Let’s look at whether keeping the investment is a good idea or not.
So you are getting a return after tax of 2%.
If you borrow an additional €80,000 to buy a new home, you will pay around 3 % interest, so you would be getting a better return on this €80k by selling your property and buying with cash instead of borrowing.
So, overall keeping the investment property is not a great idea. If one has a cheap tracker mortgage equal to the value of the property, it's usually worth keeping the investment. But as you pay down the mortgage, the tracker becomes less of an argument for keeping the investment.
Ulster Bank will allow you to transfer the tracker on your home to a new property but will charge you an additional 1%, I think for 10 years. Let's now look at the options, if you sell the investment.
In the overall context of things, the additional €3,000 a year is neither here nor there. So, it's really up to you whether you trade up or extend. It's not a financial decision as such.
Now let's say that you decide to keep the investment and trade-up.
It's certainly achievable. On a salary of €100k, you can cover the interest and any increase in interest rates. However, you will have a fairly high level of borrowing for your ages against the value of your property. If prices fall or interest rates rise or you suffer a drop in income, things could become tight. As you get older, you have less time to recover financially if things go wrong.
It seems a much better strategy to me to sell the investment, trade up or extend without worrying too much about money. And you will have €180k cash in the bank.
If you decide to trade up, you could even buy a new home, do it up and move in before you sell your own. With €270k cash, you have a lot more flexibility.
At your ages, you will probably get a much better return on your cash by investing it through your pension fund in equities.
Brendan