Move house and keep both mortgages temporarily ?

Q

Quiglet13

Registered User
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8
Heres the situation.

Bought current home in 2004. Perfect record.. no missed payments etc..

82k remaining on current mortgage, 10 and a half years remaining. Monthy repayments are low because its a tracker 692 euro a month.

Looking to move and buy a house for about 400K to 430k (lets say 420 for the sake of argument).

We have about 100k put away in cash (I have another 40k or so company bonus taken as shares to minimise tax of which about 12k vests each year in the spring - I am in the sort of industry where these shares don't go up and down that much). So I don't think these count.

Combined income is roughly 133 excluding bonus (I get a bonus as part of plan of 20%, its performance related but its been at or above target for 17 of the last 18 years with the exception of 2009 when the recession dropped it to roughly 40% of its normal level)... again not sure if they count this as income. Some probably do, some don't.

Anyway... I was going to pay off the current house and be debt free (aside from the last 18 months of my car loan and the last year or so of childcare)

Instead a house which we both have long admired has come up and we want this one and this one only.. if it doesn't work out, we stay where we are.

Anyway... I have discounted rental of our current property as it looks like a nightmare... I only pay about 90 a month in interest, so I will lose about half of the 12k potential income, plus either have to stump up for furniture in the new house or the old one.. not to mention all the messing that goes with being a landlord these days which judging by the forum here, seems to have become a bit of a nightmare in recent years.

So it comes down to selling.. our house is worth about 200k, 220 at the max. So maybe 120k equity in it. Perhaps more.

My lender BOI wants to port the tracker, add a percent to it and then have me rent the place... that strikes me as opportunistic on their part and I have no desire to do so. I would rather keep the existing mortgage as it is until the house is sold.

Basically can I pay both ?

Also, unrelated... but parts of this house, although its pretty turnkey, have single glazed windows and I would love a messy job like that done before we move in.. could you add the cost of that.. about 16k ish to the new mortgage or is that out of the question ? (if so, its heavy curtains this winter if we can make the deal happen and do it during the summer when my next bonus / shares vest)

Another option is to go to another lender and take the new mortgage out completely separately, but I don't know if that is even a possibility.
 
You're in the lucky position that this looks very possible.

Buy 420 - you need 20% deposit. 84k
Remaining mortgage needed 336k.

That leaves you with 16k cash (plus your shares) to pay stamp duty, legal fees, and get moved in.

Then sell your current house, pay off the mortgage, and have up to 120k cash to reduce your new mortgage.

Only downside is you'll have lost your tracker mortgage.
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Another idea - do what your bank has suggested. your current home will move to a BTL mortgage. Then you could change your mind about renting and sell it instead...
 
Thanks. Financially it adds up alright.. the issue is the timing I think. If I need to commit and pay for the new house in say 1 months time... but it takes 6 months to sell my current house.. and the seller isn't prepared to wait, there will be a period whereby I MIGHT have to have 2 properties / mortgages.. and whilst I am willing to take the pain, the low level person I was talking to in BOI seemed to think this would be a problem. The combined amount would be more than 3.5x of our basic.. although if you take my average bonus into account we would be ok there (or even consider the other 25k or so that we have reserved away for one offs - which we don't want to touch here).

It feels like I should be able to strike a deal with the bank.

Although BOI insisting that I add a percentage point to the tracker etc... was weird and I didn't quite understand it. Because in the next breath they were saying it would still be two separate mortgages even if I retained both houses.
 
Adding 1% is how their tracker mover works.
You'd end up with the following:
New house: 2 sub accounts: 82k at tracker +1%, and balance at new business rate. Assume 3%
Old house: 82k at BTL rate. Say 4.75%

From their point of view, 1 of the mortgages is a buy to let. So doesn't factor into their 3.5 times calculation, but they have their own criteria. They will allow about 75% of rental income into calculation for underwriting.

But you need to consider it. You could end up paying a large mortgage for a while until you sell.

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If you wanted to go the other route and try sell / buy at the same time you'd really want to already have your house on the market, or get really lucky and find an eager buyer that can close quickly. Depending on the circumstances of the sellers of the house you want to buy of course - it'd be unusual for sellers to be willing to wait 6 months for a deal to close.
 
