Ok Gordon, let's play make-belief!
Let's assume we're in an alternative universe where HollyHobby has already saved the 20% deposit and we'll keep everything else constant.
Assuming a lower tracker rate would obviously increase the tax payable on the projected rental profit so this actually favours the tracker mover option.
Let's also ignore the fact that I think your projected rental profit is overly optimistic.
So, by cashing out the home equity and porting the tracker, the "saved" interest is now reduced to €6,100 (€140k@3.1%, plus €160k@1.1%) and your projected rental profit is still €7,000.
A positive difference of €900.
Is it really worth bearing all the risks (interest rate increases, tenant default, regulatory changes, etc.) for such a slim projected margin?
Is it worth the hassle?
Is it worth the negative cash flow?
Is it worth the opportunity cost?
Is it really an "extraordinarily good investment"?
Let's assume we're in an alternative universe where HollyHobby has already saved the 20% deposit and we'll keep everything else constant.
Assuming a lower tracker rate would obviously increase the tax payable on the projected rental profit so this actually favours the tracker mover option.
Let's also ignore the fact that I think your projected rental profit is overly optimistic.
So, by cashing out the home equity and porting the tracker, the "saved" interest is now reduced to €6,100 (€140k@3.1%, plus €160k@1.1%) and your projected rental profit is still €7,000.
A positive difference of €900.
Is it really worth bearing all the risks (interest rate increases, tenant default, regulatory changes, etc.) for such a slim projected margin?
Is it worth the hassle?
Is it worth the negative cash flow?
Is it worth the opportunity cost?
Is it really an "extraordinarily good investment"?