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Your Questions: How much can we borrow to allow us buy a bigger home?

 


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Q: We are thinking about trading up our family home in Co Limerick to be a little closer to the city. We are not in negative equity and have seen suitable properties for around €250,000. Our house is valued at €191,000. We have a balance of €91,000 left on our current mortgage. How much can we borrow as a second-time buyers, and what other costs do we need to consider in selling our home?

A: A big challenge facing second-time buyers is getting the property chain to work for them. If you are relying on the equity in your current home as your deposit in your new home, banks will want you to sell your home before they will let you draw down a new mortgage, according to Joey Sheehan, head of credit at MyMortgages.ie.

Even if they do approve the mortgage in advance, you will have to wait until your own home is sold before you can successfully complete the purchase of your new property, as you will need the funds for a deposit.

Based on your figures, you are facing a surplus of €100,000 on the sale of your home, bearing in mind any solicitor’s and estate agent’s fees that will need to be deducted from that.

As a second-time buyer Central Bank rules dictate that you are required to have a 20pc deposit on your new mortgage.

Therefore, you could either borrow the full 80pc of the value of the new property, or you could choose to use some or all of proceeds of the sale of your own home to acquire more equity in your new property.

Q: I am a landlord of a three-bed property in Cork. In January I submitted an “escape of oil” claim to my insurer, which has been declined on the basis that my tenant was letting two rooms in the house through Airbnb. I had no knowledge that this was going on. How did the insurer know?

A: Airbnb activity is treated as a commercial interest from an insurance and Revenue perspective. This means the use of the property stands outside the terms and conditions of a standard home insurance contract, according to Deirdre McCarthy of Insuremyhouse.ie.

Insurers take a hard line on this, and will dispute or deny claims if they find out the space was being used in this manner. Insurers are becoming increasingly savvy when it comes to researching claims, often checking Airbnb and other letting sites for properties on which a claim has been made.

For tenants who wish to sub-let a rented property, the onus is on them to negotiate with their landlord, and get the property approved for Airbnb use.

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This is something which you will have to take up with your tenant.

In the case that, as a landlord, you would want to extend your insurance policy to cover for Airbnb use, there are a few options. One is to opt for a more commercial policy. However, this can be expensive.

Another option is to make use of a specific add-on to the current policy which will cater for Airbnb use.

Ms McCarthy says her firm has come to an agreement on such a policy extension with several of its insurers.

Homeowners need to be clear that if they, or a tenant, decide to rent out their home in part or in full via Airbnb, they must notify their insurer.

Q: I took out one of the basic health insurance plans in April 2015. I am 38 now and am thinking of upgrading my cover. What budget should I be considering to have a good standard of cover in place?

A: A good corporate plan is the recommendation of Dermot Goode of TotalHealthCover.ie.

This is because these plans cover all public and standard private hospitals including limited cover for the high-tech hospitals in Dublin for major cardiac procedures as well.

They tend to have low excesses for private hospital treatment and many of them also include guaranteed refunds on out-patient expenses, with no excess to pay first.

For example, many offer 50pc refunds on expenses such as GP, physiotherapy, consultants’ fees and many more.

These plans will cost between €1,100 and €1,200 for the year compared with around €500 on the entry-level plans.

But Mr Goode says corporate plans tend to be far better.

If these are of interest, he recommends you check out the Irish Life Health 4D Health 2 scheme at €1,213, the Laya Simply Connect plan at €1,133, and the VHI PMI 0710 at €1,188.

Don’t worry about the plan names, as corporate plans are available to all consumers.

If you’re relying on equity in your home as a deposit in your new home, banks will want you to sell your home before they will let you draw down a new mortgage.

Corporate health plans tend to have low excesses for private hospital treatment and many also include refunds on out-patient expenses, with no excess to pay first.

Irish Independent

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