Buy or sell decision

G

GalwayGuy99

Registered User
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4
Really confused about current situation and would greatly appreciate some honest advice from posters. Going mad trying to decide what to do.
I'll be as brief as possible.

Married with two kids, stay at home mum, I earn 120k pa.
own our home and one investment property. Both on trackers.
House 1: value 250,000. Mortgage 110,000 left. Monthly costs 550 and rent received is 1300.
House 2: (our home): value 330k, 280 left. 1500 mortgage per month.

We're moving house (too small with other kid on the way). New house will cost 400k approx. Have 100k savings.

Initially was going to sell our home house to buy the new house......however I wonder are we making the right decision?

Should I hold on to house 2 - could rent it for 1800 - and get a mortgage with another bank for the new house. If we put our savings in we'd only need 300k. Repayments 1450 per month.

Am I nuts putting myself under that pressure or am I nuts not to keep the houses?

My goal here is to provide a solid handover to my two kids and the one on the way. I don't care about personal wealth in the least.

Hope I made my predicament clear - please help
 
Thanks GG for coming back.
New mortgage would be at 3.35% or whatever the best I can do with boi is. 300k.

The existing two are trackers - 0.5%. All 3 properties are in very good areas, no fears there. Also I could sell them immediately, big demand.

I have a pension.

Yes agree with you that I'm concentrated on Irish property but if I sell I'll still be that way,just for less.

What would you do?
 
When you say you have a pension, what do you have?

Also, how old are you?

And why are you wedded to Bank of Ireland? They are expensive.
 
42. Have a small pension from the last ten years. 3% each from work . Am I making a mistake selling in your opinion
Thanks again
 
You asked what I would do...

You can take €50k out of one property and €140k out of the other.

You'd save €6,365 a year by having a mortgage that's €190k smaller (based on your suggested rate of 3.35%).

Alternatively, you can generate €37,200 of rental income a year.

You're paying a tiny anount of interest per annum, €1,950 or thereabouts. You'll obviously have tax and other costs to come off your rental income and you have to fund the capital repayment element of the mortgage payment.

And you are very concentrated in terms of asset class and geography.

That said, I'd keep them both; it's a once in a generation opportunity to fund an investment at almost zero borrowing cost. An investment into an asset where demand massively exceeds supply.

Some may disagree, but I'd keep them, but I'd be looking at my pension provision and looking to boost that.

I'd also continue to assess the position. You're not wedded to the properties forever.
 
Hi GalwayGuy89

I worked up a fairly detailed post on how to approach this decision that you might find of interest:-

https://www.askaboutmoney.com/threads/keep-apartment-as-rental-or-move-tracker.203907/

You will have to input your own details/projections but, from what you have told us, I suspect you would be better off cashing out your home equity and taking out a lower mortgage on your new home.

Run the figures and that should give you a solid basis for your decision.
 
Sarenco said:
from what you have told us, I suspect you would be better off cashing out your home equity and taking out a lower mortgage on your new home
Click to expand...

I'd be shocked if that's the case.

The OP would be giving up €21,600 of gross income to save €1,675 in interest.

But you're spot on, the OP needs to run the numbers.

And in any event, that's a hell of a lot of property; one asset class in one geography, coupled with a fact that they're a single income family and the OP has neglected pension funding by the sounds of it.

The existing investment property is also already subject to the rent cap rules, whereas the OP's home is not and can be let at market value.
 
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