Advice on possibly of renting PPR

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peteb

Registered User
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Hi guys,
I'm usually good at these things but I've become slightly confused so maybe the great minds on this site can give me some assistance.

I've owned my own house in Swords for the last 4 years. I currently have it up for sale but things have come to a head with me and the purchaser last night with him attempting to play poker at the last minute!! :mad:
I'm now in two minds as to whether to move back in myself or to rent it out. Its just the maths that are causing me a head ache as i dont know enough about this!

If the property is rented out then I know I have to register with the PRTB and get a BER cert etc. However the OH is renting on the southside and we were due to move in so i'm trying to see whether its best just to possibly run at a loss in terms of the rent v mortgage and still rent a property southside.

Spoke to the bank (UB) this morning and they told me that last this month my repayment was €1187.59 and the interest portion was €1151.39. In Feb it drops to €1103 as rate is reduced to 4.6% (SVR). If i were to rent it out then i would lose my TRS so repayments would be €1,263.66. If I were to rent the property out at €1,200 per month, would I have any tax liability on the property?

Like i said i am just mulling this over in my head and I can figure the maths so all advice is welcome.

Thanks!
 
Are you on an interest-only mortgage? The proportion of interest to overall payment looks very high (after 4 years) if you are not. But the short answer is, if your interest payments are greater than your rental income, you can offset the entire rental income against that interest.

As far as doing the sums goes - you'll need to factor in maintenance and should allow for at least one month of an empty property per annum. You'll also need insurance (property and life). It looks extremely tight - even if you take away the fact that you aren't making big payments against capital.

What's your mortgage and an estimate of the value of the place?
 
No, its interest and capital repayments. But if the rent is €1,200 and the interest is €1,100 is my tax liability €100 X 42% per month roughly. One more question is does the Mortgage Interest Relieft amount come off the interest amount? In which case when i lose this, is the increased amount interest?

I know about leaving a little stash of money in case its unoccupied. I intend to tuck two months rent amount away at least.
 
The tax calcs look right (roughly, as you say)

You will lose TRS but whether that makes your interest payments go up will depend on the mechanism the bank uses to apply TRS to your account. For example, in my case, the TRS is added to my current account, from which the mortgage is paid. The mortgage payment stays the same (interest and capital) but my current account amount increases by the TRS each month. If I lost TRS, then the payments would still stay the same (disregarding rate changes) but my current account wouldn't get the monthly increment. I don't know if that's the way it's usually done but you should check with the bank. You will be down by the TRS amount each month in any case, whatever way the bank calculates it.

Another wrinkle is that the bank may change your rate if you change from a PPR mortgage to a BTL mortgage (they were going to change my rate when I was thinking of renting out).

I still don't understand how the interest portion of the mortgage is so high as compared to the capital portion... My mortage is about €190k and I've been paying for 6 years - my repayments are about €900pm, made up of about €600 interest and €300 capital.
 
Thanks for the help. Your sounds like one of those off-set mortagages with First Active. My TRS just comes directly off my repayments. Yeah I thought the interest seemed quite high at this stage. What initially happended was that i rang to see if i could get something off them telling me what the interest was for the next 12 months and they told me they couldnt cos the rate may change and just game those figures

On a seperate note, I will scan my t & c's but I dont consider it a material fact to declare my change of use as I may move back into it at some point.
 
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