Selling house to fund a self build.

Muffintop

Registered User
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Hi there just looking for advice.
We are currently living in a small house in a rural area. Love the area but our house was built in 2003 long before kids and is now too small for our needs. My husband owns this house. Tt also requires alot of updating eg. new bathroom, kitchen and new boiler.
We were hoping to upgrade these items and do an extension but would need to borrow about 60k from the credit union in a home improvement loan.
Our current mortgage is about 590€ per 4.7% variable rate with Danske/Pepper per month and we would be looking at roughly the same again in credit union repayments over the next 15 years.
Our current house has alot of equity in it. 70k max left on mortgage( 11yrs) and it would possibly sell for 240k.
Are we mad borrowing from the credit union at a rate of 6.5%?
We are now toying with the idea of selling and hopefully buying a site from family and building again. We would probably require a small mortgage of 120k ontop of the equity from sale of house.
We only have 10k in savings and I own an investment property in Dublin (accidental landlord). My current mortgage balance on this is 225k and valued somewhere in the region of 260k upwards. I am on a tracker with AIB. I also pay about 200 per month towards the upkeep of this property and have no longterm desire to be a landlord and will sell when the time is right.
Our incomes are Me: 59k Public Servant
Spouse : Private Sector 34k
We have 3 children under 6.
Where should we go from here ? We live pretty much month to month with childcare expenses and a modest car loan on top of all the regular bills.
Kind Regards
Muffintop
 
Are we mad borrowing from the credit union at a rate of 6.5%?
Yes!

If you are currently living month-to-month you simply cannot afford to borrow any more money. Full stop.

So where to go from here?

This is what I would do if I was in your shoes:-
  1. Sell the Dublin apartment and use to net proceeds to pay off the car loan and attend to the most urgent jobs on your current house.
  2. Switch mortgage provider ASAP. You should be able to reduce your mortgage rate by around 1.5%.
  3. Open regular saver accounts and put money aside every month to fund the house extension/move. Check out the "Best Buys" section for the best rates.
 
Yes!

If you are currently living month-to-month you simply cannot afford to borrow any more money. Full stop.

So where to go from here?

This is what I would do if I was in your shoes:-
  1. Sell the Dublin apartment and use to net proceeds to pay off the car loan and attend to the most urgent jobs on your current house.
  2. Switch mortgage provider ASAP. You should be able to reduce your mortgage rate by around 1.5%.
  3. Open regular saver accounts and put money aside every month to fund the house extension/move. Check out the "Best Buys" section for the best rates.
Thank you Sarenco just to clarify we save about 600 per month into credit union as well as paying all the regular bills/ Car loan.
 
Thank you Sarenco just to clarify we save about 600 per month into credit union as well as paying all the regular bills/ Car loan.

Why are you saving money while carrying a car loan? Unless the rate you are getting from the credit union (net of DIRT) is higher than the rate you are paying on the car loan, you would be better off just paying off the car loan.

If you sold the Dublin apartment you would have ~€40k in capital and could save an additional €200 per month. If you then paid off the car loan and refinanced your home mortgage you could increase your monthly savings to €1,000+. You could could then save the shortfall you need to renovate/extend your home in less than two years.
 
We are saving with the credit union to build up shares as we were hoping to borrow for house extension and wanted to see could we afford to put away that amount every month. House extension is urgent as we are really stressed out about lack of space and repairs outstanding etc
Car loan has about 8k owed on it at €240 per month.
I am actually really embarrassed because we seem to be doing so much wrong. So grateful of the advice.
I ideally would like to see how my apartment fairs out for another year/6months as prices seem to be going up?
Who do we go to about switching mortgage provider...I feel so clueless about this I know 4.7 % is a very high rate to be paying.
My husband thinks selling house and building a new house suitable for our needs is the way forward and then sell apartment next year and clear as much mortgage debt as possible.
 
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