Blog – McCarthy & Associates – Galway Talks, 19/03/2015

euroandhouseQuestion: I have some money on deposit which I am considering using to buy a second house which I would rent. I would need to get a mortgage for a portion of it. I am wondering what your thoughts are.
Answer: It is very important that you do your homework. It seems that the Irish love affair with property, despite the downturn, has once again reignited.
The difference now, as opposed to 7 years ago, is that there are a considerable number of extra costs incurred by landlords. If you are getting a mortgage to, fund a portion of the purchase, then you will only be allowed to write off 75% of the interest. Taxation on rental income has also increased. All of these factors will impact on the net rental return you will receive.
You must remember that if you were buying solely for capital appreciation, then your expectations need to be tempered; slow the increase in property prices over the coming years will be modest.

Question: I have a number of loans, some of them at a very high interest rate. I might be able to get a personal loan from my bank; do you think this would be a good idea?
Answer: If you have high interest borrowings like credit cards and overdrafts then it certainly is a very good idea to get a personal loan to clear these. You will benefit from a much lower interest rate but also the discipline of a regular repayment structure.
If this is the situation you find yourself in I would recommend that you progress with an application to your bank.

Question: I am saving a deposit to buy my first house. Is there any particular bank that I should deal with or does it matter?
Answer: If you think that because you have a savings account with a particular bank you will get beneficial treatment when applying for a mortgage, then you are wrong. What a bank prioritizes is not your savings history, but your financial profile when making an application.
They do not put a much emphasis, on whether or not you have dealt with them previously. So in other words, loyalty is not taken into account so save with whichever bank that is convenient for you.