House Buying Options

[AlmostSummer]

I am moving to a new city, and would like to purchase a house there.

I currently have a 170,000 mortgage, IO for the term of the loan (25 years outstanding), tracker +1%. The house is worth about €240,000.

The new house I would like to buy is €120,000.
I have €45,000 in savings.

My salary is €44,000, but I am not permanent, am on annual rolling contracts in the public sector.

My question is:
Do I need to sell my house in order to finance the new house? Ideally I would like to keep the existing house, as I have such a great deal on the mortgage, and know I will never get such cheap credit again. Would any bank give me a mortgage of €100,000 for the new house bearing in mind my employment status?

 

[NorfBank]

Welcome to AAM AlmostSummer,

If you are not permanent, you will not get a mortgage of any amount as a sole applicant these days. There are a few threads on this if you try a search.

[broken link removed]

 

[michaelm]

Ideally I would like to keep the existing house, as I have such a great deal on the mortgage, and know I will never get such cheap credit again.

That's not a good reason to hold on to the house. I'd sell the house, buy the new house for cash, and be mortgage free.

 

[Brendan Burgess]

Let's look at the numbers on keeping the old house.

If you sell it you will get €240,000

If you keep it, the annual cost of keeping it is:

€170,000 @2% = €3,400
€70,000@4%= €2800
Total interest cost c: €6,200

If interest rates rise by
2%, the additional cost will be €4,800

So it will cost you around €11,000 in interest.

What rental income after expenses can you expect to get?

We don't speculate about house prices on askaboutmoney, but if you think house prices will fall further ovre the long-term, you should add this to the cost.

Giving up a cheap tracker is tough, but unless you can rent it easily for at least €15,000 a year, I would be selling the property.