use a property as security?

E

ecogeeko

Guest
Hi all,
we have an apartment and would like to buy a house.
Is it possible to use the apartment as security for the new mortgage, in principle? We have some money to put down as a deposit too.


Thanks!
e
 
Is the apartment mortgaged? If so how much is outstanding on it and how much is the apartment worth? How much is the house?
 
It is worth about e450,000, and there is a small mortgage on it - about 68,000 to pay off. The house would be about e500,000. We have 120,000 for the deposit.

Thanks for this. e
 
So you own about €380K equity in the apartment. Can't see why you can't remortgage for up to say 90% or maybe even more of the value in order to help fund the purchase of the other property assuming that you don't have other debts. Have you discussed this with your lender (or another lender if switching at the same time would be a good idea)? What are the plans for the two properties - e.g. live in the house and keep the apartment as a rental property or something?
 
ecogeeko said:
Hi all,
we have an apartment and would like to buy a house.
Is it possible to use the apartment as security for the new mortgage, in principle? We have some money to put down as a deposit too.


Thanks!
e
Click to expand...

Most lenders in Ireland won't cross-secure like that - in the event of a default it becomes unduly complicated.

I can't see what the advantage would be, either. If what you're planning to do is discharge the existing mortgage on the apartment and refinance as an investor, I don't think you'll actually get to write off mortgage interest against rent since the mortgage will not have been obtained to purchase / substantially renovate the property.

If you give more details, we could be more constructive!
 
Dreamerb said:
Most lenders in Ireland won't cross-secure like that - in the event of a default it becomes unduly complicated.
Click to expand...
Are you sure about that? What about all those people remortgaging their PPRs to buy investment properties at home or abroad?
If you give more details, we could be more constructive!
Click to expand...
I agree.
 
ClubMan said:
Are you sure about that? What about all those people remortgaging their PPRs to buy investment properties at home or abroad?
Click to expand...

It's specifically that he says secure the mortgage for the new house on the apartment - remortgaging being a separate technical issue. I enquired about doing a cross-securing deal when buying an investment property, but nothing doing (that was so I could get 100% investment mortgage and full write-off of the mortgage interest - could only get 90% in the end).
 
Why do anything with the flat? You can't up the mortgage to reduce your tax liability if you intend letting it and you have enough of a deposit on the new property not to need the equity (assuming your income is sufficient) so I can't see any point in racking up more costs in changing that mortgage.

Sarah

www.rea.ie
 
thanks for that everyone, sorry if I caused confusion! I wasn't sure myself about what you'd need to know.
Food for thought... thanks.
 
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