Should i sell or not

J

Josephi

Guest
Hi i am new to this forum

i am 48 years of age, married and am going through a very tough time financially. i lost my business and had to remortgage in order to clear some heavy bills etc. things were so bad that i had to use a high interest rate mortgage company, the type that will give you a mortgage even if you have a bad credit rating. the repayments on this mortgage are enormous. my house is worth at the moment around €1 Million and the mortgage is only for €265,000.

so my question is, in order to get back on track should i sell my house, pay off the crippling mortgage, rent a house locally for the next 3/4 years, invest the remainder of my equity from the sale of the house in property abroad that can be rented & or other investments and produce some return on my money.

Sorry Josephi - we do not allow speculation about the future direction of property prices in Ireland, so I have deleted your comments on this
 
This appears to be a "no brainer" decision. You are carrying a mortgage of €265K which you apparently can not afford and are also carrying €735K of equity in your ppr which could make life a lot easier. Talk about increases or decreases in property prices should not effect your decision as you are not in a position to be a speculator. Make the decision that is right for your individual circumstances as they stand which would appear to be sell the existing house and buy a cheaper one and this may also give you some extra equity to make life a little more comfortable. It's only a house and not worth the hassle.
 
Hi JosephI,
I would agree with BrenG, downsizing appears to be a good option for you. No mater where you live - even in Dublin you can buy a house in a good area for about 6 + stamp duty.

Where I live (Dublin 11) and parts near the Glasnevin end are very sought after and would be within your buget, but most importantly this is a very good area with good schools etc near by.

You're not in a great situation but your in a situation that you can get out of easily enough as you have enough equity as a buffer for the next place.
Best of luck and sorry to hear about your misfortune.
P
 
I am not sure that downsizing is such a good idea - i.e. selling and buying a smaller house. The stamp duty and other costs of moving make this a very inefficient approach.

What interest rate are you paying on your mortgage?

What is your income at the moment? What are your job or business prospects? If you can get sufficient income to keep up your mortgage repayments, you would be better off doing that. It might be tough for a year or two, but after that you would be glad you kept your house.

If you absolutely can't keep up the repayments, then sell by all means.

You would be crazy to invest in overseas property. You would need to keep your money in a more liquid investment e.g. shares or a deposit account. So that when you are ready to re-enter the housing market, you will have cash available at short notice. You do not want to be stuck with an unsellable foreign property.

But selling your home should be the absolute last resort.

Brendan
 
Referring to Brendans comments I do agree that there are some negative financial consequences to downsizing and it's obviously very difficult to give definitive advice without knowing the full financial and other facts. However reading through the brief facts given by the OP there are not too many positives to holding on to a property which is causing such a financial (and presumably mental) burden. Advice given here is general by it's nature and I would recommend that you get professional assistance before making such an important decision.
 
Another consideration is inheritance tax (now that you are getting up there in years like myself!!). Not sure what your situation is regarding children, but if this is your family home and they do inherit it in the future (not too soon, of course!!), they will probably have to sell anyway to pay the inheritance taxes due on it.

Seems to me that if you sell and buy again, you are losing out to stamp duty. If you hold on, your offspring will have to seel for inheritance tax reasons.

Is selling and renting an option?
 
Can you rent out rooms or take in foreign students etc? A friend rents out two rooms to three students from China. AFAIK she gets €120 per week per student. She has to feed them but they look after their own laundry etc. She is Dublin based. If you need more details PM me and I will find out how she gets them and exactly what they pay.
I agree with Brendan that selling your home should be a last resort. If you can make the payments you should do so for a few years and then look for a better mortgage deal once you have established a better credit history again. Do you have siblings or parents that could go guarantor on your mortgage so that you could get a lower interest rate? If you are paying more than €1’900 per month on a 17 year mortgage (I assume that you can take out your mortgage ‘till you are 65) then you are paying too much.
 
I think you'd be an ideal candidate for Eddie Hobbs' show!
Selling the house is a great option to have but I'd keep that as a last option.
Firstly I'd look at increasing income e.g. using the rent a room scheme.
Secondly try and decrease outgoings with the first item on the agenda being the remortgage payments. If you can't get the full amount maybe the banks will be willing to remortgage smaller sums e.g. €50,000?
Thirdly is there any other way of raising money e.g. downgrading your car for one worth €5000 or are there any other assets that can be sold?
 
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