The investment property is very profitable so keep it
Rental income: €7,200 a year
Interest cost: €2,100(€145k @1.45%)
Net profit before costs and income tax: €5,000
You are paying almost €6,000 a year in capital off the mortgage, so you are slowly but surely emerging from negative equity.
The cost of your home is very, very cheap
€211,000 @ 1.5% = €263 per month.
You are knocking €6,000 a year off the capital. Again, you are slowly but surely emerging from negative equity.
If Bank of Ireland approves you for a negative equity mortgage
You will be able to retain your tracker for 5 years at an increased margin of 1.5%
Say you borrow an additional €65,000 for the house.
After the 5 years, you will have a mortgage of €270,000 at an SVR of 4.5%
which would be an interest cost of around €1,000 a month or €750 a month more interest than you are paying at present.
Only you can decide if trading up is worth €750 extra a month in interest.
I have dealt with these matters more systematically in this Key Post
Negative equity tracker - trade up now or wait?
Financially, with €335k of net borrowings already and €115k of net negative equity, I think you should focus on reducing the net borrowing and negative equity.
What do you do with your savings in the meantime?
As suggested above, do not pay down either of your tracker mortgages.
Do not put the money anywhere where you can't get it in a hurry or where there are penalties for early encashment.
After that, it doesn't matter too much. Check out the best buys for lump sums.