Can I extend mortgage terms & merits/demerits of same?

[apple1]

Hi,
Currently have a mortgage on PPR & about to embark on new build with intention of occupying it as PPR. Current plan is to rent out current premises but I'm thinking that given the current mortgage repayments, I'd need to extend the mortgage term & thus reduce monthly repayments in order for rental income to cover repayments. Current shortfall = approx €125/month. My question is: 1. Can I increase the term of the mortgage? 2. Is this wise? There is still stong property appreciation in the area. Thanks in advance, apple1

 

[Dreamerb]

This is a more complex issue than you probably realise. Having the rent cover the mortgage won't cover all your liabilities. Only the interest element of the mortgage is tax deductible, so excess rent over this amount is, less any associated expenses, liable for tax at your marginal rate of tax. You'll also need to inform your lender that the original place is no longer your PPR - they may apply different terms and conditions (including different, higher, rates) to the mortgage.

You'll also have to check your liability for any stamp duty clawback, register with the Private Residential Tenancies Board, and make provision for maintenance and repairs.

You could consider converting the mortgage to interest-only, if you're confident in the capital appreciation - while you won't reduce the capital amount of the loan, it could give you greater financial flexibility. However, bear in mind that in stress-testing you for mortgages, your lender will take into account all of your borrowings.

I strongly recommend you get independent legal / financial advice on this as there's more involved than many people realise when retaining their original PPR as an investment. Something that looks like a good idea before checking all the implications can turn out to be a very expensive proposition.