Withdraw some finance from PDH to fund BTL?

1eyeonthefuture

Registered User
Messages
82
Currently doing plans for small refurbishment /extension of current PDH. Will get a mortgage top up for same.
Am toying with the idea of getting enough in the top up to act as a deposit for purchase of a BTL apartment.
Current mortgage @2.99 with mortgage of 90k and value circa 430k.
Also have an existing BTL @ 4.3% /90k mortgage, value circa 160k. Rental income covers the mortgage.
A guy I know is looking at selling a 1 bed apartment close by which generates €900 pm..there is a very strong demand for such units in my area
At 4.8% I've calculated a mortgage monthly repayment of €780pm over 15 years, although my own PDH mortgage will be cleared in 7 years so will be able to attack both rentals at that point, although granted this will be lengthened somewhat by the top up.
Has anyone took value out of their PDH of late to finance a BTL? Any regrets, advice etc.??
Would it make more sense to refinance the entire amount and therefore obtain better rate although there would be a tradeoff against not being able to reduce rental income tax by mortgage interest relief I would have thought?
Also would the bank I'm approaching for the BTL mortgage look to see where the funds for the deposit came from and look with disapproval at this method as essentially I'll be telling the PDH bank the entire top up is for the extension.

It's always been in the back of my mind to purchase an additional BTL when the main mortgage is paid up in order to aid pension income however this would accelerate the plan so to speak.

Thanks all
 
Last edited:
While it may be a good plan, you would need to look a little more closely at the figures. €900 rent, less mgt charge, less exps, less interest, then 50% tax?

Would you have negative cashflow this ?
 
While it may be a good plan, you would need to look a little more closely at the figures. €900 rent, less mgt charge, less exps, less interest, then 50% tax?

Would you have negative cashflow this ?
Yes, will have neg cash flow, however as I say, I see it as a form of pension investment /planning.
Maybe its the completely wrong way to view things, and I would really appreciate constructive neg feedback here if so, but for a relatively small monthly payment, I'd be utilising a tenants rent to pay for an asset that will produce a decent pension top up in 10 to 15 years time, while having an asset paid off and whole.. Hopefully my reasoning makes sense but perhaps not. Thanks
 
I see it as a form of pension investment /planning.

This has to be the biggest financial mistake that people make. "That property is my pension!"

You get tax relief on contributions to a pension fund.
The income and capital gains accumulate tax-free.
When you retire, you can take 25% tax-free and can manage the balance fairly tax efficiently.

If you already own two properties, you should look at maxing your pension contributions instead of exposing yourself further to property and loans.

Brendan
 
Has anyone took value out of their PDH of late to finance a BTL? Any regrets, advice etc.??
I talked to BoI a few years ago. I had an LTV of 60% an was thinking about an extension. They said they would only fund equity release for very specific renovations. They said you would need an engineer's report from before and after to prove the work had been done, invoices from builders, etc. In the end I didn't go for it. They seemed pretty nervous about the idea of equity being used for anything else other than renovations to the house itself.

AFAIK other banks are like this, but would be open to correction.
 
This has to be the biggest financial mistake that people make. "That property is my pension!"

You get tax relief on contributions to a pension fund.
The income and capital gains accumulate tax-free.
When you retire, you can take 25% tax-free and can manage the balance fairly tax efficiently.

If you already own two properties, you should look at maxing your pension contributions instead of exposing yourself further to property and loans.

Brendan
Thanks Brendan. Totally take your point on board, however if already contributing a good portion of wage to pension and employer broadly reciprocating and both myself and partner on track for quite a comfortable pension, this property coupled with the other RIP would give a property exposure of circa 300k which compared to overall markets exposure at retirement age would be circa 15% of entire. (I'm not counting PDH as I don't see it as an investment).
Doing quick maths here between mortgage top up and tax the property will cost me circa 70k and at the end of the process I'll have an income generating property worth 135 k plus appreciation.
This obviously disregards poor tenants, extraordinary costs, possibly higher interest rates and anything else that can and will go wrong with a tenanted property! Thanks
 
I agree with NoRegretsCoyote.

