Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie

Pay lump off mortgage or improve property?

Options
  • 30-04-2007 8:16pm
    #1
    iguana
    Moderators, Entertainment Moderators Posts: 12,915 Mod ✭✭✭✭


    My husband and I own a house in London which we bought last year with a 3 year fixed rate mortgage. Despite the fixed rate we have arranged a deal where we could overpay or pay a lump sum during the fixed term as we have a SSIA which matured today. Originally we planned to reduce the term of the mortgage as soon as we got the money as there have been 3 IR rises since we arranged our mortgage and it is predicted that base rates may soon rise here to 6%.

    However we don't actually like living here that much. We have three sets of people living on our street that make the whole place very unpleasant. As well as that our priorities have changed and we'd rather live in a more peaceful area. But on the plus side for us prices here have risen by about 30% this year and they are predicted to rise more. So we now plan to sell at the end of our fixed rate and either return to Dublin, depending on the possibility of employment, or move to the outskirts of London. Buying a cheaper house and reducing our mortgage that way.

    So now I can't see if there is much advantage to paying a lump off the mortgage. Would it really make that much of a difference if we plan on selling in two years? Would we be better off to make the little improvements that would make the house more saleable? The house is a biggish victorian terrace, and the owners before the ones we bought from decorated the house really nicely but it has a fair bit of wear and tear. And it only has crappy single glazing, but crappy aluminium frames rather than the original sash. And the kitchen is 10 years old now so a little dated. But would changing these things actually make a bigger difference to the sale price than the cost of doing them?


Comments

  • Options
    #2
    ircoha
    Closed Accounts Posts: 2,290 ✭✭✭ircoha


    In the absence of relative numbers thiis is hard to answer but lets crunch a few numbers:

    Max SSIA is say 40k euro or 27k stg at 6% pa is 135 a month, perhaps not a lot.

    In the London market, unless u do the work yourselves, 27k stg might get someone to turn up for tea, but not much else.

    In addition spending 27k on repairs on a house which is worth many X times that wont make much difference to the selling price.

    My opinion: Cash is king:)


  • Options
    #3
    dame
    Closed Accounts Posts: 1,623 ✭✭✭dame


    Personally, I'd put the lump sum into a deposit account and keep it for the improvements you're bound to want to do on the new house you buy yourselves in a few years.

    My reasoning would be:
    I wouldn't bother changing a ten year old kitchen because you'll never appeal to everyone anyway and ten years isn't very old/dated. Changing the windows probably would help but you'd need to spend a lot and you'd have the hassle and discomfort of the work, only to move on and leave the benefit of them to others anyway. If the prices are increasing by 30% anyway then doesn't that mean there's a great demand for houses like yours and you'll have no trouble selling it regardless.


Advertisement