Use my savings to buy 2'nd home for rental or take out a mortgage ??

T

TomPetty

Registered User
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52
Hi Folks,
Just wanted your thoughts on the following.
I'm looking to purchase a 2'nd home for rental purposes. I have a property in mind and it costs about 140 K in Dublin 4 bed semi.
It is in a really good rental location & should be no problems there.
I already have my own home and have almost all of the mortgage paid at this stage.
My question is, should I buy the 2'nd house with my own savings or should I take out a mortgage from maybe KBC Bank to buy it.
Dont want a scanario where I'm giving most of the rental income back to revenue !!
Can I offset mortgage payments against my rental income etc ..
Am I better leaving the 140 K in the bank at 4 % ?
I will still have more savings left even if I proceed with the purchase.
I have a good PAYE job and is "fairly permanent" !!
I'm new to this rental idea, so any help would be appreciated.
Thanks you folks for your input.
Tom.
 
Not sure if I am the right person to advise you... but to answer some of your questions...

Currently you can offset 75% of the interest portion of your rental property mortgage repayment against your rental income. Furniture and fittings are depreciated over 8 years @12.5% p.a.

If you do not get a mortgage on the property all rental income (less expenses, insurance, wear and tear etc..) are taxable.

Obviously if you are in employment you will most likely be paying tax @41% and this extra income could bring you into a higher rate of levies.

It depends entirely too on what rate you can negotiate for the mortgage and your deposits.

I am a landlord but I would be very very hesitant to purchase again at any price as the property expenses and taxes are escalating and also the hassles of being a landlord are really not woth it in these current times.

Please do not rely on my advise as this is only my take on the situation.
 
having a rental property is not a bed of roses !!
have a read of Brendan's thread, "Who wants to be a landlord". http://www.askaboutmoney.com/showthread.php?t=118510
After a number of years being a landlord myself and if I could reverse the clock to the time of my decisions to purchase a second and third property knowing what I know now about being a LL ...... would you guess what I would do if I got that second chance ??
 
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I'm in a similar position, have cash on deposit but the rental returns are better, even with the extra charges, also I believe property is a good punt now, the down side for me is that the cash is handy to have as I have other mortgages to pay off and I like to have some cash for rainy day. How about getting a 70k mortgage and use 70k cash.mthis way you can keep 70k and also get a reasonable rate as you'll only be borrowing 50% LTV
 
You should get a mortgage for the max you can to benefit from mortgage interest relief. Have you done the actual figures, what return will you get? Have you read the threads on here on being a landlord and on other landlord websites, it's not easy to be a landlord and the government are making it more and more unattractive.
 
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