As I mentioned in deleted thread, ye seem to be over leveraging into property IMO. You dont say where you are living currently (I'm guessing renting, as you said you had just gone sale agreed), or how much the rent is, but in general, I dont see why you are buying a house now, and another one in 6-7 years. What happens if you cant sell house #1, or cant rent it out? This sounds like 2006-type buying of a starter home with the idea of selling it on later.
Im in similar-ish position (lower salary) and am planning on saving for next 6 years and buying one house outright. Im currently also contributing max AVCs for my age to pension. IMO, on 100K, you should be able to contribute into plenty into a pension and save for house as well, especially if both of ye are almost on similar money. Buying multiple houses sounds messy, getting into being a landlord merely to have a "fallback" house doesnt appeal to me at all.
Hi 123,
Thanks for your reply. I felt the same on over-leveraging property - I'd read the thread in the key-posts section on paying off your mortgage before contributing to a pension, so that's why I posted:
http://www.askaboutmoney.com/thread...-a-pension-but-dont-leave-it-too-late.189981/
The high salary has only come about very recently after a bit of a slog so have only had the resources in recent months. Mrs isn't on that much yet, but should be in a few years. We got back from travelling 2 years ago so enjoyed the savings we had prior to that and have started at zero again.
Current rent is same as mortgage on #1, near Dublin City Centre. Renting should never be a problem - it's not 2006 style thinking of buying to sell on later. Why pay so much rent when I can afford to buy a home and put my own stamp on it? We have a child on the way and would like a home of our own - that's what it boils down to: we're sick of renting and would like somewhere of our own.
Totally agree I should be able to contribute to a pension and save/pay for a house. My question is on foregoing the pension for now and overpaying more, based on the thread I referenced, but I thought that sounded more risky.
But, to take your logic of saving for 6 years and buying outright: if I can overpay at a rate of 3x the monthly payments, the overall interest on the mortgage becomes very low as I'd pay it off very very quickly, and wouldn't be that different from saving for those years, except I buy the house at today's value rather than in a few years' time?
Genuinely on being a landlord, this is something I am happy to do. I see it as the work involved to secure additional income. No different to doing my day-to-day.
You will need to give some details.
Current value of house
O/s Mortgage
Rate of interest
Earnings
Savings
Value of house to be purchased.
Current pension.
If you have a standard variable rate mortgage then it makes no sense to pay it off and then borrow at the same rate for a PPR.
Hi Joe,
Can you please elaborate on why it doesn't make sense? My rationale is that it's roughly equivalent to having a longer duration mortgage, split across two properties, but we would own one of them outright? Should something happen to one of us, or one of us can't work, then we always have that.
Should we both be healthy, the first house can generate an income to offset the cost of the second one. I would have thought this would be a fairly sound long-term strategy?
I suppose having come out of college during the height of the financial crisis I'm conscious of both the financial and property collapses, so I'm trying to secure an asset for the future and spread some risk. If my pension was to collapse, we would at least have the house.
I've also many friends who's parents had a similar setup to what I'm trying to put together and were able to live in their parents' first home when they left college, which helped them get on their feet. This is something I would love to be able to give to my children also.
Thanks for the input from you both.