34 - weighing up large home purchase

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Financier

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Personal details

First time poster but long term reader of this forum:

Age:34

Spouse’s/Partner's age: n/a


Number and age of children: n/a


Income and expenditure

Annual gross income from employment or profession: €160,000 - MNC Private sector. Annual Bonus 30% [Not guaranteed]


Monthly take-home pay Approx 7.5k [after pension contribution]


Type of employment: e.g. Civil Servant, self-employed: MNC Private sector


In general are you:

(a) spending more than you earn, or

(b) saving?


Saving approx €3000 a month, likely to increase as weighing up trade up in property.


Summary of Assets and Liabilities

Family home worth €460K - mortgage- 180K

Cash of €130,000 (this is held in deposit accounts)

Defined Contribution pension fund: DC pension of €180k [split across three DC pension schemes and one PRSA scheme from previous employers]

Employer contribution of 8% - I currently contribute 8 % out of my salary but top this up to max out my 20% annually

Company shares : €150K [Unvested company shares of 380K, vesting over the next 3 years

Personal share investments outside of pension fund: 3K

No other loans or credit card debt.


What specific question do you have or what issues are of concern to you?

I am currently in a senior role within a large MNC, the role is enjoyable but stressful and I am conscious I have a high income for my age group. I am considering moving from PPR which is just outside Dublin to an area in South County Dublin, preferably somewhere within D6/D4 and surrounding areas. My question is two fold, I am conscious of my current pension pot and wondering if I should worry based on the value v current age and if anyone has other tax efficient ways of increasing/ saving for the future.


I am also weighing up disposing of my current house and making a purchase of 1M in an area I would like to live in. I would use most of my current savings, equity and company shares + a large mortgage of 4 times income. I would then plan to pay off large chunks of the mortgage as/when shares vest and during my annual bonus payouts. The alternative would be to keep my existing property and buy something more modest in Dublin for about 600K but I rather not be a part time landlord. I am conscious I could be saving more per month - I currently overpay my mortgage by 10% with 14 years remaining. I spend a significant proportion on my income on holidays and experiences.
 
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Financier said:
I am conscious of my current pension pot and wondering if I should worry based on the value v current age
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Are you worried about it being too small or too big?

Financier said:
I am also weighing up disposing of my current house and making a purchase of 1M in and area I would like to live in
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Have you looked in to how far €1m goes in D6/4? 3 bed homes that require a lot of work can go for this much in that area.

You would be quite streched and in a very risky position as a single person paying a large mortgage, so it depends on your appetite for such risk. Personally I think D6/4 are fantastic areas which have a positive impact on your day-to-day life, so I have recently taken out a large mortgage to live in the area, but that's not for everyone and there are two of us to spread the risk a bit in my case.
 
Repayments will be around €3,000 a month, something you can easily afford. Moving to D4/D6 area from outside Dublin will certainly have a change of lifestyle as it is a very popular area with a bustling nightlife and lots to do. Company shares are a great additional source of income for employees who receive them with lots of people using them to pay down debts early. You can afford to move, so you should do it if you want.

As regards to your pension, there is not much you can do if you are already maxing out your contributions. Make sure you are in an equity based investment so you are optimising the growth available. And concentrate on getting the debt down on your mortgage with the additional cash you will have.


Steven
www.bluewaterfp.ie
 
Financier said:
preferably somewhere within D6/D4 and surrounding areas.
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€1 million is still a lot of house for a sole occupant even in Dublin 4 or Dublin 6.

In your shoes I would buy an apartment in the same area and reassess if your personal circumstances change.
 
I think it is a good idea to buy, you can afford it, and whether it is a house or apartment it is up to you to determine what works best with your lifestyle. Probably cut down on commuting times and you have a lot of activities at your doorstep.
 
Financier said:
Personal details

First time poster but long term reader of this forum:

Age:34

Spouse’s/Partner's age: n/a


Number and age of children: n/a


Income and expenditure

Annual gross income from employment or profession: €160,000 - MNC Private sector. Annual Bonus 30% [Not guaranteed]


Monthly take-home pay Approx 7.5k [after pension contribution]


Type of employment: e.g. Civil Servant, self-employed: MNC Private sector


In general are you:

(a) spending more than you earn, or

(b) saving?


Saving approx €3000 a month, likely to increase as weighing up trade up in property.


