Move mortgage from investment property to PPR

D

Dave Byrne

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I have a Pepper tracker interest only mortgage on an investment property of €250k. I have the facility to pay this in full but I then want to take out a €250k capital & interest mortgage on my PPR. I called one broker and the said that no bank will give me a mortgage on my PPR unless I'm getting work done to it. Any thoughts?
 
Logic is that I'll play a lower rate of interest on my PPR than on my investment property. The interest only mortgage will also soon expire and given the (lack of) equity in the investment property, I may not get a new mortgage and if I do, it's going to be at a much higher interest rate than the potential one on my PPR.
 
I'm aware of the tax considerations. Setting those aside, is it fair to say that no bank will give you a mortgage on your PPR unless you're putting that money back into said property?
 
Dave Byrne said:
, is it fair to say that no bank will give you a mortgage on your PPR unless you're putting that money back into said property?
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Yes, generally speaking. There are some specific edge circumstances, such as divorce settlements and the like, where an equity release would be considered.
 
The recent Pepper rate increases are indeed a dose. Rather than the PPR angle, switching lenders to get off the tracker might get you closer to what you need to achieve, albeit at a slightly higher interest rate than PPR mortgage but more doable at least.
 
Dave Byrne said:
The interest only mortgage will also soon expire and given the (lack of) equity in the investment property
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Would this not suggest that you should sell it and pay down the mortgage?

It would be hard to get tax relief on the mortgage on your home. You would have to argue with Revenue that you took out the mortgage to replace an existing mortgage on your PPR.

Could be done, but could be challenged.

Brendan
 
The gross return on it is c.10% so I'm somewhat reluctant to let it go, so if I could keep it I would, I just don't see a lender giving me a new BTL mortgage on it. If I took the mortgage on the PPR I could see myself paying that down early as cash flow improves. I'm just currently trying to find a way to hang on to the BTL.

Anyway, I digress, the real question I had was if it's possible to get a mortgage (or release equity) on your PPR and the answer seems to be no. I could sell my PPR and buy the same house next door with a mortgage but I can't take out a mortgage on my current PPR and to me that seems odd.
 
Actually, you could sell your current house to your brother and buy it back from him for the same price.
Then you wouldn't have to move.

Brendan
 
The law around tax deductibility of mortgage interest for landlords creates wrong incentives and is better suited to business investment with fast-depreciating assets. It encouraged over-leverage in the days when banks would give out investment mortgages willy nilly and today it encourages underinvestment as banks are so cautious.

It's perhaps for another thread, but I would simply allow landlords claim relief on a notional mortgage at 60% of the value of the house whether they have a mortgage or not.
 
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