Asset Rich & Cash Poor

N

Notabob

Registered User
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Hi,

I am wondering if you can give me some advise. I am looking to figure out if I can release equity from my home and what I can borrow. I seem to have a great deal of "wealth" tied up in my home but find month to month quite a struggle and big purchases copuldn't even be considered.

My circumstances are as follows:

Married with 3 children
Mortgage of 220K with 27 years remaining with UB @ tracker ECB +0.85%
Home vaued at €750K
SSIA is maxed and due next year.
Other "investments" of approx €50K for childrens future education.
Household income of €70K (€64K +10% bonus based on single income)
No loans or ccard balances.

I would like to be able to release some of the €530K equity for the purposes of living a little!....upgrade car, home improvements...rather than slogging month to month. Please do not suggest I save other that what I am already doing as the money just ain't there! :eek:

Any advise or guidance on what I could/should borrow is much appreciated.

thanks,
notabob!

P.S. Great forum by the way, keep up the good work!
 
Hi Notabob,

How old are you and your wife?
What is your monthly mortgage repayment?
 
Ulster Bank will allow you to top up by up to €65,000 (which is fine on your income) on the same tracker rate with no legal costs - you might have to pay for a valuation at around €100 but that's it; quick and easy. Would that be enough given that your SSIA's are maturing next year?

Sarah

www.rea.ie
 
Don't forget that if you both have maxed out SSIA's you'll be getting a) a decent lump sum into your hands, and b) €500 extra cashflow per month once they reach maturity.
 
Hi Sarah,

Thanks for sharing this with me.

I would be very happy to remain with UB as I am told that the tracker I'm on is probably one of the better deals around.

The 65K is more than adequate, I was thinking more like €40K!

May I be so bold to ask how you derived those details and figure as I was looking at the UB website but couldn't find anything! :confused:

Anyways, thanks again.

Silly question but do I make contact with my branch directly and request this.....why am I so embarrased to do that :eek: maybe 'cos I was reared pre celtic tiger where us Irish weren't allowed to have luxuries!

thanks

notabob!
 
i now myself even before i ask the question that it could be a stupid one but.
you say you have no money on a month to month basis but how if this is the case are you going to be able to afford to pay back the morgtage top up..
it's a devils advocate type of question
 
Notabob said:
May I be so bold to ask how you derived those details and figure as I was looking at the UB website but couldn't find anything! :confused:

Anyways, thanks again.

Silly question but do I make contact with my branch directly and request this.....why am I so embarrased to do that :eek: maybe 'cos I was reared pre celtic tiger where us Irish weren't allowed to have luxuries!

thanks

notabob!
Click to expand...

It's my job to know it :D

And yes, just go along to your branch - they are in the business of lending money and as long as you fit the criteria you'll be just fine. If you do have any problems le me know and I'll give you a hand.

Sarah

www.rea.ie
 
Thanks Sarah, I'll give them a call next week...and thanks for the offer of assistance. :) ...above and beyond as usual! thanks
 
If you wanted to think 'outside the box' if you sold ur house and deposited the money the interest earned would pay your rent for a simmilar property and your monthy disposable income would increase by what now you spend in mortgage repayments.

By renting you would be doing what many families do in continental europe do.

Not sure ur kids would agree with this advice though :)
 
phoenix_n said:
If you wanted to think 'outside the box' if you sold ur house and deposited the money the interest earned would pay your rent for a simmilar property and your monthy disposable income would increase by what now you spend in mortgage repayments.
Click to expand...

You lose the potential capital increase on the property (depends on your current view of the housing market and the potential bubble/burst scenarios), the security of owning your own home (landlords could lead to you having to make unwanted home moves) etc.....
but the first time I've seen someone take this outlook and one that is actually surprisingly logical, at first glance at least.

I doubt if you can even see the box from that point of view phoenix :p
 
deposit rate (after DIRT) ~3%...inflation currently > 3%...
 
Satanta said:
You lose the potential capital increase on the property (depends on your current view of the housing market and the potential bubble/burst scenarios), the security of owning your own home (landlords could lead to you having to make unwanted home moves) etc.....
but the first time I've seen someone take this outlook and one that is actually surprisingly logical, at first glance at least.

I doubt if you can even see the box from that point of view phoenix :p
Click to expand...

It depends whether he is willing to risk a half a million euro on possible further increases in property prices. Whilst my idea of a deposit account was just a example i am sure there are alot of low-risk medium yield investments that would cover his rental and any loss from inflation.
 
Its not a good idea to borrow over a long period for discretionary short term purchases, im not saying dont do it just to make sure you will not be stretching this equity withdrawal over the entire length of your remaining mortgage and paying much more for your car than the amount the garage charges.
P.S try not to look at the equity in your house as profit or wealth ,its notional untill you ever sell, prices could just as easily half in real terms as double over the remainder of your mortgage.
 
Sarah W said:
Ulster Bank will allow you to top up by up to €65,000 (which is fine on your income) on the same tracker rate with no legal costs - you might have to pay for a valuation at around €100 but that's it; quick and easy. Would that be enough given that your SSIA's are maturing next year?

Sarah

www.rea.ie
Click to expand...

Sarah,

Just curious, now that ECB has increased by 0.25%, how does this affect the maximum I can borrow with UB?

thx
 
Notabob said:
Mortgage of 220K with 27 years remaining with UB @ tracker ECB +0.85%
Home vaued at €750K
SSIA is maxed and due next year.
Other "investments" of approx €50K for childrens future education.
Household income of €70K (€64K +10% bonus based on single income)
No loans or ccard balances.

I would like to be able to release some of the €530K equity for the purposes of living a little!....upgrade car, home improvements...rather than slogging month to month. Please do not suggest I save other that what I am already doing as the money just ain't there! :eek:

Any advise or guidance on what I could/should borrow is much appreciated.
Click to expand...
Amazed that I'm the first to say "don't do it" but here goes....

The details above show you to be the model family in terms of financial arrangements.

The SSIAs/"educational investments" are probably making things a bit tight for you. I'm no fan of a lot of the latter products, given their extortionate charges and mediocre performance (in the main). The SSIAs, however, are about to mature which will presumably give you an extra €6,000 per annum cashflow (not to mention the capital sum you're about to come into).

The biggest change to most ordinary people's life comes with the paying off of one's mortgage. That (or at least reducing it) should be your long-term goal - your mortgage is still relatively large versus your income. Don't listen to people who tell you otherwise.

Borrowing more on your mortgage now would take you further away from the goal of being mortgage-free. I wouldn't do it and certainly not to fund consumer expenditure.

By all means blow some of your SSIA return frivolously but borrowing to do it is just madness.

And one last thought...how's your retirement looking? Maybe that would be a better home for some of your SSIA, not to mention the €6,000pa you're about to come into.
 
Long term goal - completely agree. But Notabob is struggling at the moment when he really doesn't need to be. If taking 20/30/40k out of his property now will make a BIG difference to his family's day to day life then why not? If he was asking about a remortgage to 92% to buy a speculative investment I'd be the first one to tell him he's maaaad but a few creature comforts are affordable and can make a huge difference to your quality of life.

Sarah

www.rea.ie
 
I know I do look like a bit of a killjoy....

I guess I'd be advising him to use the SSIA for those things and not to be adding more debt on to the end of his mortgage - to be still paying interest on a car he'd buy now in 27 years time would be simply sad....but just the sort of thing the mortgage companies love.
 
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