Can I transfer a tracker from a rental property to pay down our home loan?

[Donegalgal]

Hi everyone. Long time reader of aam but first time posting. Our position is as follows. Husband has a rental property which we are keen on selling. House is in his name as he had it before we met. House is valued at approx 220k with 138k outstanding on tracker ECB +.5%. I've house in my name with outstanding 310k.we would use profit on sale of rental house to reduce our mortgage to 240k-250k. Is it possible to transfer his tracker mortgage to my house with 2 of us named on house. I understand that it's only remaining balance and new borrowings are at new rates but it would still be huge savings. Any help greatly appreciated

 

[Brendan Burgess]

No, Bank of Ireland would not allow that. If you were to buy a new house, they might allow you to transfer the mortgage to the new house for a period of 5 years with an increased margin of 1%.

At ECB +0.5%, the rental property is extremely profitable. However, you probably should still sell it. Here is how to evaluate the decision:

If you sell the property and pay €82k off mortgage, you will save interest at 3.5% = €3k.

So using my estimates, you are better off by €2k if you keep the rental property. But I doubt if that is a sufficient return for the hassle and risk involved.

If you reduce your mortgage by €82k, you may be able to get a lower rate if it brings you into a lower LTV category.

 

[Donegalgal]

Thanks for reply Brendan. Is it worth asking BOI anyway. Suppose worst they can say is no. Rental property is a nuisance to be honest as it a good bit away from us and the tax of nearly 3k a year is killing us. Thanks again

 

[Brendan Burgess]

the tax of nearly 3k a year is killing us.

The only reason you are paying tax is because you are making a profit!

You are also paying down the capital which might be killing you. But it's real savings. Every year, you will have more equity in the property.

Brendan

 

[Donegalgal]

Not making profit. 730pm rent. Mortgage is 700. €30 goes towards property tax. Really have nothing out of it yet always hit with big tax bill

 

[Palerider]

Not making profit. 730pm rent. Mortgage is 700. €30 goes towards property tax. Really have nothing out of it yet always hit with big tax bill

Tracker is available on the mortgaged property as that is what you have contracted with your lender,once that is cleared your tracker expires, no transfer is possible as it stands.

 

[Gordon Gekko]

Not making profit. 730pm rent. Mortgage is 700. €30 goes towards property tax. Really have nothing out of it yet always hit with big tax bill

You need to analyse this properly. The mortgage relative to the rent is irrelevant. The capital element of your mortgage repayment is savings.

 

[Donegalgal]

Completely confused. Mortgage on my house our ppr is 1754 stuck on fixed of 4.95% until June. Our thinking is to sell rental and reduce our mortgage as between Creche fees our day to day spending is extremely limited.

 

[Dermot]

Assuming that you are paying €3k tax (your own post) and you are on the higher rate of tax that would indicate that you are reducing the mortgage on your rental property by €6k. The reduction of the principal on the BTL is deemed to be a profit even though you are not physically putting it into your pocket. The tax is causing a cash flow issue for you I would imagine as it would appear that you are having to dip into your own earnings to pay the tax.
I would think that you should sell the rental property and reduce the mortgage on your own house when the fixed term is up.
The rental property would appear to be not worth all the hassle to you.
If you do make up your mind to sell make sure you give the proper notification to your Tenants.
Hope you have the NPPR, Household charge & LPT charges up to date.
Also hope you are registered with the PRTB.

 

[Bronte]

Completely confused. Mortgage on my house our ppr is 1754 stuck on fixed of 4.95% until June. Our thinking is to sell rental and reduce our mortgage as between Creche fees our day to day spending is extremely limited.

Have you looked at your day to day spending to see if savings can be made. If you can last until June will things get better? You ought to save the 3K tax bill monthly so you don't feel like it's so bad, if you decide not to sell it. Watch out, you may be liable to CGT on it.