I don’t think banks do equity release anymore other than for receipted renovations.
 
Hi 1eyeonthefuture,

Yes, that's a relatively easy thing to do.

Only Finance Ireland & Dilosk will allow equity to be used to help fund the purchase of another property.

Other lenders will only allow equity releases towards home improvements(on the proposed property to be secured), debt consolidation, education fees for children etc.

Finance Ireland will only lend out on 1 beds in certain areas - between the canals in Dublin & sometimes, depending on the location/property quality in other areas.

I'm pretty sure Dilosk is not as fussy on location with regards to 1 beds. Dilosk however, won't do buy to let lending in areas with a population of less than 10,000 residents.

The max loan to value on a buy to let is 70% - i.e. 112Ke in your case(i.e. 160Ke x 70%) - which would release 22Ke of equity(112Ke - 90Ke)).
The buy to let rate in this case would be 3.95%.

The max loan to value on an owner-occupied property is 80%.
Finance Ireland's lowest rate is the 3 yr fixed - 2.4%(loan to values of 80% of less).

You can also make penalty-free overpayments on Finance Ireland's fixed-rate products(an annual lump sum of up to 20% of the outstanding principal, during each year of the fixed term).

Depending on how much surplus cash you have leftover each month, you may still be able to clear your new & higher PDH mortgage in 7 years given the scope to make overpayments that you'd have - plus a lower rate than what you are currently paying.

Dilosk, the last I checked, also have the same penalty-free overpayment facility on its' fixed rate products.


Good luck!



[email protected]
 
Hi 1eyeonthefuture,

Yes, that's a relatively easy thing to do.

Only Finance Ireland & Dilosk will allow equity to be used to help fund the purchase of another property.

Other lenders will only allow equity releases towards home improvements(on the proposed property to be secured), debt consolidation, education fees for children etc.

Finance Ireland will only lend out on 1 beds in certain areas - between the canals in Dublin & sometimes, depending on the location/property quality in other areas.

I'm pretty sure Dilosk is not as fussy on location with regards to 1 beds. Dilosk however, won't do buy to let lending in areas with a population of less than 10,000 residents.

The max loan to value on a buy to let is 70% - i.e. 112Ke in your case(i.e. 160Ke x 70%) - which would release 22Ke of equity(112Ke - 90Ke)).
The buy to let rate in this case would be 3.95%.

The max loan to value on an owner-occupied property is 80%.
Finance Ireland's lowest rate is the 3 yr fixed - 2.4%(loan to values of 80% of less).

You can also make penalty-free overpayments on Finance Ireland's fixed-rate products(an annual lump sum of up to 20% of the outstanding principal, during each year of the fixed term).

Depending on how much surplus cash you have leftover each month, you may still be able to clear your new & higher PDH mortgage in 7 years given the scope to make overpayments that you'd have - plus a lower rate than what you are currently paying.

Dilosk, the last I checked, also have the same penalty-free overpayment facility on its' fixed rate products.


Good luck!



[email protected]
Justin, apologies just seeing this now.
Needless to say I didn't proceed as outlined exactly but I am close to pulling the trigger on a slightly different plan.
Appreciate you taking g the time on the above
 
Hi 1eyeonthefuture,

Yes, that's a relatively easy thing to do.

Only Finance Ireland & Dilosk will allow equity to be used to help fund the purchase of another property.

Other lenders will only allow equity releases towards home improvements(on the proposed property to be secured), debt consolidation, education fees for children etc.

Finance Ireland will only lend out on 1 beds in certain areas - between the canals in Dublin & sometimes, depending on the location/property quality in other areas.

I'm pretty sure Dilosk is not as fussy on location with regards to 1 beds. Dilosk however, won't do buy to let lending in areas with a population of less than 10,000 residents.

The max loan to value on a buy to let is 70% - i.e. 112Ke in your case(i.e. 160Ke x 70%) - which would release 22Ke of equity(112Ke - 90Ke)).
The buy to let rate in this case would be 3.95%.

