haventabreeze
Registered User
- Messages
- 12
Case A | Case B | |
Current house value | €300k | €300k |
Current mortgage | €200k | €100k |
Equity | €100k | €200k |
Savings | €50k | €50k |
Target house value | €500k | €400k |
Earnings | €100k | €200k |
In Case B... Can you explain why it would be better to save the cash for the deposit rather than avail of the same interest savings as Case A? Is it case of having somewhere to live while you complete the sale of the second house?
Yeah, I had considered that and it’s definitely a good option. We’re with UB so we could pay off the 10% allowance with no break fee each year and save the rest, should our funds keep performing well.I note that you say you will be getting some lump sums over the coming years. A more cautious approach would be to on a monthly basis split it 50/50 for example if you have 500 a month available to pay off the mortgage, pay off 250 and save 250. This way you aren't at the fully exposed to a dip in the property market, once you receive the lump sums based on the prevailing market at that time you can decide whether to save it or pay off the mortgage.
This isn't the most efficient option but if you are concerned with the property market falling and you essentially losing what you have paid off due to devaluation this option could work.
Might help to know what the value of the home you would like to buy in future would be roughly.
Yes. to buy a house for €400k , they will need a deposit of €80k cash. They have €50k so they need to save up.
As you fit into category A, if you do not have a tracker mortgage, then you should pay down your mortgage. You "get the money back" when you sell your house.
Brendan
This way you aren't at the fully exposed to a dip in the property market, once you receive the lump sums based on the prevailing market at that time you can decide whether to save it or pay off the mortgage.
Hi Andrew
Either you are making no sense at all or else I don't understand what you are saying.
I cannot see how a fall in the value of property changed this strategy at all. There is no advantage in paying off half and putting half on deposit. The full amount should be paid off.
If there is some point I am missing, could you please illustrate it with an example.
Brendan
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