Investment property in UK- Living UK- Raise finance in Ireland?

Discussion in 'Property investment and tenants' rights' started by nbc, Sep 11, 2017.

  1. nbc

    nbc Frequent Poster

    In a nutshell...Late 40's- Living in UK 7 years. Income approx £100k. London flat worth £650 and owe £380(0.99% interest rate) Next year considering buying an investment property here valued at £400k- will need 25% deposit- 100k.
    Options are to borrow on my flat- Bank have told me I can borrow up to 80% of the value at about 1.5%
    However in Ireland I have a few RIP's and with Euro increasing against £ I wondered should I borrow at home. Total value E1.25 million. Mortgage debt 0.5 million( One property valued at 300k totally mortgage free and others vary from 25% LTV to one which was in negative equity but now prob 95% LTV- this however is on a 1% tracker with rental income of E1300 per month and mortgage payment of E375 monthly) As a rough guide total rental income 2.5 times total mortgage payments.
    Questions going through my mind
    1) Borrow in UK at 1.5%
    2) Borrow in Ireland at I'm not sure- Between 3% and 5%? But big savings on exchange rate.
    3) Will an Irish bank lend me money to invest in property in UK and me not a resident?
    4) General thoughts? From 2020 HMRC won't allow mortgage interest to be offset against tax- is it worth doing at all? Have I enough on my plate already?
    Cheers guys
  2. cremeegg

    cremeegg Frequent Poster

    I am not sure that you have thought the exchange rate thing. It is only future exchange rate movements that matter. If you borrow in Euro and invest in GBP a future gain for GBP would make the repayments cheaper, a future fall would make them more expensive. If you want to invest in property, then invest in property, if you want to speculate in currencies, then invest in currencies.

    If you are living in England you must be paying some one to look after your properties in Ireland, that reduces your income.

    With that level of equity and borrowing capacity why not look at commercial property. In my opinion there is a sweet spot in the Irish market above what the small time private investor can afford, below what the large investment company is interested in.
    RedOnion likes this.
  3. Leo

    Leo Moderator

    No. If that was possible everyone here would be borrowing at much lower rates available across Europe.
  4. nbc

    nbc Frequent Poster

    Thanks Leo
    But the difference here is they would be lending me money on an Irish property- I have one completely mortgage free. Does this not make a difference?
    Cheers cremeegg- no interest in commercial property- bit out of my league and whatever you say about residential people always need a roof over their heads!!
  5. RedOnion

    RedOnion Frequent Poster

    Yes, technically you could raise finance in Ireland with your Irish property as security.

    However Cremeegg has made a very valid point re FX speculation. You've already got a massive FX exposure if you intend staying in UK as you've over 500k in EUR assets.

    But there is an element of hedging in what you've proposed. If GBP strengthens, the cost of repaying a EUR loan falls in GBP terms, but the value of you EUR property portfolio falls, and vice versa.

    However, you're speculating with large amounts of money, and I'm not sure you understand the risks.