Mid-30s - Sell or Rent previous house?

Personal details

Age: Mid-30s
Spouse’s/Partner's age: Mid-30s
Number and age of children: x2 pre-schoolers


Income and expenditure
Annual gross income from employment or profession: €115k
Annual gross income of spouse: €0

Monthly take-home pay: €6k
Type of employment: IT/Tech, private-sector
Spouse: Stay at home mom (no childcare costs)

In general are you:
(a) spending more than you earn, or
(b) saving?
Not saving, recently moved into newly renovated home. All spending on decor, furnishings, finishes, etc.


Summary of Assets and Liabilities
Family home worth €850k with a €400k mortgage
Previouly family home worth €275k with €130k mortgage
Cash of €10k
Private Pension fund: €50k

Family home mortgage information
Lender: PTSB
Interest rate: 2.7%
Fixed until early 2023.

Other borrowings – car loans/personal loans etc
No other borrowings.
Rarely use credit card and always pay off immediatly

Buy to let properties
Value: Previouly family home worth €275k with €130k mortgage
Rental income per year: Expect ~€1100 if we rent it
Rough annual expenses other than mortgage interest : Expect €1000
Lender: AIB
Interest rate: 2.1%
Recently fixed for next 5 years.

Other savings and investments:
No other investments.
Employers contributes to pension, I dont contribute anything yet.

Other information which might be relevant
We both are well covered through personal & work health insurance, life insurances, income protection, & specified illness policies


What specific question do you have or what issues are of concern to you?
- Cash flow: for now and for the next few years we wont make any real savings. We want to "finish" our new home, which we expect will cost ~€20k. This will take all of our savings over the next few years, and make things tight for rainy days and usual costs with young kids, holidays, car upgrades, etc.

- Previous family home: sell or rent? Expect to clear at least €130k if we sell, but dont know what to do with the funds and concerned we will not put it to good use. Renting will be convenient and seems like an obviousy strong investment long term. But, we would prefer less hassle. Also, renting will have CGT impact on increased value (~€100K) since we used as PPR.

- switch mortgage: Family home can move to 1.9% Green mortgage with BOI. Potentially we can release €20k equity here also, which would see us through cash flow concerns for next few years and help with finishes to family home.

Currently leaning to sell the previous family home and also try to release equitly when switching mortgage, to progress with house finishes short term. Though, not sure what to do with the funds from sale. Concerned this might be a short-sighted decision.

Good finances! The pension pot is probably an area to look at, if you sold PPR use funds to top up pension pots for both you and your spouse.

Given the previous PPR price has increased 100k, it may be a good time to sell up and reduce your property exposure and risk.

I would strongly advise you against becoming a landlord. Have a look at both Sinn Féin’s and Labour policies on amending the laws covering rental properties. Sell.

Please read my posts in this thread https://www.askaboutmoney.com/threa...bly-get-a-move-on.224871/page-13#post-1784556

Renting may not be convenient and when we have a change of government it's likely to be less and less so!! It's also not an obviously strong investment long term.

Teapot said:

Family home mortgage information
Lender: PTSB
Interest rate: 2.7%
Fixed until early 2023.

Click to expand...

Teapot said:

Buy to let properties
Lender AIB
Interest rate: 2.1%
Recently fixed for next 5 years.

Click to expand...

So it looks like you have a PPR mortgage on both properties.

When you went for the second mortgage did AIB not insist on BTL rates? Or did PTSB not insist on converting the existing mortgage to BTL rates?
Your borrowing is manageable but it's at 4.6x income. Exceptions are generally needed for LTIs >3.5x. I'm curious as to how you got such a generous mortgage with PTSB.

Almost identical situation with similar age, incomes, preschoolers.

We sold the property, despite my own personal love affair with brick and mortar investment.

We have a PPR of similar value now, with a relatively small mortgage on it. In hindsight I do not mind above average leverage, and would not have put all the cash from the sale into reducing our new PPR mortgage, ie I should have retained a bit for cash flow comfort, but that will sort itself over a few months, and it forces some further family saving and prevents lifestyle creep anyway.

In your case, given your strong income and assets, your pension looks light as others have mentioned. As you know, with a DC pension (if that is what you have), the money going in early in your career is extremely important to unlock the magic of compound interest. If your employer allows you to flex the contribution with relative ease and frequency then push yourself to start contributing a decent % every month, and you can always pull back a little if you need the cash in hand (at a higher tax rate!)