Building new home, what to do with current home?

iron1234

Looking for some advice regarding what to do with my current house when my wife and I build a new home on a site we own.

I bought a 3 Bed semi house 6 years ago as a single person, with the mortgage etc. all in my own name. I bought the house for €175k, with monthly repayments now around €900 per month. Going on current market value and what some houses in the same estate have sold for recently, I should be able to sell it for €255-270k. There is roughly €140k remaining on the mortgage, so if I sold now I should have around €110-120k in cash after the sale.

We have been granted planning on a site we own and the house we have planning permission for is going to cost in the region of €400-420k to build via a contractor, may be able to reduce this by going direct labor route but not sure if we want the hassle.

What is the best thing from a financial point of view to do with the home I currently own? Do I sell now and put the cash profit into building the new house to minimize the amount we need to borrow to build the new house, there by saving a few hundred per month on mortgage repayments? Or should I hold on to it and rent it out? Rent for similar houses in the area is about €1400 - €1500 per month.

Any advice from anyone who has been in a similar situation would be appreciated.. At the moment, leaning towards selling current house as not sure if renting out a house for a small profit every month is worth it, considering the amount we would be guaranteed to save on our own repayments for the new house.

Thanks!

Del2005

Assuming that you are on the higher tax bracket then the rent will struggle to cover the mortgage and that's if the tenant pays.

There's a reason why small landlords are selling up and only large funds are buying or building rentals.

€100,000 off your new mortgage will be better than being a landlord

sonyvision

Sell the house as if you lived in the house its your PPR and not subject to CGT.

If you rent it out the growth will be subject to CGT. Houses are all time so leaving now is great. I have a rental property it comes with big risks and wouldn't recommend it unless you understand the potential downside and flush with cash.

If you sell you can use for the cash reducing the mortgage needed. That's exactly what I would be using the money for.

dublin49

I would sell but keep most of the profit for rainy day fund.Who knows whats down the road and you could view the additional mortgage repaymemts as a redundancy insurance.Nothing to stop you then repaying chunks of the mortgage from your rainy day fund as your circumstances change.