House price in the UK €700k
Stamp duty €44k
Total –Say €750k
Equity in house 1: €125k
Equity in house 2 €180k
Savings €90k
Total available: €400k
Option 1 – sell both houses
Amount required to borrow : €300k
Option 2 – Sell House 1 , but keep House 2
Amount required to borrow €480k
This seems very clear to me. €480k on a joint income of €195k is very comfortable at aged 37
House 2 is very profitable
Rental income: €26k
Interest actually paid : €4,000 ( €300k @1.25% )
Notional interest : €6,000 (€180k @3%)
Profit: €16,000
By keeping House 2, you will have an extra €180k mortgage at UK interest rates of around 3%. You need to factor this in to the decision.
In any event, it’s absolutely clear that you should keep this.
If you do the same calculation on House 1, you will see that it’s much less profitable.
Another reason for keeping House 2 is the tax free capital gain
As you bought it for €590k, it can increase to this value before you end up with any taxable capital gains.
Yet another reason for keeping House 2 is the hedging
Although you don’t want to move back to this house, at least you will have this stake in the Irish property market. So if you do move back, and property prices have gone up much higher relative to UK prices, then you will have some protection.
This decision is reviewable and should be reviewed regularly
You are not keeping House 2 forever. If interest rates rise and rents fall, it could become right to sell it and pay the proceeds off your UK mortgage