Switch from high buy to let rate to home mortgage rate possible?

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Marantz

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I have an mortgage of 150 k at 4.9 % for 12 year remaining on a buy to let, but I have an mortgage free home worth 250 k, Is it possible to take out a home mortgage to clear the rental mortgage?

I can't claim interest as the loan on the buy to let was used to build my home.
I also have a tracker at ecb + 1.3 % on another property, 200 k with 12 years remaining .
 
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The mainstream lenders won't do this.

But you might succeed with Finance Ireland or ICS.

As both of these operate through brokers, your best bet is probably to use a broker to discuss the issue generally.

Please make sure to come back and tell us the outcome.

Brendan
 
My situation is complicated, nearly 60 and semi retired. I live on passive rental income and so will probably be tied to the buy to let rates always, was lucky to secure the 4.9% mortgage but had hoped to be able to switch to a lower rate after a bit of time.
I have 75% equity across 4 properties so have the option of downsizing the home in 5 years and reviewing my situation then.
 
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The 4.9% was a equity loan to enable me to build my one off house on home land.
Had no other way then of raising capital short of selling one of the
rentals, which I won't do as they're my main source of income -circa 80 k yearly plus a contributory pension.
I also see the house ( my home )that the loan built as nothing more than an asset that I "rent to myself" for a few years, Until I sell it
and move to somewhere in the world that's warmer.
For the time frame -5 to 6 years - that's in it, I saw it as an acceptable short term risk in a longer game plan.
Though switching might be a way of squeezing a few more dollars into my wallet.
Liking this site very much, very informative and helpful.
 
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You should be able to at least refinance the BTL at a better rate.
Talk to a broker that deals with Finance Ireland and ICS and talk it through.
Rates of 3.75% should be possible.

It's impossible to know if anything else possible based on the info you've shared, so a broker is the route I'd go in your circumstances.
 
Hi Marantz

Say you have a mortgage free investment property worth €150k.

This may go up or down in value over the longer term. That is a real risk to you. A short-term drop would not matter.
You are probably getting €9k rent. After costs and that, you might be getting €7k net rent.
You are running the risk of a bad tenant or difficulties in finding a tenant. That seems very unlikely in today's market, but markets change.
So you are getting €3,500 net after tax from this property.

You are paying about €7,500 net interest on the mortgage. You can probably reduce that to €6,000.

But this is an unprofitable business with a lot of risk.

It makes no sense at all to keep that property.

Brendan
 
is there not a fair chance that inflation over time will negate the losses outlined by Brendan. What rent return would a person require to make it worthwhile to stay in the rental game assuming he/she is on higher rate of tax,?
 
"The passive income figure & total equity suggests a property portfolio worth north of 1.3m, with total borrowings of 350k. "

That's more or less in the ballpark as of now, although the equity is nice, it's mainly the income stream that's important to me.
Selling is always an option at any given time, but in the short term it's not necessary.
 
Hi Marantz

Say you have a mortgage free investment property worth €150k.

This may go up or down in value over the longer term. That is a real risk to you. A short-term drop would not matter.
You are probably getting €9k rent. After costs and that, you might be getting €7k net rent.
You are running the risk of a bad tenant or difficulties in finding a tenant. That seems very unlikely in today's market, but markets change.
So you are getting €3,500 net after tax from this property.

You are paying about €7,500 net interest on the mortgage. You can probably reduce that to €6,000.

But this is an unprofitable business with a lot of risk.

It makes no sense at all to keep that property.

Brendan
Click to expand...
I see your point in the short term...but
I see myself moving to my endgame within the next few years.
Selling the home place,at the right time, to pay off both the mortgages on the rentals is my 5 year goal.
That'll leave me with a good income from 3 mortgage free properties.
Rent a property in a low cost country as a base.
Spend my disposable cash on myself.
Game over.

The rental properties are in prime city center locations.
 
Marantz said:
"The passive income figure & total equity suggests a property portfolio worth north of 1.3m, with total borrowings of 350k. "

That's more or less in the ballpark as of now, although the equity is nice, it's mainly the income stream that's important to me.
Click to expand...

This makes it more and more clear that you should not be carrying a loss making property.

You have plenty of other assets so if house prices and rents rise, you will benefit anyway.

If they fall, you will have derisked and sold a loss making property.

You should also give serious consideration to selling a second property and buying equities for diversification. If this would trigger a big CGT bill, then maybe it's not the right thing to do.

Brendan
 
Brendan Burgess said:
I was giving an example. And if that example is anywhere close, the conclusion is valid
Click to expand...
Fair enough, my bad. I wasn't thinking in the context of your example. In the example the conclusion is valid. But it's unlikely to be near reality given OP recently took an equity release and lenders are restrictive on LTV in such scenarios, although this is likely to be loss making up to 50% LTV.

If the 150k mortgage is on a 600k property bringing in 48k gross rent I'd have a different conclusion.

But I completely agree, it does look like there is an over exposure to property.
 
Thanks Red

I think Marantz is typical of many Irish people - "I know property and therefore that is all I will invest in. Sure, isn't it risk-free?"

So he sees no need to reduce risk by either eliminating expensive borrowings or diversifying part of his portfolio.

Brendan
 
Re- over exposure to property, on the face of it, yes.
All I know to do, true but profitable so far.
Risk is always a factor.
But this is just a snapshot of my position now, how I got here involved de risking over the years.
I'm old enough to have bought and sold property and lived through boom and bust cycles in 2 countries, and know perfectly well how precarious it all is.
Like I said, I have absolutely no problems in selling one or even all of them at any point if events demanded it.

Okay, Say I sell two rentals in the morning-
Nominal sale price, 600k,, reducing my income by 66%
Pay cgt , pay 350k to redeem mortgages.
Throw what's left into indexes?
Am I better off or am I safer.
 
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Hi Marantz

Without filling in the details in the Money Makeover section, it would not be possible to answer.
If you have a property with a big CGT liability and a cheap tracker mortgage, you should not sell it.
If you have a property worth €150k with no cgt liability and a mortgage at 4.9%, you should sell it.

Brendan
 
That makes sense in a tactical way.
I'm at the stage where my needs are simple, I have enough to see me to my final resting place down the road, hopefully from rental income, but releasing capital by selling off properties works for me too.
 
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