Interest Only mortgage with PTSB BTL, time running out

[Silvergirl]

Hi,

We have a 3 bed semi in Cork City North side, our previous PPR, currently let. When we moved we had remortgaged with PTSB on a tracker rate BTL, for 288K, this was in 2006. This released the 'equity', which enabled us to purchase the site for our new build back then, the property was highly overvalued (market rate at time) and ye all know the story, on both the site and the original PPR.

My question is this, when the interest-only BTL mortgage runs out in c. 4 years, does anyone have any idea or experience of what will happen? Will PTSB grant us another mortgage, but obviously not interest only? I am 45 and partner 47.

We have held on to the house awaiting property prices to increase, if we were to sell the house now we would probably achieve 220K (less cost of sale), which still leaves us quite a bit of negative equity. As it is, we are paying interest only, 254 per month and the rental income is 900.00 per month. By the time tax, property tax, insurance, repairs etc are paid it's probably breaking even or leaving little extra, which usually goes towards putting it right after tenants move on. It's a late 1970's house so can often need repairs and maintenance, boiler, showers, roof repairs, fascia & soffit, appliance replacement etc which add up. I know you can offset these against the tax, however it takes so long and it's an instant 'unforeseen' bill for us when one does arise.

Anyone been in a similar situation or can offer advice on what a good course of action would be?

It's in the back of my mind as we'd need to start financial planning for it - we've 4 kids who are getting more expensive by the year!

Thanks.

 

[Brendan Burgess]

Not sure that there is much you can do at this stage.

You are not making a profit although you are on a cheap tracker.

If ptsb were to grant you a new mortgage, they would want the full interest rate and would want capital repayments as well.

So, you have to prepare yourself to sell the property in 4 years. As of now, you have a €68k shortfall.

You should plan to save up as much of this money as possible over the next 4 years.

However, if you don't have it, it is likely that ptsb will agree to a sale and the shortfall would be an unsecured loan.

Have you a mortgage on your home with ptsb? If so, they might allow the shortfall to be added to the home loan.

Brendan

 

[Silvergirl]

Thanks for the reply Brendan, no we are with BOI for our PPR. Hopefully (or not) in another 4 years it will have gained more value and we won't have as much as that of a short fall/loan. I guess we will keep plodding away with, the epitome of the reluctant landlord!