charlie_45
Registered User
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Quick question on how to approach evaluating whether it's better to sell or rent. Current situation is we own a property with no mortgage which is valued at ~€450k and are looking to trade up. Our options are to either sell the property and put the full proceeds into the new property, or keep it and take a much larger mortgage and use the rental income to pay a portion of the mortgage. We have mortgage approval to do either.
We're evaluating if it's better to sell or rent by comparing the difference between the net rental income and the increased repayments on €450k additional mortgage. Rental of the property would be ~€2.5k pm, and as we'd be paying ~50% tax and have no mortgage interest to write off, we're estimating net rental income of ~€1.2k pm. Borrowing the additional €450k increases the mortgage by ~€1,800 pm. From this simple calculation, we think it's financially better to sell rather than take a higher mortgage and rent.
However, if we kept the property and covered the additional ~€600pm, it would cost €216k to have an asset worth €450k at the end of the 30yr term. When we look at it this way, we think it might be better to keep and rent. We don't love the idea of becoming landlords and all that goes with it, but want to ensure we fully explore the financial implications of both options before making a decision.
Any advice on how we should be evaluating this situation, and if there's something we're not considering would be much appreciated.
We're evaluating if it's better to sell or rent by comparing the difference between the net rental income and the increased repayments on €450k additional mortgage. Rental of the property would be ~€2.5k pm, and as we'd be paying ~50% tax and have no mortgage interest to write off, we're estimating net rental income of ~€1.2k pm. Borrowing the additional €450k increases the mortgage by ~€1,800 pm. From this simple calculation, we think it's financially better to sell rather than take a higher mortgage and rent.
However, if we kept the property and covered the additional ~€600pm, it would cost €216k to have an asset worth €450k at the end of the 30yr term. When we look at it this way, we think it might be better to keep and rent. We don't love the idea of becoming landlords and all that goes with it, but want to ensure we fully explore the financial implications of both options before making a decision.
Any advice on how we should be evaluating this situation, and if there's something we're not considering would be much appreciated.