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Changing to Investment mortgage wise?

  • 06-07-2005 12:32am
    #1
    SouthO
    Closed Accounts Posts: 26 ✭


    Looking for advice on whether to change to an investment mortgage...
    I am currently paying for a mortgage on a 2 bed apartment but have since emigrated to the US and am wondering if it would be wise to switch this to an investment mortgage? The reason I am thinking of this is because I never intend coming back to live in this property and fully intend to sell it off in the next 5 to 10 years. Currently I am paying the mortgage PLUS another loan I needed to obtain to finance the remainder of the property at the time of purchase. The combined outgoings each month for the mortgage and the related loan currently cost me an extra 150 euros over what I take in from renting the property. So as you can see this is not very profitable for me at the moment.

    If I did switch to an investment mortgage is it possible for me to consolidate both these loans together to obtain one(my current mortgage plus related loan)?

    any advice appreciated. Thanks!!


Comments

  • #2
    antoinolachtnai
    Registered Users, Registered Users 2 Posts: 9,815 ✭✭✭antoinolachtnai


    By 'investment mortgage' I take it you mean interest-only mortgage.

    You are in fact making a profit from the property at the moment. The problem is that it isn't generating cashflow for you. From a tax point of view, it's a profit if income - interest - expenses > 0.

    It's up to you, but I would try to consolidate the two loans to get a lower interest rate and more manageable monthly payments, if the bank will let you do this (depends on the loan-to-value ratio, and obviously don't make a fuss of the fact that you got this other loan to pay the deposit). Then pay this down over 20 years or whatever number of years suits your situation. This should be a good bit less than what you are paying now. Be sure you are paying the correct amount of tax (strictly speaking, the tenant or the person collecting the rent should withhold tax and submit it to the Revenue on your behalf, if I remember correctly).

    I wouldn't go interest-only if I could help it. If it doesn't have a high capital appreciation potential I would certainly steer clear of interest-only.

    It also depends on what other resources you have available. I personally would want to avoid converting dollars into euros to fund the mortgage and tax bill, assuming your main income is in dollars.

    You really should seek professional financial and tax advice, and not rely on what you may hear on boards.


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