Equity Release or Buy-To-Let Mortgage

Hi Folks,

We have two houses:
House # 1 is our is our principal primary residence. It is in joint ownership of me and my spouse.
House # 2 is a rented house which is in my spouse ownership.
Both the houses are paid off.

Other than property, we have investment in a couple of New Ireland's funds. We also have stocks of some US companies. We have investment in an Irish company in food sector through EIIS. I also do regular pension contributions.

My spouse doesn't work anymore. Rental income is her only income now. Her rental income from House # 2 is 34K. We rent a room in House # 1. Rental income from room rent is 13K (6.5K for each). She is 44.
I work and have a 6 figure salary. I am 45.

She is looking to buy one more house (in her name) to rent (say House # 3). She has savings to pay 30-35% of house # 3 price.

Can she have 65-70% equity release from House # 2? If yes, this will be her preferred option. Buying house # 3 on cash will provide flexibility, negotiation power and quick closure. We asked mortgage broker about equity release two weeks back but he hasn't come back to us yet.

Another option is buy to let mortgage. What is better in your opinion: equity release or BTL? Please give reasons.

Is there any other advice?

Thanks

You are already jointly very concentrated in Irish residential property, and in the same general area/region I suspect. This isn't good from an investment diversification point of view. Buying yet another property just concentrates your risks even more. Doesn't seem like a good idea to me. Although admittedly we know nothing about any other investments that you have that might give better diversification.

That being said, the questions about the possibility of her getting an equity release or BTL mortgage are almost impossible to address without some hard figures about her rental income.

If she did get an equity release on property #2 then I'm not sure that the interest could be written off against rental income from property #2 or #3. I can't remember if this is possible or not but it's definitely covered in existing threads.

Hi @ClubMan

I have updated the post with other investments that we have. If not property, what other options are out there?

Info_Seeker said:

I have updated the post with other investments that we have.

Click to expand...

The additional information isn't really detailed enough. No figures, particularly for your spouse's income which is key to the questions about mortgage options.

Info_Seeker said:

If not property, what other options are out there?

Click to expand...

You should read some of the Investment forum's key posts:
You might be better off doing a Money Makeover post to get better/more targeted feedback.
People often start off by asking a very specific/narrow question when the real issue is that they need a more holistic analysis of their overall circumstances.

Thanks @ClubMan

I have updated the post again with actual rental income numbers.