I have two morgages what should i do ?

I have a morgage with boi at 3.040% (€418.63) per month with oustanding balance of €82,733 the market value is around €155,000..that leaves around €65,000 tied up in equity.I also have rental property with ulster bank at 5.6% (1018.64) per month fixed until this november with outstanding balance of €179,000..rent covers €700 morgage leaving €350 outstanding..im self employed and my income is very erratic at the moment...my morgages after rent is around €800 per month..just wondering what i could do in november to improve this..for example if i switched would a bank take on both morgages at a more competitive rate or could i release equity or should i sell although id rather not have to sell.....if anyone has any advice on this id really appreciate it.thanks

What is the current LTV on the rented property?
If its less than 80% you could consider moving banks, but as your earnings are erratic, a bank might not be willing to give you a mortgage.
Is the mortgage on the rented property Interest Only or capital and interest repayments?
Seen your mortgage is not covered by the rent, have you considered selling the rented property?
Do you know what rate you will be moving to after the fixed term? Could it be a tracker?

hi thanks senna for your reply...my morgage on the rental property is capital and interest and will be variable when i come off the fixed rate..my morgage advisor thinks it should be around 3.5%...LTV - loan to value ?.....i took rental morgage out in november 2007...house price then was €198,500 and morgage drawn down after deposit was €182,600 over 30 years...a realistic market value of house now would be around €170,000 to €180,000....morgage balance in november will be around €179,000.....

You should check with your mortgage advisor again, i didn't think UB's rate was a low as that.
Re-mortgaging will not be possible as you are in negative equity on the rental property and equity release might not be possible if your earnings aren't 100% stable.

Could you sell your PPR and move into the rented property, possibly even renting out the rest of the property. That could leave you with 65k cash, which could either be used to reduce the mortgage or keep as a liquid reserve. You might not want to sell but you have to consider that investment properties were a huge mistake over the last few years and you are very luck to be able to cut and run, many cant.

Have you taken the new MIR reductions announced in todays budget into consideration, i think you will be losing 75% of the relief, and all relief will be axed at sometime in the future. Things will be getting much worse over the next few years and off-loading one property now, could lead to a lot less headaches later on.

Thanks senna..your advice is much appreciated...i checked daft.ie and my rental maybe be worth a bit more maybe nearer the €180,000 but yeah i had thought of selling my own home..its been home to me and my daughter for quite some time and i know the golden rule is not to get emotionally attatched to property but i am a bit to this one as its been our home but yeah i may have to take the hit..cant rent any rooms if i move into rented house though as it wouldnt be suitable for my daughter.but i have realised i am in a lot better position than a lot at least i have options...well thanks a lot again for taking the time to reply.

So your total outstanding debt is around 260k (82 +179)
Realistically you have assets currently worth 320k (155 + 165)
I would approach BOI and ask them would they consider consolidation of the debt. By the time this would go thru with legal stuff you would be out of the 5.6% fixed rate so just over 3% would not be too bad.
I presume you would come out to around 4% in November anyway so that would decrease your liabilty by over €100 a month short term.

Have you taken the new MIR reductions announced in todays budget into consideration, i think you will be losing 75% of the relief, and all relief will be axed at sometime in the future.

Click to expand...

My understanding is that you lose 25% of the relief and you are entitled to 75% against interest payments.

hi elcato..thanks for your reply...yeah I though maybe a consolidation of the debt might be the easiest solution but unfortunately my income is erratic at the moment and is not steady so I would doubt that the BOI would agree to consolidation at the moment...as for the relief im not sure what the situation is with that..on my own home morgage ive had that for 8 years so im wondering is the rental property regarded as a seperate entity regarding morgage relief or will the fact that ive had my 7 years interest relief on my own home mean i wont get morgage relief on my rental property any more ?....

Your PPR get Tax Relief at Source so its totally separate. Your Mortgage Interest Relief is relief on your tax liability for the rent received from the second property. You need to fill out a form 11 and get it into your tax office before Oct 30th of the following year in which you received the rent. So in your case if you got any rent in during 2007 you are already late for your return (even though you do not owe anything). Similarly for 2008 rent you will need to make a return by 30th Oct 2009. Again your liability will be probably zero and you can carry forward any deficit from previous years.

hi elcato thanks for that...my accountant did a return for 2007 and ive passed on my details for 2008..but again i went into this a bit blind so now with the downturn ill need to try and understand all of this with the tax and morgages a bit better...and thanks again elcato your advice is very much appreciated.

eyesgreen_1 said:

..on my own home morgage ive had that for 8 years

Click to expand...

If you have had that mortgage for 8 years then your MIR will end on 1st may for your PPR.

hi senna...thanks for that...yeah I took out ppr morgage around 2001 so MIR will definetly go on may 1st...im going to try and wait until november when rate on rental property goes to variable and see how thing go from there...I think...there will probably be another 5 budgets between now and then!!!!...thanks for the reply senna...

If anyone else has any ideas advice or opinions on this id apreciate it..thanks.