Hi All,
I'm in the process of deciding on whether or not I should top up my mortgage to invest in german property.
Now, can someone please show me how to calculate yield, and perhaps advise of a 'good' yield that I should be aiming for.
I am in this for the long haul, until the mortgage is paid off, c 15-20 years, not in for a 'fast buck' but more to have as a cash cow from rental income in later years. I'm 27 right now and don't mind not seeing a penny for some time.
I have a 96k mortgage outstanding for another 19 years on my house here in Dublin which is valued at 300k. I rent a room out of it for €390 p/m under the rent a room scheme so tax free. I pay €475 p/m off my mortgage. The bank don't see a problem lending me the 140k on top of this that I have enquired about. They lend it secured on my home, but separately, so I can pay it off over a longer or shorter period which is perfect and I like how I can see it as if it's a separate entity.
I have seen an apartment that is well located in Cologne city centre (the city I'm most familiar with) and is for sale at €106 (€115k really including all legal, taxes and agents fees). The rental income from this property which is currently let is €520 p/m after management fees are taken out.
The bank are offering me the following at the current rate of 3.05% (3.1%APR):
20 years, €640 p/m, €38,760 in interest.
25 years, €548 p/m, €49,500 in interest.
30 years, €488 p/m, €60,662 in interest.
I can't quite get my head around a couple of things. Is it generally better to aim for the shortest term, even if I have to make up the shortfall from my own salary (which is not a problem really)? Or should I 'make the property pay for itself completely' by taking out a longer term and paying more interest?
I would really appreciate input on the above. I have done the calculations and even if rates rose by 3% I could cover all my debt from my own salary with no tenants here or in germany (although it'd be a life in Lidl for me!). Property prices falling in the short to medium term don't overly concern me because I do not intend selling either property for decades.
Thanks very much to anyone who's read to the bottom!
I'm in the process of deciding on whether or not I should top up my mortgage to invest in german property.
Now, can someone please show me how to calculate yield, and perhaps advise of a 'good' yield that I should be aiming for.
I am in this for the long haul, until the mortgage is paid off, c 15-20 years, not in for a 'fast buck' but more to have as a cash cow from rental income in later years. I'm 27 right now and don't mind not seeing a penny for some time.
I have a 96k mortgage outstanding for another 19 years on my house here in Dublin which is valued at 300k. I rent a room out of it for €390 p/m under the rent a room scheme so tax free. I pay €475 p/m off my mortgage. The bank don't see a problem lending me the 140k on top of this that I have enquired about. They lend it secured on my home, but separately, so I can pay it off over a longer or shorter period which is perfect and I like how I can see it as if it's a separate entity.
I have seen an apartment that is well located in Cologne city centre (the city I'm most familiar with) and is for sale at €106 (€115k really including all legal, taxes and agents fees). The rental income from this property which is currently let is €520 p/m after management fees are taken out.
The bank are offering me the following at the current rate of 3.05% (3.1%APR):
20 years, €640 p/m, €38,760 in interest.
25 years, €548 p/m, €49,500 in interest.
30 years, €488 p/m, €60,662 in interest.
I can't quite get my head around a couple of things. Is it generally better to aim for the shortest term, even if I have to make up the shortfall from my own salary (which is not a problem really)? Or should I 'make the property pay for itself completely' by taking out a longer term and paying more interest?
I would really appreciate input on the above. I have done the calculations and even if rates rose by 3% I could cover all my debt from my own salary with no tenants here or in germany (although it'd be a life in Lidl for me!). Property prices falling in the short to medium term don't overly concern me because I do not intend selling either property for decades.
Thanks very much to anyone who's read to the bottom!