Have mortgage, what are favourable options for moving?

[whytis]

We are considering moving away from our area.

It's certainly not due to current financial pressures, but more of a lifestyle choice considering where we want to live long term. If anything, our potential income would fall after the move.

We own a house. We owe ~€215k on our mortgage, with about 32 years remaining. It's fixed with more than 4 years remaining on the fixed agreement.

Some options:

• Sit tight, continue as normal
• Move away, rent house
• Move away, sell house

Gross rent would be about €650 I'm told, so €400 below the current mortgage payment.

Several houses are on sale in the same estate, with asking prices of €190k. A similar sized house in a neighbouring estate which is slightly less desirable is asking for €160k.

We have €50k cash.

Assuming we were to move away, what would you do in our shoes?

 

[44brendan]

Option 2: Bear in mind that you will lose TRS but can offset 75% of interest paid against rent. You can also offset other direct costs of renting the property. Rent paid cannot be offset against rent received, You may also be breaking the terms of your loan agreement & should establish whether interest rate may be affected. Renting a house in the desired area will give you an opportunity to check out the area without burning your bridges. It would seem to be the safer option other than Option 1.

Option 3; Sale could be protracted in the current market. You may need to cut the asking price considerably to achieve a sale. Compensation is that if you do sell, you will be in a strong negotiating position to buy in the new location.

Ultimate decision is difficult to advise on. Everything involves risk, but the least risky option would be to put your house on the market & remain living there until a sale is achieved. 50K in cash does mitigate the risks somewhat & extends your options.

 

[whytis]

Thanks 44brendan. Just so I know exactly where you're coming from:

Option 3; Sale could be protracted in the current market. You may need to cut the asking price considerably to achieve a sale. Compensation is that if you do sell, you will be in a strong negotiating position to buy in the new location.

Regarding the strong negotiating position, I'm not sure I follow.

If we managed to sell the house at €160k, for example, we'd end up at €0 (assuming that we could cover the gap between current savings with amount owed and related sales fees).

 

[Bronte]

Gross rent would be about €650 I'm told, so €400 below the current mortgage payment.

There are too many variables to answer your question. Where are you getting the rent figures from? Can you afford the 400 gap, do you really want to be a landlord and all that entails. There are many many boom time landlords that hate being landlords. Rents are going to drop this year (my personal opinion) while costs are increasing, we are not allowed to discuss house prices so won't go there, asking prices are nothing to do with selling prices, a lot of sellers don't get the reality of the market.

In general a 32 year mortgage is too long, max it should be is 25 years. Otherwise in the long term you pay too much interest on your mortgage with the 35 + mortgages. You cannot now pay off the lump sum as you have a fixed rate and there are penalties.

Why do you want to move exactly ?

 

[whytis]

There are too many variables to answer your question. Where are you getting the rent figures from? Can you afford the 400 gap, do you really want to be a landlord and all that entails. There are many many boom time landlords that hate being landlords. Rents are going to drop this year (my personal opinion) while costs are increasing, we are not allowed to discuss house prices so won't go there, asking prices are nothing to do with selling prices, a lot of sellers don't get the reality of the market.

No, we would be the "reluctant landlords". Yes, it would be a strain to cover the gap.

You cannot now pay off the lump sum as you have a fixed rate and there are penalties.

It depends. The bank previously agreed to waiving the breakage fee for an out-of-course payment, and we have asked them once more, and what they say will be a factor in what we decide.

Why do you want to move exactly ?

To move be closer to my wife's family. I'm doing a cost-benefit analysis of moving. This thread is trying to figure out the costs/effort.

 

[whytis]

Just as an update, if anyone else has comments on our situation: the bank has again agreed to a lump sum payment against the balance of the capital owed without a breakage fee.