Yes. If you exclude this borrowing the bank will find that you have omitted information and would likely decline the proposal for that reason.In applying for a new mortgage, do I include the current mortgage payments as a monthly expense, thereby limiting the amount I can borrow?
Yes. If you exclude this borrowing the bank will find that you have omitted information and would likely decline the proposal for that reason.
I intend to keep the apartment as a rental property as it's on a tracker mortgage and the rental income will cover the repayments.
Does your lender have a negative equity "tracker mover" offering?
Hi cashnoob, I was in a similar situation. When I applied the bank deducted my investment property monthly mortgage amount from our monthly income but they included 6/12 of the annual rental income as part of my income.
Are you absolutely sure that it makes sense to retain the apartment as a rental? Does your lender have a negative equity "tracker mover" offering?
If you have no previous experience of running a property rental business, I would suggest that you spend some time reading up on the taxation of rental profits, and understanding what expenses you are likely to incur, before you make your final decision how to proceed.
Just because you have a tracker, and the prospective rent will cover the current mortgage repayments, doesn't necessarily mean that it's a good investment prospect (when you take expenses and tax into account). It might well be but you really need to run the numbers.
This really is the key.
What lender are you with? Most have tracker mover products and you should avail of this instead.
You will need to do a formal written agreement with your partner as to what proportion of the mortgage each is responsible for and what proportion of the home you each own.
Brendan
I'm not certain about retaining the apartment but think it makes sense.
With BoI. I'm not exactly won over by their 5-year tracker switcher which is another 1% on top and then losing the tracker altogether.
It's a tricky decision but it looks like retaining the apartment as a rental might be a viable option in your circumstances.
However, you need to try and figure out whether the projected after-tax profit on the rental over your projected holding period is likely to exceed the additional interest costs on your new PPR mortgage by not opting for the tracker-mover product. If the numbers are close, which is often the case, you should opt for the tracker-mover product over retaining the apartment (because it’s the risk-free option).
Be careful not to confuse cash-flow with profit – a rental can be profitable on an after-tax basis but still take money out your pocket every year (because you are paying down the principal on the mortgage). Also, be careful not to underestimate the expenses associated with managing and maintaining a rental (I would suggest using 30% of projected gross annual rent as an estimate) and remember that 25% of mortgage interest payment and LPT are not deductible expenses.
In arriving at your decision, you should also have regard for your overall financial position (pension, insurance, cash reserves, etc.) so you are not putting all your assets in one basket.
Best of luck.
It sounds like a lot of your assets are in the property basket, and you're borrowing more to invest in more property. This sounds a little too familiar.That was my thinking on actually not putting all my assets in one basket - trying to make the apt cover itself and seeking a new mortgage on a separate property and, in a way, trying to keep them somewhat separate.
It sounds like a lot of your assets are in the property basket, and you're borrowing more to invest in more property. This sounds a little too familiar.
I appreciate that it looks feasible from a cash-flow perspective, but it did in 2006 too.
I chose my words quite deliberately there. You are making a purchase on credit with the expectation of a return. That's an investment.Yeah I take the point, although 'borrowing more to invest in more property' is probably a bit misleading. I'm looking to buy a family home that I intend to live in from now on.
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