Can I trade down?

[Patty C]

Hi all, could I have your advice or observations please..
I'm divorced almost 50 with 1 dependent, low income and not likely to improve, a mortgage of €75000. on a house valued at approx €500000., You might think im privileged but its the only thing I have to my name!. I live very close to my ex and would love to move but by the time I sell my house buy another and repay mortgage I wouldn't have a whole lot left.
I had thought of trying to buy an apt and renting my house for income and put of selling until things get better but I couldn't get even a small mortgage. I guess I'm thinking of the future, with very little income, Im trying to get my life in some sort of order after some very bad years. Can anybody see anything I cant?

Many thanks
P

 

[Brendan Burgess]

Hi Patty

Owning your family home gives you great financial security and other non-financial benefits. However, as your family home is in the wrong place, then you probably should move.

You could consider selling the house, paying off the mortgage and just renting for the time being. You will have around €400k cash in the bank which would keep you going for some time. You could use the dividends or interest received on the investment to pay the rent.

The downside is that if property prices and rent rise over the long term, you could be in a worse position.

Another downside is that your home is ignored for Social Welfare means testing, whereas a lump-sum would not be ignored.

I am not recommending selling and renting. But I am saying that you should consider the pros and cons of that option.

Brendan

 

[truthseeker]

by the time I sell my house buy another and repay mortgage I wouldn't have a whole lot left.

Just on the above - currently you are making mortage repayments monthly?
So if you sold, paid off the mortgage and bought something smaller outright - how would you not be better off? Youd have no more monthly repayments - and as for money left over, you dont have that now either? So any money over would be a bonus?

 

[Patty C]

Yes, I'm repaying mortgage monthly with some difficulty. I should have mentioned that I am in receipt of one parent benefit which will end in 2 years when my youngest is educated and left the nest, at this point my income will be very little and very little hope of any major change, while im very willing to work, I dont have a formal education and im moving on in years.

Thanks

P