, car and wedding, with that amount of savings?

What do you mean by rent a room scheme?

Watch out your current mortgage doesn't mean removal of tracker if you rent, not that banks seem to enforce this but it's important to know,

What does a bank want from you in order to let you borrow, currently that would be that you can afford both mortgages without taking into account the rent.

What is your monthly wages, your mortgage costs and your savings amount.

wow that's some tracker rate. Agree with prior responses, potential for a good return here and you seem to be in a good position with options.

One other question I would add is what is/are your pension arrangements, don't overlook. Clearly you have built up a high level of savings which is great in terms of having a deposit, but also think about pension arrangements. Apt can be one part of your pension plan obviously.

5404.
Sarenco & Bronte give good (business) advice.

I would worry that since rents are increasing and it looks today like a one way sensible ticket you may not be thinking long term.

Do you really need or want to become a landlord?
Do you want the hassle of watching over it?
Do you believe it will be rentable to good clients long term?.

From your post you are doing well, so congrats.

Ulster Bank are very difficult to deal with. Recently I read in the paper that if one has an LTV of less than 60% that one was entitled to a preferred rate of 3.5% as opposed to existing rate of 4.2%. However this is not passed on automatically but needs a written request. I recently moved address and wrote to notify Ulster Bank of this fact and asked them to send on forms to avail of the improved mortgage rate. They in turn sent me out correspondence to inform me that I had to go to a nearby branch to prove who I was. This I duly did and the branch said they would notify Ulster Bank Mortgage Operations. 2 weeks have passed and no reply, I have since contacted Mortgage Operations who have received no correspondence from the branch. I have tried many times to phone the branch but cannot get through as the number goes straight through to a call centre. This is a frustrating experience and I can only put it down to delay tactics to dissuade customers availing of lower rates, anyone else have similar experiences?

Yes Corcaigh I do.its typical of Ulster, tried recently to find out the rates as they no longer have them on their web site.

Corcaigh1 said:

Ulster Bank are very difficult to deal with. Recently I read in the paper that if one has an LTV of less than 60% that one was entitled to a preferred rate of 3.5% as opposed to existing rate of 4.2%. However this is not passed on automatically but needs a written request. I recently moved address and wrote to notify Ulster Bank of this fact and asked them to send on forms to avail of the improved mortgage rate. They in turn sent me out correspondence to inform me that I had to go to a nearby branch to prove who I was. This I duly did and the branch said they would notify Ulster Bank Mortgage Operations. 2 weeks have passed and no reply, I have since contacted Mortgage Operations who have received no correspondence from the branch. I have tried many times to phone the branch but cannot get through as the number goes straight through to a call centre. This is a frustrating experience and I can only put it down to delay tactics to dissuade customers availing of lower rates, anyone else have similar experiences?

Click to expand...

I think everyone has a similar experience. Their staff are unable to operate their procedures.

I don't think it is a deliberate tactic, they are just useless. It is not coincidence that UB have major IT problems also

Complex systems, poorly trained staff, paid peanuts.

Corcaigh ,

Are the opposition not taking on lower LTV,s at better rates than your 4.2%?
might be no harm to phone PTSB, KBc, AIB etc, you might get a positive outcome.

The opposition have similar rates, it's just that it's a bit of hassle to switch with all the paperwork and possible legal fees.
Have read that next year that one may be able to use European banks which have half our rates under a new EU plan, would be no harm it that came about.

Hi Corcaigh

Nobody on an LTV of less than 60% should be paying a rate of 4.2% at this stage. If Ulster Bank don't sort you out pronto you should definitely switch. I know it's a hassle but the savings more than justify the time commitment.

KBC currently offer a rate of 3.4% variable at your LTV if you meet certain conditions and their cash back offer should comfortably meet all costs of switching (see this link for all switching incentives being offered by lenders, which I'm pretty sure is still up to date).

http://www.askaboutmoney.com/threads/incentives-offered-to-switch-mortgage-provider.194854/

AIB and EBS also have very competitive variable rates at your LTV but don't offer any sweeteners to switchers AFAIK.

If you're interested in fixing, BOI offer a fixed rate of 3.6% at your LTV and will give you cash back equivalent to 2% of your outstanding mortgage.

Depending on the size of your mortgage, your overall savings could run to thousands, if not tens of thousands, of euro over the remaing lifetime of your loan with most of the savings accruing in the early years.

It really is unfortunate that Ulster Bank has such disastrous systems because otherwise there is a lot to recommend them IMO.

By the way, I wouldn't hold my breath waiting for other European banks to enter the Irish mortgage market any time soon.

Just an update on the above, I still have received no correspondence on the above, I had to go back into the local branch of Ulster Bank and resubmit my details and show my driver's license as a form of ID, I was informed that I would receive correspondence in 5-7 days time.
It is now 19 days later and no correspondence. I rang the mortgage correspondence team who informed me that they scanned the form but forgot to send correspondence to me. Again I am being told that it will take another 5 days and that any other complaints should be forwarded to the Concerns and Elevations department. If I want a track of all phone calls and correspondence I need to pay €10 to get a Subject Access Report. What a complete bunch of amateurs. Two and half months to get closure on a simple matter!

Sounds par for the course with UB mortgages - had an extended discussion with them earlier in the year - never got a satisfactory resolution. In the end (in my case) it wasn't worth the effort.