Mortgage changing to “buy to let”

B

Bishop

Registered User
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Hi

I wondering if anyone could offer some advice.

I current have a variable mortgage with EBS. This is currently 5 years old and I own €160,000 on it. The house is currently worth approximately €300,000.

Now, I’m moving to Oz in May next year and I want advice regarding the following option available. I don’t wish to sell the house completely. I want to realise some of the equity in the house and take around 40k with me as a down payment on a house in OZ. I also wish to let the house out here to cover off my full repayments (I only want 40k due to the fact that I want rent to cover the full repayments)

I have only ever had a mortgage on a property I lived in so and know ever little about arranging a mortgage for what will effectively by a business venture. I was wonder if you could outline to me options regarding remortgaging under these circumstance?
Will interest rate we higher or lower?
Should I be looking at tracker variable or fixed rate mortgages?
Would I better sticking with the EBS due to the solicitor fee and other transfers costs?
I’m not moving until May but should I look at switch now before the ECB put the rate up?
Will the banks turn me down, give that I won’t be here to secure the mortgage?
I’m sure there are lots more questions I should be asking but I hope this forum will help me raise them and learn a little more before I approach the bank

Appreciate any help
 
We did a similar thing, released equity to buy investment prop in France and subsequently moved to France and kept own home as investment.

First I approached my bank and told them the truth, the whole truth..... and I was refused ("you couldn't expect us to lend you money as you skip the country and leave 2 good jobs with no jobs to go to"). So we did it the dishonest way and just suddenly decided after we'd bought our prop in France to move over (2 days later!!!). Advised the bank by letter that we'd moved "please note our change of address, and, by the way, we now have tenants". No problems. No change to rate. Nada.

Good luck with the move. Lovely lifestyle in Oz, hope it all works out!
 
RainyDay said:
Make sure to take the tax impacts into account when doing your calculations.
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Such as?

Are you referring to that fact I won't get any mortgage relief once I've left?
 
Bishop said:
Such as?

Are you referring to that fact I won't get any mortgage relief once I've left?
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To bo honest, I'm not sure of the exact tax issues for non-residents. I'd imagine that your income will be taxable in Ireland and/or Oz for a start.
 
Hi,

When you refer to income you mean for the house tenants, No? If so why would it be taxable in OZ.

Also the idea would would be to have the tenants rent match my repayments fairly closely. I;m not looking to make money on the deal. Would this lessen the tax burden?
 
Bishop said:
When you refer to income you mean for the house tenants, No? If so why would it be taxable in OZ.
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I'm talking about your rental income, the money the tenants will be paying you. International tax issues are quite complex. The question is not 'why would it be taxable' - the real question is 'why would it not be taxable'? I know nothing about the Oz tax code, but the fact that you are earning money in Ireland does not necessarily mean that it is not taxable in Oz. You need to check out if a double-taxation agreement exists between Ireland and Oz, and if so, how would Irish rental income be treated over there.

It may also depend on how long you will be staying in Oz. I think you can remain tax resident in Ireland for 2 years after you leave.

Bishop said:
Also the idea would would be to have the tenants rent match my repayments fairly closely. I;m not looking to make money on the deal. Would this lessen the tax burden?
Click to expand...
If you're not going to make money, why would you do the deal? I'm not being smart here - just trying to tease out the issues. Your definition of 'not making money' is 'rental income = mortgage repayment'. But this doesn't hold water. With each mortgage repayment, you owe less money to the bank, so you are 'making money' each month.

In general, you are allowed write off your mortgage interest against your rental income to calculate your taxable profit. Check out the FAQ's in this forum for a better understanding of the tax issues here. However, I'm not sure if the same rules would apply to an 'absentee landlord' (no offence intended).
 
Hi Rainyday

Sorry if my questions seem I bit naive but I'm just starting to peel away at this onion and my eyes are only beginning to water :)
 
As an non resident landlord your tenants have to deduct tax @ 20% and pay this over to Revenue unless you nominate an agent in Ireland. If they don't they may be responsible to revenue. When you make your tax return this tax already paid is offset against you liability. You may be due a refund.

See [broken link removed] and go to
What if Rents are payable to a non-resident landlord?
 
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