Reduce mortgage?

B

byron

Registered User
Messages
36
Looking for some advice. Have outstanding mortgage of €270k and €200k in cash. Am considering trading up in next 1-2 years. Should i pay down large lump sum of mortgage to reduce payments or hold onto cash for trading up down the line. Currently paying 3.15% interest on mortgage.

Is there any disadvantages when trading up in having to wait for house sale to get your cash back?
 
My tuppence worth.

I'm assuming you want to sell your place, and buy at the same time?

Currently, banks aren't doing bridging loans for house movers. If you want to be able to buy & sell at the same time, you will need to be in a chain - I.e. you buy subject to sale of your house. The proceeds of your sale clear remaining mortgage, with balance paid to your solicitor, which would probably use to part fund new purchase, and the balance would be your new mortgage.

None of this is straight forward at the moment, but works if you're selling in an area of high demand.

Now, when you are buying you will need to pay a booking deposit, and the balance of 10% on signing contracts. You won't have proceeds from your sale yet so you either need this cash, or get a loan.

I'd be holding back at least 10% of the amount you think you'll buy for to make that step easier.

Pay the rest off mortgage, and try get a better rate for the balance. Try for 2.75% with AIB.
 
When you are trading up, the least hassle way of doing it is to buy another house first. Then sell your own house.

If you can do this in a chain, great. But you might want to buy a house and spend some time doing it up.

If you go down this route, the maximum mortgage you will get will be 80%. So you will need 20% of the price of the new house. Let's say the new house will be about €500k, so you will need around €100k when you buy.

Over the next two years how much will you save? Let's say it's €20k. So you need to keep €80k of your savings.

Pay €120k off the mortgage.

Brendan
 
Just following up on this old thread. Our situation is that we want to trade up to a more expensive house in about a year's time. Our existing mortgage has a LTV of 60%.

We have a lump sum saved but it would obviously be advantageous to use it now to pay a bit off the principal of our existing mortgage to reduce our monthly repayments but then in a year's time remortgage to get some cash back out of the mortgage to use for the 20% deposit for get a 2nd mortgage to buy the new property (we would then sell our existing property).

We've asked a few banks about this and have received mixed messages on whether we could remortgage for a higher amount to finance a cash deposit as detailed above. Does anyone know if the above would be possible? Some banks such as AIB and BOI have said that you can only remortgage for a higher amount for either illness reasons or renovations or education. We know that some second time buyers can be treated as an exception to the 20% cash deposit requirement by the Central Bank, alth AIB mentioned that they no longer permit such exceptions, meaning we may only require a 10% deposit but is it risky to hope that exceptions still exist in a year's time?

Many thanks for any help received.
 
Another way of asking the same question: is it possible to remortgage an existing mortgage for a higher amount if the reason isn't paying for renovations, illness or education?

In this case it would be to help raise the 20% deposit to move house.
 
You must log in or register to reply here.
Back
Top