The max loan to value on an owner-occupied property is 80%.
Finance Ireland's lowest rate is the 3 yr fixed - 2.4%(loan to values of 80% of less).

You can also make penalty-free overpayments on Finance Ireland's fixed-rate products(an annual lump sum of up to 20% of the outstanding principal, during each year of the fixed term).

Depending on how much surplus cash you have leftover each month, you may still be able to clear your new & higher PDH mortgage in 7 years given the scope to make overpayments that you'd have - plus a lower rate than what you are currently paying.

Dilosk, the last I checked, also have the same penalty-free overpayment facility on its' fixed rate products.


Good luck!



[email protected]
Hi Justin,

Will Finance Ireland or Dilosk facilitate equity release for any purpose?

e.g. for the purchase of an overseas property?

Many thanks,

Gordon
 
To update here, UB facilitated equity release on my PDH to obtain deposit to use on the investment property.
Even with same the overall Loan to Ratio on the property is still v healthy which I'm sure influenced the underwriters decision making.
Thanks all for input.
 
Interesting reading back on the thread that the consensus seemed to be that banks would not facilitate equity release (easily). @1eyeonthefuture were the circumstances that you obtained the equity as outlined in your first post? Did you get money for your renovations and for a BTL deposit?
 
Interesting reading back on the thread that the consensus seemed to be that banks would not facilitate equity release (easily). @1eyeonthefuture were the circumstances that you obtained the equity as outlined in your first post? Did you get money for your renovations and for a BTL deposit?
No.
Decided for the time being to leave the renovations until the BTL was put to bed so ended up obtaining deposit via equity release on PDH.
UB were happy for us not to use our savings. Therefore have same to use for renovation in future if required.
IMO UB have being doing some strange things of late with respect of mortgages.. I recently logged into manage my mortgage to find them offering me a new 2.8% rate on the other B2L which I took and fixed for 8 years at which point I'll have about 1 year left of payments.
This is actually lower than what I have on my PDH at 2.99 % which has a better loan to value.
Am going to contact them on Monday to see about accessing the 2.8 % on a 10 year fixed on same which given my current o/payments will see it cleared at that point.
While I understand Ze Germans don't like inflation, am keeping a wary eye on it none the less and a fixed rate until its cleared will give me some comfort.
 
Hi 1eyeonthefuture,

Yes, that's a relatively easy thing to do.

Only Finance Ireland & Dilosk will allow equity to be used to help fund the purchase of another property.

Other lenders will only allow equity releases towards home improvements(on the proposed property to be secured), debt consolidation, education fees for children etc.

Finance Ireland will only lend out on 1 beds in certain areas - between the canals in Dublin & sometimes, depending on the location/property quality in other areas.

I'm pretty sure Dilosk is not as fussy on location with regards to 1 beds. Dilosk however, won't do buy to let lending in areas with a population of less than 10,000 residents.

The max loan to value on a buy to let is 70% - i.e. 112Ke in your case(i.e. 160Ke x 70%) - which would release 22Ke of equity(112Ke - 90Ke)).
The buy to let rate in this case would be 3.95%.

The max loan to value on an owner-occupied property is 80%.
Finance Ireland's lowest rate is the 3 yr fixed - 2.4%(loan to values of 80% of less).

You can also make penalty-free overpayments on Finance Ireland's fixed-rate products(an annual lump sum of up to 20% of the outstanding principal, during each year of the fixed term).

Depending on how much surplus cash you have leftover each month, you may still be able to clear your new & higher PDH mortgage in 7 years given the scope to make overpayments that you'd have - plus a lower rate than what you are currently paying.

Dilosk, the last I checked, also have the same penalty-free overpayment facility on its' fixed rate products.


Good luck!



[email protected]
Hey Justin & all.. quick one if I can.
So as described, I've released deposit from my PDH equity thru UB.
Have taken on separate mortgage thru UB on a BTL.
UB rate on the BTL is a variable rate 4.95%
Is there anything to stop me switching same almost immediately to a different provider with a lower rate?
Many thanks
 
Back
Top