Mortgage to buy new house and let existing

W

Wavey

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Evening all.

We are 10 years into 30 year 350k mortage on a house currently worth 350k. Tracker mortgage.
The house is in highly desirable rental area .D16.
We want to move down the country and I am looking at a properties on sale for about 370k.
The plan would be to move into the new property and let the property in D16.

All buy to let mortgage offers I have seen assume that you are going to let the property that you buy, but in our case we will let our existing house and live in the new property.

I see that owner occupiers can still borry 90% of the property value but investors can only borry 75%.

As we will live in the new house, which category do we fall into?

Has anybody made a similar move?

Any advice appreciated.

Wavey
 
Be careful - the terms of the tracker mortgage may require that the house is your PPR.

Your existing mortgage in effect switches from a PPR mortgage to an investment property mortgage.

You may have to tell the bank - and the rate may rise as a result.

Warning - think carefully about losing a tracker rate.
 
I have a tracker on my PPR, and my job may move 100km+ away. So I enquired about a mortgage on houses in new location.

AIB - must sell existing house, offered 135k mortgage

BoI - can keep existing house and let it, offered up to 200k, but that was over the phone.

pTSB - can keep first house, offered up to about 160k
 
Hi Wavey

If you have an Ulster Bank mortgage, you may be able to sell your current house and transfer the tracker to a new property.

If you have a Bank of Ireland mortgage, you will be able to transfer the mortgage at a slightly higher tracker rate for 5 years and then the SVR after that.

If you have to get a new mortgage it will not be for a buy to let, it will be for your home. Whether you get it or not, will depend on your income, your credit record, your existing borrowing etc., etc.

As you already have a mortgage of €350k, your total borrowing will be over €700k so you will need a huge income to get a mortgage.

If you cannot transfer your mortgage to a new property, would you consider renting in the new location? You are more likely to keep the cheap tracker. You keep a stake in the property market. But you are not overexposed to property and lending rates.

While the cheap tracker is very valuable now with 20 years to go, it will become less valuable as you pay down the capital. If normal mortgage and savings markets return, it may also become less valuable. So maybe after 10 years, the advantages will be substanitally reduced making the loss of the tracker less painful.
 
Thanks for the replies guys.

I will probably find this out when I start calling banks today,but, do they take into account the possible rental income of the existing property in addition to my salary?

Thanks,
Wavey.
 
What's the rental income likely to be and what is your current mortgage repayment.. Where are you getting the house value from. Are you cut out to be a landlord? Have you calculated how much it will cost you.
 
Hi Bronte,

Original house value was an estimate based on houses sold in the area last year.
Had the house valued for rental and sales value this week.
Sales 390k-420k.
Rental 1700-1800.

My current mortgage repayment is 1100/month.

Not sure about being cut out to be a landlord. I would probably pay the extra 5% to an estate agent to manage the lease for the first year at least.

As to the additional costs associated with leasing? I am still getting to grips with these. Advice appreciated.

Waiting for a call bank from my current mortgage provider to talk options. They are much slower to engage then they were 9 years ago. Shock.
 
If your existing tracker mortgage is with Bank X and your new mortgage is with Bank Y, how will Bank X find out about your new purchase and thus take your tracker away?
 
Delboy said:
If your existing tracker mortgage is with Bank X and your new mortgage is with Bank Y, how will Bank X find out about your new purchase and thus take your tracker away?
Click to expand...

They will find out if you tell them. But it could be a risky strategy. Best to look up the mortgage terms and conditions and see what it says. Not all mortgages have a clause about the interest rate being linked to the property being a PPR. (principal private residence)
 
Wavey said:
Hi Bronte,

House value 390k-420k.
Rental 1700-1800.

My current mortgage repayment is 1100/month.

Not sure about being cut out to be a landlord. I would probably pay the extra 5% to an estate agent to manage the lease for the first year at least.
Click to expand...

Bank lending is so low I'd be amazed if you are able to borrow for another property. If you've a really good job and are not applying for a very high amount maybe it will work.

If you lost your tracker, how much would you have to pay at investment rates ? Rental income is excellent. Dublin is where it's at in relation to property values. I presume D16 is an area that will always be a good market.

The advantage of renting is that you will be acquiring an asset, hopefully without it costing you from your earned income. Mortgage is good therefore as 75% of interest can be deducted. But you'll be hitting the higher rate tax bank and prsi as well. Have you calculated yourself how much you will take in annually and how much you will have to pay out. Have a look at revenue.ie, a look at the landlord section on AAM and the website called Irish landlord.com.

I completely disagree with hiring an agent, that's a no no. Cannot see anyone getting out of bed for 5%, it's more like 10% plus an upfront fee for getting the tenant. Please be aware that in all likelyhood an agent will only cause you even more grief than being without an agent. What would be good though is an accountant.

Have you a deposit for the house you intend on purchasing. It might be an idea to rent for a year to get a feel for the area. Are you going to commute to Dublin for work?
 
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