Sell or rent out my house?

A

aristotle

Registered User
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898
Hi,

I need to decide whether to sell or rent out my house so looking for some opinions. Getting married soon so moving in with soon to be wife into her property.

Bought 3 bed semi in west Dublin in 2005 for 300k. Mortgage remaining of 195k and valued at about €260k. 19 years left on mortgage.

Could achieve rent of €1200 per month but the issue is I will loose my tracker Mortage so need to assume a 4.5-5% Mortage rate once rented. Repayments would be about 1250 per month at that rate.

With all the fees, taxes, potential hassle etc I am sure I won't make much from renting and with a young family I have little time to be a landlord so have to factor extra costs of having an agent handle the letting and tenancy.

I am wavering between selling up or rent it and see how it goes. Are they any ways of looking at this that might help make my mind up?

Thanks
 
Hi Aristotle

Are you absolutely sure that you will lose your tracker if you rent out your house?

If that is definitely the case then it's a screaming sell for me - a rental financed at 4.5% with a prospective net yield of around 4% makes no financial sense to me.
 
It's in the mortgage t&c's that if I rent out it will be moved to an investment mortgage rate. The bank will find out via my house insurance policy as they request a copy of it each year.

I could take say 70k off the remaining Mortage as I have some savings and that would make the numbers better I think?

I don't want to sell it really if I can make it work.
 
Thousands of people on trackers have moved out and let their former PPR.

As long as mortgage is paid, and house is insured, most, if not all, banks don't seem to care.

But you must cancel the TRS.
 
Protocol said:
As long as mortgage is paid, and house is insured, most, if not all, banks don't seem to care.
Click to expand...

That seems to be generally the case but I gather the terms and conditions of most trackers issued by NIB were quite specific that a borrower would be moved to a RIP rate (currently 4.95% variable) if the property ever ceased to be their PPR.

Retaining the property as a rental makes no financial sense to me if Aristotle can't hang on to the tracker - the numbers just don't work.
 
Agree with sarenco it's a sell for me purely based on the numbers. If a straight issues re the numbers then I would also think selling is the best option unless you can keep the tracker.

One consideration is the status of your wife to be's house. Is her house fully paid for example and is it the house you are both planning to live in longer term. Any chance her mortgage is variable? Would you plan to move at some point?

Reason I ask is if you did move there may be a benefit to trying to potentially hang onto the tracker or transfer it to a new property in time. May well be the case that there is no chance so may not be a serious consideration particularly if NIB were specific with tracker wording. I would check it though.

Do not see any major downside to keeping for 3-6 months to see what approach the bank take.

If you do keep it for a period prepare for the tax bill though. It will likely be significant so don't ignore it in your planning and thought process.
 
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cremeegg said:
The cost of a second insurance policy would be minimal in the context.
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Is it actually legal to have two insurance policies on one property? If its legal and would not cause a problem in the event I had to claim off the second "buy to let" insurance then it would at least keep Danske in the dark. I would think this is getting into things that are not legal?
 

Yes I plan to lease out the property on a 6 month term and see how it goes. Yes, I will cancel TRS and I know I need to do a tax return.

I am surprised its such a clear cut decision for some to sell if the rate goes to 4-5%. I will have to do some calculations in a spreadsheet.
Thanks
 

It isnt illegal. but there is clauses in insurance policies about the existence of a second one and having to contribute in the event of a claim. Not to mention it would then become obvious you deliberately mis-represented yourself. Which would give you issues with any insurance policy going forward. Not something i'd suggest.
 
aristotle said:
I am surprised its such a clear cut decision for some to sell if the rate goes to 4-5%. I will have to do some calculations in a spreadsheet.
Click to expand...

Well, you wouldn't borrow money @5% to place it on deposit @4%.

That's essentially what you would be doing here - borrowing @ close to 5% to purchase an asset that would only produce a (risky) yield, net of expenses, of around 4%.

And that's before you take income tax into account.

That would only make sense if you want to speculate on capital appreciation in the housing market.
 
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