Summary of Assets and Liabilities

Family home worth €460K - mortgage- 180K

Cash of €130,000 (this is held in deposit accounts)

Defined Contribution pension fund: DC pension of €180k [split across three DC pension schemes and one PRSA scheme from previous employers]

Employer contribution of 8% - I currently contribute 8 % out of my salary but top this up to max out my 20% annually

Company shares : €150K [Unvested company shares of 380K, vesting over the next 3 years

Personal share investments outside of pension fund: 3K

No other loans or credit card debt.


What specific question do you have or what issues are of concern to you?

I am currently in a senior role within a large MNC, the role is enjoyable but stressful and I am conscious I have a high income for my age group. I am considering moving from PPR which is just outside Dublin to an area in South County Dublin, preferably somewhere within D6/D4 and surrounding areas. My question is two fold, I am conscious of my current pension pot and wondering if I should worry based on the value v current age and if anyone has other tax efficient ways of increasing/ saving for the future.


I am also weighing up disposing of my current house and making a purchase of 1M in an area I would like to live in. I would use most of my current savings, equity and company shares + a large mortgage of 4 times income. I would then plan to pay off large chunks of the mortgage as/when shares vest and during my annual bonus payouts. The alternative would be to keep my existing property and buy something more modest in Dublin for about 600K but I rather not be a part time landlord. I am conscious I could be saving more per month - I currently overpay my mortgage by 10% with 14 years remaining. I spend a significant proportion on my income on holidays and experiences.
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Go for it, you can afford it, and if your earnings keep at this level or increasing it’ll seem cheap in the future imo.

Reasearch locations , d4 /6 seems good when you are younger but along the coast becomes more appealing as time goes in, I’d recommend Blackrock as an in between even though I’ve gone further along the coast now.
 
Financier said:
Personal details

First time poster but long term reader of this forum:

Age:34

Spouse’s/Partner's age: n/a


Number and age of children: n/a


Income and expenditure

Annual gross income from employment or profession: €160,000 - MNC Private sector. Annual Bonus 30% [Not guaranteed]


Monthly take-home pay Approx 7.5k [after pension contribution]


Type of employment: e.g. Civil Servant, self-employed: MNC Private sector


In general are you:

(a) spending more than you earn, or

(b) saving?


Saving approx €3000 a month, likely to increase as weighing up trade up in property.


Summary of Assets and Liabilities

Family home worth €460K - mortgage- 180K

Cash of €130,000 (this is held in deposit accounts)

Defined Contribution pension fund: DC pension of €180k [split across three DC pension schemes and one PRSA scheme from previous employers]

Employer contribution of 8% - I currently contribute 8 % out of my salary but top this up to max out my 20% annually

Company shares : €150K [Unvested company shares of 380K, vesting over the next 3 years

Personal share investments outside of pension fund: 3K

No other loans or credit card debt.


What specific question do you have or what issues are of concern to you?

I am currently in a senior role within a large MNC, the role is enjoyable but stressful and I am conscious I have a high income for my age group. I am considering moving from PPR which is just outside Dublin to an area in South County Dublin, preferably somewhere within D6/D4 and po surrounding areas. My question is two fold, I am conscious of my current pension pot and wondering if I should worry based on the value v current age and if anyone has other tax efficient ways of increasing/ saving for the future.


I am also weighing up disposing of my current house and making a purchase of 1M in an area I would like to live in. I would use most of my current savings, equity and company shares + a large mortgage of 4 times income. I would then plan to pay off large chunks of the mortgage as/when shares vest and during my annual bonus payouts. The alternative would be to keep my existing property and buy something more modest in Dublin for about 600K but I rather not be a part time landlord. I am conscious I could be saving more per month - I currently overpay my mortgage by 10% with 14 years remaining. I spend a significant proportion on my income on holidays and experiences.
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Based on your cash, company shares, home equity and unvested shares (assuming no collapse) you have €940k of short term realisable wealth (less taxes on the unvested part or have your quoted net amount?).

You could easily own a €1m home outright with no mortgage within 3 years based on those numbers. Even if you had a €190k tax bill on the unvested tranche you could probably cover most of that through additional savings.

100% go for it if it’s what you want. You could probably justify spending more and be relatively comfortable.

Your retirement is fine and suspect if you keep accumulating at this rate, SFT will come into play fairly early on - assuming it’s not revised up (down more likely if SF have their way). I wouldn’t be stressing about how to add more.

Edit - most important piece of financial advice you can get. Sell the vested shares. Tomorrow if you can. You have plenty of exposure through your unvested and by virtue of employment. No point taking needless concentration risk for which there is no reward.
 
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