Fiancée buying on her own before marriage

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TheJackal

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Hi all, I'm looking for your thoughts on the following:

I'm due to be married in 2021 (hopefully no Covid delays!) Fiancée is thinking of buying a house on her own before our marriage.

The reasoning is

I already have a house (with approx. 14 months left in mortgage based on current overpayment schedule)

If she buys on her own before married
-she is solely assessed and can get a PPR mortgage
-after we are married she could move into my house and rent out hers.

If she waits to buy until after marriage
-we would be jointly assessed, even if mortgage to be solely in her name?
-as I already have a house the bank would regard her mortgage as a BTL, so charge a much higher rate?

The above isn't in stone really. I'd rather she save the money for another use but with my mortgage almost paid off, she'd prefer an investment property.

And timing it to avoid BTL mortgage rate sounds a bit dishonest, even if we are still legally single people at that time.
 
Technically speaking your mortgage contract may specify that you have to tell the bank if the house's use changes from PPR to rental. They will probably charge you a BTL rate which is a lot higher as a result.

In practice, once you are paying your mortgage the bank won't know if the house is in use as a rental, and whether you tell them is your own business.
 
The big difference would be on the deposit, 10% vs 30%. She could use the differential for something else.
 
Thoughts....

Talk to a financial planner?

Don't pull the trigger solely because of a potential impending marriage. Consider things in the round (and slowly!).

As a couple, will a lot of your net worth be tied up in Irish property? Have you equity market exposure in your finances? How diversified are you overall?

Would an investment by your potential spouse in a Real Estate Investment Trust (REIT) invested in Irish property or one in global property sate the desire for property exposure? This wouldn't be as risky or leveraged.

You are nearly home free on your mortgage. Do you want to take on the potential risk/disruption to your household finances if in a few years your wife had to stop work for whatever reason or tenants could not be found or some property-specific issue arises?

What if building ramps up in this country to address the chronic housing undersupply and there is a dilution of property values. Would your wife be buying at a potential peak? Could negative equity be on the horizon?

Final words: both of you think as broadly about this as you can and make sure there isn't a narrow focus on Irish bricks and mortar, arbitrage of deposit requirements/PPR v BTL rates, ducking and diving with the lender etc
 
TheJackal said:
Hi all, I'm looking for your thoughts on the following:

I'm due to be married in 2021 (hopefully no Covid delays!) Fiancée is thinking of buying a house on her own before our marriage.

The reasoning is

I already have a house (with approx. 14 months left in mortgage based on current overpayment schedule)

If she buys on her own before married
-she is solely assessed and can get a PPR mortgage
-after we are married she could move into my house and rent out hers.

If she waits to buy until after marriage
-we would be jointly assessed, even if mortgage to be solely in her name?
-as I already have a house the bank would regard her mortgage as a BTL, so charge a much higher rate?

The above isn't in stone really. I'd rather she save the money for another use but with my mortgage almost paid off, she'd prefer an investment property.

And timing it to avoid BTL mortgage rate sounds a bit dishonest, even if we are still legally single people at that time.
Click to expand...

As AAA states and if you are a follower of AAM this decision should not be taken in isolation. Post after post on this website will advise the same. A single investment in an Irish property forming a large part of any portfolio is not a wise move.

While the interest rate on this investment is important it is also one cost that is written off against rental income each year so that does reduce its importance in the grand scheme of things.

For what its worth diversification is the name of the game always. As a landlord myself I would strongly advise against buying a single investment property unless you will have use for the property yourself in the future.
 
KOW said:
A single investment in an Irish property forming a large part of any portfolio is not a wise move.
Click to expand...

It could work, depending on your circumstances and risk tolerance.

OP should go to the money makeover forum, as it's hard to advise with so few facts.
 
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