A relative purchased an apt in west Dublin in 2003 for 315k. It is a section 23. Currently rented to reliable tenants who keep it in order. Rental income 1100 per month. No possibility of increase as rent was increased as per new RPZ rules in last 12 months. Amount outstanding on loan is 113,000k on an interest only basis. Loan matures in 2023 so full amount outstanding will fall due. Monthly payments fixed at 900 per month, includes a small overpayment. Interest rate 4.51. Management fee 1500 per annum. The owner has approx 75 k in cash so could pay off some of loan but is this the right strategy ? As deposit rates are so low perhaps so. The owner has used up a lot of their savings annually overpaying the loan to get it down to its current level i.e paying at least 10k per annum on top of mortgage payments and wants to keep the apartment - despite it having been such a financial burden. What should they do ? Keep paying around 10 k off per annum, utilising the reducing interest payments against rental income and so use up s 23 allowance quicker ? Or just pay most of it off and therefore reduce the future interest payments and use s 23 allowance even faster ( remaining still over 150 k I think). Another alternative could be to ask the lender to refinance the remaining portion of the loan over a longer period eg 15 years, owner is only 45 and on a good salary. Would pepper consider this now at a better rate ? Owner has two kids and could do with using cash for other purposes. No holiday in many years as worry over looming maturity date and overpaying seemed like the sensible approach.
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