The area of biggest saving for most people is their mortgage. You have an 80% LTV mortgage. Who is your lender and what rate are you paying? You should shop around to see if there is a better rate.
A mortgage of €175k represents three times your income and 80% of the value of the property. That is way too high to be comfortable. So your priority should be to reduce this mortgage. You are contributing €12k a year to your pension, which is €6k net. I think you would be better off paying this off your pension.
- Firstly, it will reduce your Loan to Value and may well qualify you for a lower rate on your entire mortgage
- Secondly, you will be less impacted by mortgage interest rate rises when they come, as they undoubtedly will.
- Thirdly, if you lose your job, the lower LTV will give you and your lender a lot of comfort
- Finally, if you decide at some stage to trade up, you will have much more equity. You can't access the money in your pension scheme to trade up.
I might be very old fashioned, but I reckon a comfortable mortgage is around 50% LTV and one time's income. This might be a bit low at age 33, but aim to achieve that within a few years. When you achieve that, start maxing out your pension.
You have €5,000 in savings. That is probably enough given that the return on your savings is so low. At your age and in this employment market, you will probably get a job again very quickly. If you lose your job, you will probably get notice and a redundancy payment. Maybe build up to the €8,000 needed to buy out the car and then use any surplus to reduce your mortgage.
After you pay off the car, start building up your savings again to €5,000.Don't forget you will have the €250 per month PCP payment available to save at that stage.
Brendan