Should I change my house insurance?
Q I am a reluctant landlord (I have to move out and rent out the house due to finances) and am just coming to grips with registering with the PRTB, revenue, bank etc. I had both contents and building insurance cover on the house while I lived there and am cancelling the contents part (as I understand landlords don’t cover contents). Can I continue with the same policy for the building insurance?
AYour insurance company should be informed that the property is no longer a principal private residence and is now an investment property/rental. If you don't tell them that, you could find that in the event that something happens, the insurer will draw your attention to some small print in your policy and inform you that you are not covered. There is specialist landlord insurance – your current insurer probably offers this, although shop around before buying – which includes such features as third party liability (injury to tenants, visitors etc), and, crucially, loss of rent cover. This kicks in if the property is destroyed or in some way rendered uninhabitable and cannot be rented out – obviously that is not a feature of regular policies. As you appear to be relying on the rent to cover the mortgage, this could be very important for you. Irishlandlord.com is a good source of information on all aspects of becoming a landlord (however reluctant).
Is it time to opt for a fixed-rate mortgage?
Q It seems very likely that ECB interest rates will go up this year and continue to rise for the next few years. I missed out on getting a tracker mortgage some years ago and am at present paying an interest rate of 3.5 per cent on a variable mortgage. The bank has a five-year fixed-rate mortgage of 4.6 and a 10-year rate of 10.1 per cent which would bring me up to the end of the mortgage. In view of rising rates, does it make sense to fix now?
ABorrowers fix to get surety –there is a lot to be said for knowing exactly what your major bill (and for most that is the mortgage) will be for the next few years. You are correct in saying that there is speculation that ECB interest rates will rise in 2011 but as to when that may happen is anyone's guess – after all there was intense speculation that interest rates would rise in 2010 and it didn't happen. Market watchers suggest that if interest rates are to rise it won't be until the fourth quarter of the year. You will also be aware that lenders do not have to wait for the ECB to move on rates, they can, and have, increased variable interest rates. With so many borrowers being on cheap tracker rates, it's likely that more and more lenders will be inclined to try to recoup some of their losses by increasing the variable rates. It's a volatile situation and if it gives you peace of mind, fix – but go for a shorter fixed term, say of two, three or five years.
Your questions
Send your queries to Property questions, The Irish Times, The Irish Times Building, 24-28 Tara Street, Dublin 2 or e-mail propertyquestions@irishtimes.com. This column is a readers’ service and is not intended to replace professional advice.
