Building Equity For Future Investments

If one is buying a house in Ireland and planning to buy a property abroad (say in France), is there a such thing as building equity in your home so that loans can be secured against it and is this measured?

For example, say the property in France is 200k and there is 100% finance available, is one in a better position if you have been paying off a 25 year term as opposed to the 35 year term on a 400k loan, for, say, 3 years?

I have no house at the moment but would like to know for the future!

Is this what building equity means? If so, is this what people investing in property abroad are doing? (ie paying off their irish mortgage as quickly as possible). Excuse my ignorance if I am way off the mark here.

Equity in this case is the difference between the value of a property & the outstanding mortgage/claims held against it. "Releasing Equity" is borrowing some of this difference. The concept really only applies to people who bought a long time ago and have their mortgage almost paid off and/or in the case of a booming property market where prices are growing 10%+ year. Neither would appear to apply in your case.

'where prices are growing 10%+ year. Neither would appear to apply in your case.'

If the property was city centre in Cork or Dublin then i believe that this 7-10% rise will indeed keep going. I am aware i would be in the minority on this but no matter what one hears on RTE or the radio or wherever the economics of the situation in big cities is always the same, even in downturned economies (which i believe ours to be far from being), demand will exceed supply (and the price of a can of coke and a packet of tayto's wont go down!). I am convinced these properties are safe investments. Its those 'cummuter' towns that are 30min to an hour away from cities and which should never have been advertised as cummuter towns given the road infrastructure and poor public transport in this country that are extremely vulnerable. I am going off the point a bit here so i will get back on track! If one completes 3 years of a 25 year term of a 400,000 mortgage then that is approx 85,000 in payments. Is that enough to release equity for a property that is 200k? Would banks look favourably on this amount?

marsplastic said:

and the price of a can of coke and a packet of tayto's wont go down!.

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I've never heard Irish properties described like this but it does seem like a fair moniker.

You can crunch the no.s here. At the begining a 25 year mortgage is approx 1/3 principal, 2/3 interest, so you'll have built up approc E25K in equity along with any increase in value. For a first time buyer banks will lend up to 92% or even 100%. However for an equity release, they may have a lower threshold (80%-90%).

thanks. that clears thing up for me. i am sure that that is what i will do as not only is one building equity at a faster rate but one is also saving substantial interest in real terms. i have worked out that moving from a 35 year term to a 25 year term only works out at approx. an extra 350 euro per month on a 335k property. this extra outlay may hurt me for the first year or 2 but the benefits certainly outweigh the disadvantages. In ireland, are people really stretching themselves that they cant cut back spending by 90 euro a week???!...if that was 2 people buying the house then that is 45 euro per week (2 nights at the cinema!)

one completes 3 years of a 25 year term of a 400,000 mortgage then that is approx 85,000 in payments. Is that enough to release equity for a property that is 200k?

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No, because most of that is interest.