Anyone else considering downsizing?

[Kuki]

Hello,

I am a new member to this forum but have been reading threads here for many months and I would like some advice please.

Basically my family and I have moved to Cork for my husbands work. We are renting our home in Clare and renting here in Cork. House in Clare is valued approx 300k with a tracker mortgage of 77k left with 7 years to go. Mortgage repayments on this are 960pm. We are getting 800pm rent and make up the shortfall of 160 ourselves.

We are considering buying a smaller home in Cork, valued at 210. We would be able to get a small mortgage of 130k and put 80k of our own towards it.

Would we be better off selling the Clare house and buying smaller home, with no mortgage or holding onto tracker for a few more years thus allowing us to hold on to the property for the future - kids college and pension fund etc. We have no other loans, just the mortgage.

Would be keen to hear back from others who may have been in a similar position. Thanks

 

[Bronte]

Because you have such a low mortgage on the Clare property, it would mean that you're going to pay a lot of the income in tax, and you'd be also subsidising the mortgage out of taxed income.

It would look better to sell, releasing about 220K. The buy a house in Cork with a mortgage, money is relatively cheap, and paying back mortgage can be a type of saving. Make it a well manageable mortgage. And then invest the 220K, maybe in a couple of city apartments that are yielding a high amount. No harm to have them on mortgages initially to get the interest relief of 75%. Then near retirement you'd have the mortgages paid off and the rent would become an income. If you buy in the right location you may have free accommodation for your college going kids.

Or if you can come up with better ideas for a return on the 220K all the better as being a landlord is not as easy as some people think. It brings a lot of headaches, but if you buy in a good location, with a high yield and it's well built than it's not so difficult. Better that the apartments are close to where you live.

 

[Kuki]

Thanks for reply.

To be honest, being a landlord is not my first choice and being in a different county to the rental property is a bit inconvenient to say the least!

We could just pay the mortgage off altogether from our savings and then own the property outright. Then in a year or so decide what to do re selling. The income that we are getting towards the rental of Clare property would go a long way to helping us with our rent/new mortgage repayments on smaller property here. Any thoughts?