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Chances of a mortgage and investment possibilitie

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  • 17-09-2016 8:13pm
    #1
    billyhead
    Registered Users Posts: 9,867 ✭✭✭


    I am currently living in an affordable house with a remaining mortgage balance of €25,000 (monthly mortgage of €300) and 10 years left (cant sell before then as I would have to pay a clawback). A neighbours house has gone on sale for €300,000. I have €100,000 in An Post long term state savings (some of which have another 8-9 years to go before I gain full interest on them). I was thinking to myself what if I tried to get the funds together including a mortgage to buy the neighbours house and then rent it out. I am currently earning €46000 gross and am single thus with the mortgage rules I would get 3.5 times this I believe which is €161,000. I have a saving history over the last 2 years of €1000 per month after bills,mortgage has been paid. Would a bank even entertain me with this idea and do any posters think its a crazy idea to think about in my current position? I would have to make up the cost difference with a loan elsewhere i.e a credit union which I am not currently a member of. This would be about €40000 i.e already have the €100,000 in An post and then the mortgage of €161000 if the bank would provide it to me.


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    #2
    mirrorwall14
    Closed Accounts Posts: 6,751 ✭✭✭mirrorwall14


    This sounds crazy TBH and the bank will not consider you at all with a 40k credit union loan! You can't top up a mortgage with a loan these days


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    #3
    antoinolachtnai
    Registered Users Posts: 9,793 ✭✭✭antoinolachtnai


    It probably could be done though the calculation is a little different from what you have. The reason I say that is because your total income including rent would be higher than you have stated and the loan you would require (the bank would probably prefer to do it all and keep the credit union out of it) would be around two-thirds of the property value.

    The question is really whether it would be worthwhile. You would be paying quite a high interest rate and there would be significant tax to pay. Also, renting property is real work. You could be a bit lax in the old days when rent was just a few hundred euros, but these days with rents in the thousands you really need to deliver a good level of service. And would you want to be renting out a property right next door?


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    #4
    Pepe LeFrits
    Users Awaiting Email Confirmation Posts: 15,001 ✭✭✭✭Pepe LeFrits


    I very much doubt the bank would consider lending (they'll look at how you put together your funds), but assuming they did, why would you bother?

    BTL rates are higher and I'm guessing a credit union loan wouldn't be any longer than 10 years and at a fairly high rate too. I don't see your loan repayments being less than €1,500 a month. The rent, less tax and maintenance costs to the gaff probably wouldn't even cover that.


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    #5
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    Don't let out a BTL property a couple of doors away from where you live- just don't. Whatever about making the figures work (and they do seem to be ropey)- the idea of having tenants a couple of doors down, who would be on my doorstep anytime they felt like it- sounds like a complete nightmare. The only people I know who let property in their immediate neighbourhood- do it through an agent, pay their 10% and keep the hell out of the equation.

    That said- I don't know of anyone who has bought buy to let property in the last year- I could tell you of 20 people I know who've sold BTL property without blinking- but no-one who has purchased...........

    If you've 100k sitting in a Post Office account- and a mortgage on your current property- surely the most cost effective thing would be to see if you could pay off the mortgage on property 1- and pay down and debt you have- and only then- when you're clear of any overhangs- survey the lie of the land? Even if it meant you had to save for another year to get a reasonable deposit level back together again- wouldn't it be worth it?

    Seriously though- don't buy a property nearby where you live- you'll regret it before long............


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    #6
    billyhead
    Registered Users Posts: 9,867 ✭✭✭billyhead


    The_Conductor wrote: »
    Don't let out a BTL property a couple of doors away from where you live- just don't. Whatever about making the figures work (and they do seem to be ropey)- the idea of having tenants a couple of doors down, who would be on my doorstep anytime they felt like it- sounds like a complete nightmare. The only people I know who let property in their immediate neighbourhood- do it through an agent, pay their 10% and keep the hell out of the equation.

    That said- I don't know of anyone who has bought buy to let property in the last year- I could tell you of 20 people I know who've sold BTL property without blinking- but no-one who has purchased...........

    If you've 100k sitting in a Post Office account- and a mortgage on your current property- surely the most cost effective thing would be to see if you could pay off the mortgage on property 1- and pay down and debt you have- and only then- when you're clear of any overhangs- survey the lie of the land? Even if it meant you had to save for another year to get a reasonable deposit level back together again- wouldn't it be worth it?

    Seriously though- don't buy a property nearby where you live- you'll regret it before long............
    Thanks all for the replies. Yep I will pull the plug on this idea


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