Switching or Topping up Buy to Let - options ?

bmount

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Hello all,

We have a investment cottage worth around 430k with 110k mortgage with Ulster Bank on a Tracker. Ltv therefore around 25%.

To supplement a very expensive period of our lives we d like to top this up as simple topup, move or switch and increase it to 180k or 190k ish, without much fuss or stress.

UB so far arent keen on topups (never mind topup on this, a tracker). This seems short sighted with the low ltv and absolutely guaranteed rent. Its in D4.

Please note we are not interested in topping up our PPR (home) for numerous reasons.

Any ideas are very welcome. Could we get 3% rate even by switching ? We dont mind some extra interest as its allowable against income.

Thank you.
 

Monbretia

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Have UB declined the top up? I would have thought that income being ok they might have done 65k of a top up. If they would that would be your best option, yes it's a little short of what you want but you could even get something short term, cu or bank for the balance. It would be a shame to give up the tracker at this stage. The top up wouldn't be at the tracker rate anyway but at today's rates.

If the loan is to do work to the house then I'd be surprised if they wouldn't do the top up with that LTV, they are limited though to the amount that can be done by way of top up, it used to be 65k, not sure if it's changed. Anything above their top up limit requires a brand new remortgage which will lose you the tracker.
 

bmount

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Thanks for reply Monbretia, I'm basing it on a casual phone call while getting the up to date balance, but I'm not convinced the customer service agent is correct saying no topups on buy to let. I'd prefer to talk to a branch but everything seems centralised now in UB.

We d be quite happy to get a simple 60k topup at say 2.8 or 3%. And stay below the 65k limit as that makes it complicated.

The money is for "keeping the plates spinning" on our lives with expensive cost of living right now and older teenagers especially etc. and it wont be to spend on any house work. We wouldnt want staged payments or any of that with a topup, ideally they just give us the 60k unvouched. There hasn't ever, and wont be, a missed repayment.
 

Monbretia

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Now maybe they do have a policy in place as to no top ups on BTLs, who knows these days! I'd try again so with UB, walk in and make an appointment with a mortgage advisor in your local branch, even if you ring a branch number you will be routed to call centre.

Bear in mind though if you do end up transferring the lot to somewhere else and losing the tracker you will not get tax relief on the extra borrowings if they were not spent on the BTL.
 

NoRegretsCoyote

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Sadly, there is no such thing as guaranteed rent.

A highly difficult tenant can leave you without rent for up to a year once RTB and other legal avenues are exhausted.
 

Brendan Burgess

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We have a investment cottage worth around 430k with 110k mortgage
he money is for "keeping the plates spinning" on our lives with expensive cost of living right now and older teenagers especially etc.
It seems that you are putting yourself through a lot of hassle to invest in a second property.

Please note we are not interested in topping up our PPR (home) for numerous reasons.
If you have a mortgage on your family home and you are having problems keeping the plates spinning, then sell the investment property.

How much is the tracker worth? If it's €110k @ 1% margin, that makes it worth about €2k a year. And its value declines quickly as you pay down the capital and come to the last few years of the mortgage.

It might a good topic for a money makeover.

Brendan
 

NoRegretsCoyote

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I think we are not allowed to speculate on property prices.

But if you believe that there is little near-term upside in prime Dublin house prices, then it might not be a bad time to liquidate. If there is a CGT liability it will have to be paid eventually anyway.
 

bmount

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Yes maybe in fact. Thank you both.

We agree we should sell it, we've being saying it for years.

However its a bit of a dilemma, it was bought in 1995 for 100K IEP, and we topped it up twice in the first 12 years (before the 2008 crash). There is 9 years left on the mortgage, we are early 50s. There will be a large 90 to 110k CGT, has to be paid anyway I'm sure (dont know a way to reduce it).

The final factor is we were trying to hang on to it until there is no mortgage, then possibly transfer ownership to our 2 children jointly (who will hopefully out of college and working then late 20s), they raise a new mortgage for 70% of the market value themselves, we receive that mortgage cash, we pay our CGT with some of it and fund some retirement with the balance. The kids in turn jointly receive a reduced price step on the property ladder 30% below market value, with no Gift tax. It may not happen :)

If the govt reduced cgt back to 20% might sell it tomorrow.
 

NoRegretsCoyote

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Your kids' circumstances might coincide for a few years where they are both single and working in Dublin. But most likely one will want to work somewhere else, or start a family, and may not be interested in a joint mortgage on a low-price property, even with a sibling.
 

bmount

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Good point. I'm going to contact them anyway to confirm options if any. I heard something about Cabot owning UBs btl mortgages but this is a performing loan not arrears of any sort, so dont know whether good loans have also moved to a vulture fund. If the good loans have moved too, I would have expected a letter/notification at least.
 
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