Yeah, thats the killer.. we are going through the offer process.. we don't want to put ours up on the market yet until we get offer accepted... indeed IF we get offer accepted... because otherwise we are staying where we are.
 
I'd love to just clear the current mortgage, but that leaves us well short of the deposit for the new one (unless it was 10% in which case I could raise it .. but it won't be because one of us, me, is not a first time buyer)

What about if I leave my mortgage untouched with BOI ? And take out a new one with Ulsterbank, EBS or AIB (this is where my current account and savings are.. but EBS and UB seem to have better deals)... or would there be complications with that ?
 
Yep. That's right. To be honest.. I don't know why it's so messy because I have a current house when both together are well within range for us.
 
It would be worth talking to other providers or a broker about your new mortgage. Perhaps someone else in BoI might look at your situation differently.
 
Make sure you are talking to a mortgage specialist in BoI, rather than someone in the branch that deals with everything. I think they have people that will even call to you at home.

Failing that, another provider should be able to accommodate.

It all looks fine on paper.

As an aside, I've just gone through the process, but due to circumstances I had to sell first and then buy. Anything you can do to reduce stress is worth it!
 
Go to AIB and tell BofI nothing.

Move good furniture into new house, put solid dependable furniture in old house. That will all be written off as wear and tear over 8 years. Spend nothing on old house now other than that. In a couple of years out in double glazing which can be written off as a repair in a single year.

Why are you moving ? What is great about the new house? What is the interest rate on your car loan?
How many children and what is everybodies age etc ...
 
Moving just because its a house we always admired, its bigger, its got a garage for my old vintage car... its in an urban area, but has great grounds around it, mature trees etc.. complete, fully detached privacy... also current house is a 3 storey town house with a dead drop through the middle which scares me with a 2 year old and 3 year old.

Car loan is a PCP.. low interest about 2%.. finishes May 2020 with a 10k balloon, which I already have saved away in share options that will mature 4 weeks before the payment is due.

The house that needs the double glazing is the new one.. old one is great condition, 4 beds, 2 living room, 3 bathrooms etc.. built new in 2004... its nicely done, if it were in Dublin it would probably go for about 600k ! Down in the Southeast here, 200k (thats the one thing I don't miss about Dublin !)

But yes, I am tempted to just cut BOI out of the deal.. this is basically a minor liquidity thing (which I can handle).. that leaves me ultimately with what is basically a starter mortgage of about 200-220k a few months down the line when my own house is sold. If BOI won't accommodate, I would be surprised if someone else didn't.
 
AIB were in touch today... they reckon its a great potential bit of business for them... BUT they reckon I will have trouble with the stress test if I don't have my own house sold first. Apparently they add 2% to the current interest rates on both... and then I need 2550 left over every month after other loans etc.. are taken out.. now, its no problem, I am still 4k in the black per month at that (not including annual bonus payments).. HOWEVER.. the would want to see whatever the stressed new AIB mortgage is.. about 2100 per month in savings every month.. which of course we don't do.. I tend to leave stuff in my current account and when I have a big surplus drop it to savings... also, with nothing to save for I tend to spend it on things like fancy cars, bikes etc... and other things I could liquidate or entirely do without.

So bottom line.. I am low risk, can afford it by any reasonable measure but may have some issues here due to some rules from the central bank etc... if I had this house rented out or sold, with my history every bank manager in town would be throwing their panties at me. As it is, I reckon I talk to them all.. and see who is willing to interpret them closest to what I want.

Will keep this thread updated in case anyone goes through similar.
 
... UPDATE:

Walked into Ulster Bank... outlined all of the above... approval received within a few days with no conditions (although what they don't know is that I put my house on the market to see if it would attract any offers and it sold 10 days later... so I won't even have to draw down the full amount)
 
Well done and thanks for updating.

The loss of the tracker is costing you little or nothing.

€83k @ 1% vs. €83k @2.3% with Ulster Bank is about €1,000 in the first year reducing quickly over the remaining 10 years.

This is nothing in the overall context of the numbers you are talking about.

Brendan
 
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