To pay off BTL mortgage or not?

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Poh38123

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Hello everyone.

In 2009, i purchased a property in Dublin. I got a mortgage from Danske bank before they exited. It is a tracker mortgage ECB +.5. based on 50% LTV. I think i was one of their last customers for this product, drew-draw on Friday. They withdrew the product on the Monday.

Original sum borrowed: €200,000
Original Term: 30 years
Interest rate: ECB + .5%

Current sum outstanding: €43,000
Term remaining: 55 months ( I made some over payments when interest rates shot up in the last few years)
Interest rate: 3.30%

Unfortunately, due to the economy in 2009/2010 i emigrated Ireland and the house has been rented every since. I am still non-resident. I never informed the bank about my change in circumstances and I am not going to. I am currently doing my tax return and the deductible interest payments came to around €2,000 in 2025. I have about €140,000 in savings. I therefore could pay off the mortgage in its entirety. However, would readers recommend this? I would lose out on the tax deductible. However, i am on the lower tax rate for most of my income and would struggle to make gross interest of €2000 on €43,000 annually in this climate!
 
Hard to tell because we do not have all your details. Been on the lower rate of tax might suggest that this property is a large part of your net wealth.
This to me might suggest selling the property and investing the funds in your pension or something less risky.
 
KOW said:
Hard to tell because we do not have all your details
Click to expand...
Maybe this helps? Or maybe it needs updating?

Advice needed - do I need to change anything?

Personal details Age: 41 Single No children. Income and expenditure Annual gross income from employment or profession: 185,000 Monthly take-home pay: 8400 Type of employment: e.g. Civil Servant, self-employed. Salaried employee In general are you: (a) spending more than you earn, or (b)...
www.askaboutmoney.com
 
Poh38123 said:
the house has been rented every since
Click to expand...

This is the bit that needs exploring. The legal environment for landlords has changed significantly since 2009/2010. Forget about the tax deductible. The real worry is gaining vacant possession when it comes time to sell.
 
Personal details

Age: 45

Single

One child .


Income and expenditure
Annual gross income from employment or profession: 270,000


Monthly take-home pay: 12,208.11. I am non-resident in ireland. This income is not subject to Irish revenue tax.

Type of employment: e.g. Salaried employee

In general are you:
(a) spending more than you earn, or
(b) saving?

Sometimes both.

Summary of Assets and Liabilities
Family home worth €700 with a €490k mortgage. It is not based in Ireland but elsewhere in Europe.
Cash of €140,000
Defined contribution pension fund.

Irish Buy to Let Property 1: worth €800k with mortgage of €42k. 3.30% Tracker. ECB +.5%
Gross income: 31,000
Monthly repayment 900

This is the property I am discussing above


Irish Buy to Let Property 2: worth €300k with zero mortgage.

Gross income 30,000


EU (non-Irish) - Buy to Let Property 3 worth €500k with €30k mortgage. 2.49% fixed. Fixed rate for duration of mortgage

Gross income 26000
Monthly repayment 1473

Irish Buy to Let Property 4
Partial ownership

Worth 700,000. Own 20% share. Receive no investment income.



Family home mortgage information for non-Irish located family home
Lender
Interest rate 1.16%
If fixed, what is the term remaining of the fixed rate? Fixed. 18 years left.

Other borrowings – car loans/personal loans etc

Do you pay off your full credit card balance each month? Yes


Other savings and investments:

Do you have a pension scheme? Yes, it's defined benefit and based on length of service

Do you own any investment or other property?

As indicated above.

Other information which might be relevant

Life insurance:
Life assurance on family home and the first buy-to-let investment property.
 
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You are doing well financially.

The big question is whether you should keep the investment property or not.

Poh38123 said:
Irish Buy to Let Property 1: worth €800k with mortgage of €42k. 3.30% Tracker. ECB +.5%
Gross income: 31,000
Monthly repayment 900
Click to expand...

You have net equity of €750k
You are getting about €25k gross or €20k net on it.
What are the CGT implications of selling it? You probably have a €150k CGT liability

That does not seem like a good return, even after the CGT, so financially you should sell it.

The environment for landlords is getting worse and worse which is another reason for selling it.

Owning a BTL is difficult enough when you live nearby but if you run into problems and you are abroad, it will be even more difficult.

The only reason you might keep it would be that if you return to Ireland, you might live in it. But I think that is too slim a reason.

If your tenants give notice, then definitely sell it.

If not, and they are decent tenants, maybe tell them informally that your medium term plan is to sell it but you are in no rush so maybe they should look around.

After a few months, then start the process of terminating the lease. It could take you a few years if they resist it.
 
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Whether to pay off the mortgage or not is a side issue.

The net rate is 3.35% less 20% tax = about 2.5% and this is expected to rise as ECB rates rise.

It's not a big issue as the mortgage is so small.
 
Poh38123 said:
Irish Buy to Let Property 4
Click to expand...
If you have 4 properties, you will be a "large landlord" for any future tenancies. I am not sure if the fact that only 3 are in Ireland matters. It might, if so, you would still be a small landlord.

If a house becomes fully vacant, then renting it out again brings the property under the new rules. You might want to consider your situation if that occurs.

Large landlords have very limited rights to evict the tenant. Mostly, it has to be a for-fault eviction. The tenant can stay as long as they keep paying the rent.

As a large landlord, you can't evict to sell, or evict because you want to move-in.

You can still sell the property with a tenant in situ though. If you do that, you will likely get way fewer bidders. Only other landlords will bid, since they have to keep your tenants, under the same terms.

This is a huge risk for them. They would need extremely accurate records from you about the tenancy, and even then, there is a risk that your records have an error, and they will be the ones who get hit with the consequences.
 
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