In 3 minds about Buying a house

[leonvq]

Heres my situation, I am lucky enough to own a house in Dublin worth over €300k and mortgage free. Income is decent at the min both from work and rental from the Dublin property, should I:

A. Sell Dublin and buy rurally, pocketing some cash in the process.
B. Swap house and look for the difference in value off the seller/builder.
C. Re-mortgage the Dublin house to buy one of a lesser value and let the dublin rent pay the mortgage?

Thanx..

 

[ClubMan]

A. Sell Dublin and buy rurally, pocketing some cash in the process.

The alternative is presumably to mortgage to buy and thus end up concentrating even more of your overall net worth (and more since you would be leveraged) in residential Irish property. Do you think that this is the most appropriate investment strategy for your specific needs in the current economic climate?

B. Swap house and look for the difference in value off the seller/builder.

Surely finding a seller/builder who is willing to do this could be tricky?

C. Re-mortgage the Dublin house to buy one of a lesser value and let the dublin rent pay the mortgage?

If you do this remember that you cannot set the interest on the mortgage topup against rental income from the Dublin property.

 

[leonvq]

You again!!

Actually builders seem desperate here in Leitrim and I've run into a few in the last few weeks willing to swap with good rental properties in Dublin.

If you do this remember that you cannot set the interest on the mortgage topup against rental income from the Dublin property.

Don't understand this, its not a mortgage top-up, there no mortgage on the dublin house? You mean I wont be able to get mortgage interest relief?

 

[rmelly]

You again!!

Actually builders seem desperate here in Leitrim and I've run into a few in the last few weeks willing to swap with good rental properties in Dublin.



Don't understand this, its not a mortgage top-up, there no mortgage on the dublin house? You mean I wont be able to get mortgage interest relief?

He was responding to your option C? - the 'Re-mortgage'. You won't be an owner occupier of the mortgaged property, so no mortgage interest relief. Plus you can't offset the interest against rental income as mentioned because the money is not being used on the property the mortgage is against.

 

[leonvq]

Right, interesting, didn't think of that. I suppose I should just get a normal mortgage for the house I want to buy and move into then? The Dublin house will just be security for my lender?

 

[ClubMan]

You again!!

Er - and your point is?

Right, interesting, didn't think of that. I suppose I should just get a normal mortgage for the house I want to buy and move into then? The Dublin house will just be security for my lender?

What are you trying to do? Buy another rental property or buy a PPR (Principal Private Residence) of which you will genuinely be an owner occupier?

Regardless of whether the prospective purchase is of PPR or a rental property you don't seem to be addressing the issue of the possible implications of concentrating so much on (leveraged) residential Irish property to the exclusion of other possible investment options and whether or not this is the most appropriate course of action for your specific circumstances.