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

Should I sell first home or rent out

Options
  • 14-10-2019 12:17pm
    #1
    CandyButcher
    Registered Users Posts: 115 ✭✭


    Hello,


    I would appreciate some financial advice on this one. I just bought my first property costing 255,000 with a 40k deposit put down. It is 30 year fixed interest of 2.3%



    The problem is I am unhappy here after 6 months for various reasons so I would like to move home in the next two years but if I sell up I lose the generous mortgage deal (I cannot move the mortgage)


    In 1.5 years time I am hoping to be in a position to buy a house with a partner. If I keep the first property then that will see me pay an extra 1% on second home as it will be considered a (buy to let)


    Should I sell up.. and if I get my 40k dep back.. put it towards a nicer home and have no hassle of becoming a landlord (which I don't mind the challenge of it) or should I rent it out and if that goes well have the mortgage paid on it each year or better yet possibly a profit too..


    Is it mathematically worth paying the extra 1% on second home basing on average 3 bed semi 350,000 ?


    I would appreciate any views on this


Comments

  • Options
    #2
    Woshy
    Registered Users Posts: 1,429 ✭✭✭Woshy


    Have you factored in tax and other costs? The tax can be quite onerous on letting property. You don't just pay tax on your "profits" but on all the rent you receive (minus some allowances).

    We rented our house out and moved into a property owned by a family member. We are currently selling it because it ended up just being more hassle than it was worth.

    We had quite a few repair costs that ate into any of the profit we made and had stashed away to pay tax (we didn't make much on top of the mortgage payments to begin with) and then we got a big tax bill that we had to come up with money from elsewhere to pay because our stash was gone, causing issues in other aspects of our lives. This on top of the hassle of looking after the property (getting calls to fix things etc).

    We sat down and looked at the figures factoring everything in (including the capital gains tax that would be due the longer it was let) and financially it just wasn't worth our while. We both regret not just selling it straight away. I would sit down and do all the sums and see if it's worth it.


  • Options
    #3
    Fian
    Registered Users Posts: 2,188 ✭✭✭Fian


    If you move out of your first home you are not entitled to keep the mortgage deal, there will be a clause in the mortgage requiring you to remain residing there as your principal residence. You will be liable to have the mrotgage moved to a BTL rate.

    You will also loose the benefit of CGT exemption on any increase in value.

    This is irrespective of whether you buy a second home or not.

    You can go to a different bank to obtain a mortgage for your second home if you wish. You would be entitled to get a non BTL mortgage on it if it is to be your primary residence. You will have to disclose the existence of the other mortgage.


  • Options
    #4
    Ush1
    Registered Users Posts: 11,461 ✭✭✭✭Ush1


    Never heard of a 30 year fixed rate? I thought the longest was 5 years or so.


  • Options
    #5
    SozBbz
    Registered Users Posts: 1,889 ✭✭✭SozBbz


    Ush1 wrote: »
    Never heard of a 30 year fixed rate? I thought the longest was 5 years or so.

    Yeah this sounds strange to me too. 10 is the max I've hear of, and only 5 in most cases.

    Are you sure on the terms of your mortgage OP?

    That said, I know plenty of people with places rented out that have not touched their original mortgages. From what I can tell, the Banks tend not to come looking to make changes unless you somehow come to their attention.

    That said, its possible they will come looking at some point in the future, so you'd need to factor what a BTL rate would do to your sums.


  • Options
    #6
    pc7
    Moderators, Entertainment Moderators, Society & Culture Moderators Posts: 14,004 Mod ✭✭✭✭pc7


    Honestly as an unplanned landlord here (who has a fantastic tenant at the minute), I would sell if I were you. Its a lot of hassle, you don't know what why the market will go. if you sell now can you buy now with your partner? Have you somewhere to move too?


  • Advertisement
  • Options
    #7
    Salary Negotiator
    Closed Accounts Posts: 1,148 ✭✭✭Salary Negotiator


    Ush1 wrote: »
    Never heard of a 30 year fixed rate? I thought the longest was 5 years or so.
    SozBbz wrote: »
    Yeah this sounds strange to me too. 10 is the max I've hear of, and only 5 in most cases.

    Are you sure on the terms of your mortgage OP?

    That said, I know plenty of people with places rented out that have not touched their original mortgages. From what I can tell, the Banks tend not to come looking to make changes unless you somehow come to their attention.

    That said, its possible they will come looking at some point in the future, so you'd need to factor what a BTL rate would do to your sums.

    Council scheme like Rebuilding Ireland or similar maybe.


  • Options
    #8
    SozBbz
    Registered Users Posts: 1,889 ✭✭✭SozBbz


    Salary Negotiator wrote: »
    Council scheme like Rebuilding Ireland or similar maybe.

    Perhaps, but don't those types of schemes have claw back provisions to stop a person profiting from the property - ie if you sell within a certain period or if you rent it out?

    If this is the case it would totally change all the assumptions that those giving advice are based on. We really need the OP to clarify.


  • Options
    #9
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Not sure where you're gonna get a long term BTL rate at 3.3%. BTLs also have much higher deposit requirements. Frankly this doesn't sound like it's in Ireland.


Advertisement