Investment opportunities
Address: 179 Fearnn Ri, Merlin Park, Galway.
Agent: Property Partners Heaslip.
Property type: townhouse at €255,000.
What do you get? A four-bedroom terraced townhouse in a recently completed development on the east of Galway city. Consisting of 121sq m (1,300sq ft) of living space, it is ready for immediate occupation. The sale also includes integrated appliances. The accommodation comprises an entrance hall, kitchen/diningroom, livingroom, four bedrooms (one en suite) and a bathroom.
How much for an investor to buy? At an 85 per cent mortgage at the standard variable buy-to-let rate of 3.5 per cent, the repayments would be €1,083.75 per month.
Where an investor has three or more investment properties with AIB, the pricing will be individually negotiated based on the risk assessment of the proposal where the loan-to-value is 75 per cent.
With an interest-only loan, the monthly repayments are made up of interest only - the capital borrowed does not reduce. This allows customers to divert capital to another source - for example, pension contributions or another investment property. For this mortgage the repayment would be €632 per month based on a standard variable rate of 3.5 per cent.
How much to buy? If borrowing 100 per cent of the property price at AIB's one-year fixed new business rate of 2.75per cent, the repayments on this mortgage would be around €946 per month.
Repayments at AIB's standard variable rate of 3.3 per cent would be €1,023 per month.
Single income required: a single first-time buyer would require a salary of around €60,000 to fund this mortgage over 35 years.
Joint income required: a couple would require a minimum income of €26,000 each to fund this mortgage over 35 years. At a tracker rate of 3.1 per cent, the repayments would be €995 per month. First-time buyers borrowing up to 92 per cent of the property price would require a salary of €54,000 to fund this mortgage over 35 years. A couple would require minimum incomes of €24,000 each to fund this mortgage over 35 years.
At AIB's one-year fixed new business rate of 2.75 per cent, the repayments on this mortgage would be €870 per month. Repayments at a standard variable rate of 3.3 per cent would be €941 per month.
Stamp Duty: €12,750 for investors and trader-uppers.
Potential: although situated on what is considered the less fashionable side of Galway, the rents are stronger because it is beside a large employment base. A four-bed house in this area could achieve a rent of €850-€950 per month.
Verdict: good rental location but a lot of houses are being built in the area, so there is a danger of oversupply which could cause rents to drop and hamper long term growth.
Calculations by AIB
