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Investment advice mortgage

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  • 28-12-2017 12:25am
    #1
    893bet
    Registered Users Posts: 8,980 ✭✭✭


    I am in the enviable position of owning my own house outright following a self build. Prob be valued at 250k give or take. I have never had a mortgage. I have a decent salary of 60k basic with another 8-15k irregular/bonus etc.

    I am considering the purchase of 1 or maybe 2 apartments depending on how/what I can borrow. 80k or so each.

    Questions.....

    1) Can I qualify as a FTB given I have never had a mortgage? I am guessing no?

    2) If I borrow to invest I am tied to higher interest rates and deposit requirements. Can I instead remorgage (well first mortgage) against my own home and spend as I wish so to speak?

    3) If I borrow against my own home I assume then I can't offset any interest portion against interest?


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    #2
    antoinolachtnai
    Registered Users Posts: 9,792 ✭✭✭antoinolachtnai


    1. No

    2. Maybe. But there is a tax reason why this is a bad idea. (See a 3)

    3. Not quite true. You can use your home as collateral and still offset the interest. It is the purpose of the loan rather than the collateral that matters. That said, the bank will prefer not to take your home as collateral.


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    #3
    antoinolachtnai
    Registered Users Posts: 9,792 ✭✭✭antoinolachtnai


    antoinolachtnai wrote: »
    1. No

    2. Maybe. But there is a tax reason why this is a bad idea. (See a 3)

    3. Not quite true. You can use your home as collateral and still offset the interest. It is the purpose of the loan rather than the collateral that matters. That said, the bank will prefer not to take your home as collateral.

    All that said, it is not necessarily a good investment. You need to look at the numbers.


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    #4
    893bet
    Registered Users Posts: 8,980 ✭✭✭893bet


    antoinolachtnai wrote: »
    All that said, it is not necessarily a good investment. You need to look at the numbers.

    Can you clarify?

    My perspective is the rent will cover enough of the mortgage to mean I wouldn't notice the top up. Prob cover 70%.


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    #5
    893bet
    Registered Users Posts: 8,980 ✭✭✭893bet


    antoinolachtnai wrote: »
    1. No

    2. Maybe. But there is a tax reason why this is a bad idea. (See a 3)

    3. Not quite true. You can use your home as collateral and still offset the interest. It is the purpose of the loan rather than the collateral that matters. That said, the bank will prefer not to take your home as collateral.

    2) what's the tax reason that this is a bad idea?

    3)my issue is I don't have the deposit for an investor mortgage hence wanting to go the route of buying for cash so to speak leveraging my home for the loan.


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    #6
    antoinolachtnai
    Registered Users Posts: 9,792 ✭✭✭antoinolachtnai


    2 the tax reason is that if you get a home loan, for your domestic purposes, you won’t be able to offset the interest charges against tax.

    You can in principle use your home as collateral to buy your BTL property. This would mean you would not need a large cash deposit. Whether the bank would do this is a separate question.


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    #7
    antoinolachtnai
    Registered Users Posts: 9,792 ✭✭✭antoinolachtnai


    893bet wrote: »
    antoinolachtnai wrote: »
    All that said, it is not necessarily a good investment. You need to look at the numbers.

    Can you clarify?

    My perspective is the rent will cover enough of the mortgage to mean I wouldn't notice the top up. Prob cover 70%.

    But that will diminish as time goes on and the interest bill reduces. If the property can’t be rented you are in trouble. Will rents go up? Will the property actually be worth anything in 20 years?

    It is worth getting some advice.


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    #8
    antoinolachtnai
    Registered Users Posts: 9,792 ✭✭✭antoinolachtnai


    893bet wrote: »
    antoinolachtnai wrote: »
    All that said, it is not necessarily a good investment. You need to look at the numbers.

    Can you clarify?

    My perspective is the rent will cover enough of the mortgage to mean I wouldn't notice the top up. Prob cover 70%.

    But that will diminish as time goes on and the interest bill reduces. If the property can’t be rented you are in trouble. Will rents go up? Will the property actually be worth anything in 20 years?

    It is worth getting some advice.


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