Moving house/2nd property query

D

Dermob

New Member
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Hi all,
I’m looking for some advice regarding what to do in our current situation, as we are pulling blanks atm. Our house is getting too small for us.

Married couple, 44 years old, 2 kids, 4 and 8 years old. Combined income of 210k
House is located in Dublin 14, value of approx 515k, mortgage remaining of 260k. Mortgage of approx 1500 month.

Savings of approx 50k.

I’d like to look at options of retaining current house and renting out, and obtaining a 2nd mortgage for new house. Is this feasible?
 
You don't seem to have enough cash deposit to buy a larger house.

50k deposit means a 500k house, yet your current house is worth more.

If the proposed house is 600k, that means 60k deposit.
 
Dermob said:
Married couple, 44 years old, 2 kids, 4 and 8 years old. Combined income of 210k

Savings of approx 50k.
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Seems like a very low savings figure for such a high household income?
Dermob said:
I’d like to look at options of retaining current house and renting out, and obtaining a 2nd mortgage for new house. Is this feasible?
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Impossible to say without some indication of the possible second house purchase price.

Might be worth doing a Money Makeover as what's possible and what's appropriate may depend on more detail about your overall financial and personal circumstances...

Key Post - Basic information required for the "Money Makeover" forum

It can be difficult, but please try to use a meaningful title in your thread For example "27 year old with mortgage arrears". You will get a much better and much more coherent answer if you give as much information as possible in your first post. For example, if you give your mortgage rate, it...
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Why do you think that concentrating so much in Irish property is an appropriate investment strategy for your needs?

Seems like a lot of people go down this route without thinking it through properly, having a business plan that makes sense and validates that it's a sound and appropriate investment, and considering all other investment options. E.g. another one today...

Could my daughter move into the second property rent-free? Is this acceptable to Revenue or will there be issues?

My God. Put her in the house and don't be overthinking these things. Revenue are not interested.
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Protocol said:
You don't seem to have enough cash deposit to buy a larger house.

50k deposit means a 500k house, yet your current house is worth more.

If the proposed house is 600k, that means 60k deposit.
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Thanks, I was hoping for some magic wand equity release possibility.
 
Thanks,
Due to a recent promotion, combined salaries have increased, also paying full amount into pension, but pension is well behind.

I’d like to get an indication of a possible budget for second property on this route.

Not great on investments, and currently and for the next 5-10 years I see property prices as being stable.

Not great with investments, and they also seem as volatile as property. It’s why I’m here for advice.

Thank you
 
Buying a second property would be concentrating risk for most of your net worth in a single asset class/geographic region and, as such, probably not the best idea.

Buying a property because you're "not great with investments" isn't really a good reason.

As I said, a Money Makeover would probably be a good way to get more specific/targeted feedback.

But if you don't want to do that then there are loads of existing threads on different investment options and why concentrating risk in one asset class isn't generally a good idea.
 
ClubMan said:
Buying a second property would be concentrating risk for most of your net worth in a single asset class/geographic region and, as such, probably not the best idea.

Buying a property because you're "not great with investments" isn't really a good reason.

As I said, a Money Makeover would probably be a good way to get more specific/targeted feedback.

But if you don't want to do that then there are loads of existing threads on different investment options and why concentrating risk in one asset class isn't generally a good idea.
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Thanks Clubman,

I had started a Money Makeover thread previously, I may resurrect it.

We refurbished and extended the house when we bought it in in a wreck 2017, and its in decent condition. we were only meant to live there for a few years.
I suppose the thought process is that we could continue to service the mortgage with the rental income, coupled with the flexibility of being able to sell it when we wanted.
misemoi said:
What is the price of your target property? And have you had your house valued recently? That seems low for D14 unless it's a 2 bed?
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Yes its a 2bed, with another room that could be converted to a 3rd bedroom on the GF, Last valuation was for 515k in 2020.
Not really sure on the target price, the Dublin Market is crazy and if we wanted to stay close to current school we would be looking at 600 - 700k. Obviously at this spend we would have to sell current house. We are also considering a move out of Dublin though.
 
Dermob said:
Thanks Clubman,

I had started a Money Makeover thread previously, I may resurrect it.
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Ok, I didn't realise this.

Mid forties couple, with Family looking for guidance

Hi Folks, First time posting, I'm hoping to get some good advice. Age: 43 Spouse’s/Partner's age: 43 Annual gross income from employment or profession: E95,000 Annual gross income spouse: E60,000 Monthly take home approx 8000 Type of employment: Me Private Spouse public Expenditure pattern...
www.askaboutmoney.com
 
If you don't sell within a year of buying the new house you will have to pay capital gains tax at 33% on the gain. It will take a good few years rent to make up for that
 
On the move out of Dublin. What is your target price there and how realistic is you both keeping current jobs and salary levels if so? Are your employers rock solid for yhr next 15 years (whose is!) or government and if required more in office would this be feasible ?

Have you priced conversion of ground floor room or attic or extension? Unlikely you'd get what you need for less than moving though but worth getting ball park idea just to rule it out.


On moving schools. At aged 8 your older child could potentially cope with a change. You're obviously considering i6 anyway by considering moving out of Dublin.

I guess what I am saying is look at your options, considering what you would gain in each scenario (larger house, closer to family, stay in current community) v what it will cost you to choose that option, considering money, impact on kids, logistics eg if you have to sell to buy how will you do this, or if moving out of Dublin maybe you don't need to.
 
ClubMan said:
Not on the full gain, only a portion of it.
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And the portion rises every year no matter what way house prices go.

My guess is the OP has had a very good gain over the past few years which is currently tax free.

If he rents it til 2030 and then sells it, 30% of the gain til then is subject to cgt even if the price drops
If he rents until 2035, the % goes to 50% subject to cgt.

The rent will be subject to high rate tax, you may or may not have good tenants and then you have maintenance.

If he did want an investment property, I'd sell the current ppr, take the tax-free gain and buy a separate investment property.
 
So there is no way to really use equity and savings to buy a second property?
misemoi said:
On the move out of Dublin. What is your target price there and how realistic is you both keeping current jobs and salary levels if so? Are your employers rock solid for yhr next 15 years (whose is!) or government and if required more in office would this be feasible ?

Have you priced conversion of ground floor room or attic or extension? Unlikely you'd get what you need for less than moving though but worth getting ball park idea just to rule it out.


On moving schools. At aged 8 your older child could potentially cope with a change. You're obviously considering i6 anyway by considering moving out of Dublin.

I guess what I am saying is look at your options, considering what you would gain in each scenario (larger house, closer to family, stay in current community) v what it will cost you to choose that option, considering money, impact on kids, logistics eg if you have to sell to buy how will you do this, or if moving out of Dublin maybe you don't need to.
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Thanks for this, yes, all big questions, and ones we will work on. Part of the concern is the type of house you are getting for 600-700k. One of our jobs is secure, the other, main income is stable for the next month anyway!
 
If you are maxing AVCs at present, is that wise given that you need a cash deposit, moving costs etc? Review this as you can always keep saving and then make a lump sum AVC when you undertake the plan of action.
 
peemac said:
And the portion rises every year no matter what way house prices go.

My guess is the OP has had a very good gain over the past few years which is currently tax free.

If he rents it til 2030 and then sells it, 30% of the gain til then is subject to cgt even if the price drops
If he rents until 2035, the % goes to 50% subject to cgt.
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Was the original purchase date mentioned somewhere?
 
Once again, I think that the best approach here is to update the earlier Money Makeover so that people can comment based on a more holistic overview of your finances and circumstances. Otherwise, as is happening here, it's all bits and pieces without full context.
 
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