Stay or move mortgage(s)

Hi there

I'm considering moving my mortgage but not sure if it is worth it.

I currently have €249K outstanding with 22 years to go. House is valued at €500K.

Recently came off a fixed rate and moved to LTV <60% APR 4.53%. I make two payments a month which currently come two €1618. This includes payment protection for my wife and myself. I'm with AIB

At the moment my payments seem to be going up once a month.

Considering fixing - any suggestions?

I also have an investment mortgage with NIB, not sure of the rate as the amount I'm paying hasn't increased at all in the last year (variable) but there is €89k left and 10 years remaining. Current monthly payments come to €780. Rent is not covering this as it is only let 9 months of the year (students!)

I need to regulate the mortgage amounts. I can just about make the current repayments, but will struggle if they go any higher.

Any suggestions?

SEPhoenix said:

Recently came off a fixed rate and moved to LTV <60% APR 4.53%.

I make two payments a month which currently come two €1618.

Considering fixing - any suggestions?

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Why are you considering fixing when you seem to have the mortgage well under control? Only fix if you absolutely need to due to cashflow constraints.

This includes payment protection for my wife and myself. I'm with AIB

At the moment my payments seem to be going up once a month.

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Which payments are going up? Your payment protection premiums? Why do you have this insurance when it is often bad value for money, often pays out only in limited circumstances and for restricted (cumulative) periods of time, and you have the mortgage under control already?

I also have an investment mortgage with NIB, not sure of the rate as the amount I'm paying hasn't increased at all in the last year (variable)

Click to expand...

I don't get this either - the loan is variable but the repayments have not changed even while the ECB rate was changing?

but there is €89k left and 10 years remaining. Current monthly payments come to €780. Rent is not covering this as it is only let 9 months of the year (students!)

Click to expand...

Why not try to rent it for the full year? Are you writing off mortgage interest against rental income when filing your tax return? Why not sell up if it's not viable?

AIB bundle the payment protection in with the mortgage repayments. I believe it is the mortgage amount that is causing the recent monthly increases. My concern is if they payments keep increasing, I'll find it difficult to pay.

My investment mortgage with NIB is on a variable. I only noticed when I was checking old statements that the payment amount has remained the same but the rate has changed. This means that less is being paid off the capital and more interest. I think NIB have made a mistake and I'm dreading contacting them. The branch we are with is in Dublin, but we now live down the country. We have had nothing but problems with them since the beginning. The only remaining business we have with them is this investment mortgage.

I think you have a few options for reducing your monthly bill.
You can take both propoerties and use them as security for mortgage with any number of institutions and load more of the mortgage against the investment property than the home propery. My advice would be to load the investment property to 80% LTV and go interest only on his. Your rent will probably come close to matching the repayments. Also as Clubman says, try and let it out for the year if possible, even at slightly lower rent as it will help your cashflow. The equity you release on the investment property can be used to pay down your home mortage and thus the repayments on the home mortgage.
In addition, I would concur with Clubman about the payment protection - complete rip-off and I don't know of anyone that got a payout when they hit trouble. Will probably save you a couple of hundred a month.
I don't think you should be worried about your situation, it should be easy to sort - I'd advise speaking to an independent financial adviser to clarify your options in detail, but in broad terms, I think you'll be fine

Whilst you can remortgage the Investment mortgage and make the new amount I/O please be advised that you can't remortgage/assign more mortgage to the Investment property than that used to purchase/renovate the property, so can't manipulate the loan amount upwards to offset against rental income, as it is limited to the amount spent/used to purchase/renovate the Investment mortgage.

The above strategy will free up some cash as only making I/O repayments on teh Investment mortgage, but you could do that already with the existing Investmetn mortgage.

This has been discussed many times, financially it makes sense to minimise capital repayments on Investment property and maximise repayments off PDH mortgage, so as to reduce taxable income, but you can't change the amount of the investment mortgage upwards unless the funds can be proved to have been spent on the investment property and not to reallocate against PDH mortgage.