Thinking about buying another property - advice appreciated.

C

colly

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I have a small apartment which I bought a few years ago. I live in Dublin but the apartment is in Wexford - I have had it rented out all of that time - it pays for itself but does not make any profit really. I paid 130k for it, i'd guess there is about 110k left on the mortgage right now. I think it might be worth 140-150k now

I'm thinking about buying anotehr apartment - this one to live in, and rent out the other room. Obviously prices have fallen significantly and now would probably be a good time to buy - I might wait a little longer, some say the bottom is not quite here yet - but who knows...

I saw some very nice apartments in the city centre near where to I work - brand new build, so no stamp duty - for €250k - a staggeringly low price for what it is, I think. So, I was thinking, I could probably sell my apartment and get the money I would need for the deposit etc on the new place.

However I could also wait a year or two and see what happens. My thinking is that if the market does go up, the apartment I will want to buy in Dublin, will probably go up in price at a much greater level than the extra money I would get for my one in Wexford. So it probably makes more sense to buy at the bottom of the market than when goes back up.

My other option (if this is even possible) is to borrow against the equity in the Wexford place to get the deposit for the new apartment. That way I would still own two - in time I might be glad I did not sell. Hopefully I would be able to borrow the amount needed for a deposit, but switch to interest-only and extend the term so the mortgage repayments would not go up too far and it would still be covered by the rent.

This was just a thought I had - I'd appreaiate any comments or suggestions you would have - I need all the info I can.
Thanks
 
Equity release/top-ups are hard to come by. You might be lucky but, for example, NIB is closed to all top-up business so releasing equity on the existing apt may be a non-runner, particularly if there's only a max of 30-40k of equity in it. You can't overestimate the wackiness of asking prices at the moment - they are really no guide to actual property value; some are realistic, others not at all. So your estimated value for the apt if you sell may not be correct - there's only one way to find out!

The other thing is that banks also seem to be looking for significantly more than a 10% deposit - NIB is looking for 25% for example. If you don't have the deposit now, then your options are to sell the existing place and hope you make enough of a profit, or save the deposit for the new place, which takes longer.

Personally, if you don't have savings already, I'd be cautious about holding on to the first apartment. If you borrow for the deposit against the old apt and buy a new place, your wiggle-room is significantly reduced and you'll have no financial cushion in the event of unforeseen circumstances. That said, it's purely a personal opinion - I'm a big fan of having a solid 6-month cushion for any eventuality.

Good luck with your decision.
 
I would only buy in Dublin if I could sell the other place first....dont get trapped like many at the mo with mortgages you cant service
 
It all depends on how secure your job is. You probably won't get the necessary loans at the moment and even if your job is very safe, the idea of borrowing for a deposit is plain bad thinking. My advise is to either stay as you are and save like mad or first see can you sell your first apartment.
 
You will have stamp duty unless you sell the apartment in Wexford first.
 
colly said:
€250k - a staggeringly low price for what it is, I think.
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Staggeringly low compared to what?? There is no point looking at what an apartment cost in 2006 compared to now, 2006 was shear madness a huge property bubble brought about by large amounts of outside influences (and meddling) a bubble the likes of which will never be seen again (i hope).
Compare that 250k price to a 1998 price and see how staggeringly low it looks then.
 
MrMan said:
You will have stamp duty unless you sell the apartment in Wexford first.
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why -The OP should have paid stamp duty on purchase if it was over 127k in the first place as it was not a PPR. The new purchase would be a ppr so no stamp duty on new property.
 
Not from my reading of the post

colly said:
I have a small apartment which I bought a few years ago. I live in Dublin but the apartment is in Wexford - I have had it rented out all of that time
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If you don't live in it and have it rented out since buying it, it's an investment property not a PPR and stamp duty would be due.
 
bleary said:
Not from my reading of the post




If you don't live in it and have it rented out since buying it, it's an investment property not a PPR and stamp duty would be due.
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I'm taking into account the possibility that someone may have bought as an investor but didn't declare themselves as such, which wasn't all that uncommon.
 
Thanks for the advice guys, exactly what I need.

When I bought the property it was 130k so I had to pay stamp duty. I have never lived in it.

I thought if you bought a new property you do not have to pay stamp duty? What difference does it make if you have another already?

Also, What's PPR?
 
Really, so the only people that can get away with not paying stamp duty are First Time Buyers? No Exceptions? I thought that you do not have to pay stamp duty on brand new properties .

I bought my apartment just before the "First Time Buyer" grant came in. I also paid 130k for it, only barely over the 128k threshold. Cost be about 4k I think.
 
If you buy a new property under 125sqm as an owner occupier (even if not a first time buyer), it's exempt from stamp duty.
 
You are covered if its 1350sqft. The others are stamp duty applies to either 25% of cost of house or 100% of site cost whichever is greater. Generally means if the house is worth up to about 500k your safe from sd as long as it will be your ppr and it is a new build. If you go onto daft or revenue they will have it properly worded.
 
MrMan - You should really have prefaced that stamp duty warning with a statement of your assumption that he had declared it as his PPR for stamp duty purposes - easy to see where the confusion arises from without that important piece of context
 
McGrath said:
MrMan - You should really have prefaced that stamp duty warning with a statement of your assumption that he had declared it as his PPR for stamp duty purposes - easy to see where the confusion arises from without that important piece of context
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Well like alot of things on AAM, even through confusion some info can be garnered and it is also important to have as much info available on a topic, which turned out to be the case.
 
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