47, good job, love the area, but still in starter home. What are the options?

[Southwesterner]

I would be very grateful for your insight

Age: 47
Spouse’s/Partner's age: 46
Number and age of children: 2 children ages 9 and 10

Annual gross income from employment or profession: 148k
Annual gross income of spouse: 40k
Monthly take-home pay: 9000 euro (both incomes)

Employment type
Me: Public sector,
Wife: Self Employed

Saving about 1.5k per month

Family home worth €370-400k with no mortgage– paid it down last year
Cash of €25k
An Post state savings: 175k
Zurich Life investment: 50k
I have some whiskey investments about 5k
We likely expect 100k inheritance but not banking on it

Pension fund: If retire at 66, expect 57k per annum + 150k lump sum [comprises Irish state pension, SPSP scheme, bits of UK public service for years there [I am topping the latter up as per the current offer]]
Spouse: pension value 45k [private pension since 2018]

Company shares : €0k
Buy to Let Property: None
We review our insurances/ bills etc every year, and avail of all the tax reliefs

Other borrowings – car loans/personal loans etc: None
Do you pay off your full credit card balance each month?: No credit card
Life insurance: Yes

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

We live in a lovely village near the sea, in a semi-d that I bought as starter home in 2008 just before the crash. Worked in the UK for a few years, moved back here in 2016. Nice neighbours, very quiet, small development (30 houses), near to everything. But the downstairs is dark and we have no views.

I always hoped to move to a place with more space & light & views, but want to stay in this area. I like it very much. My village is one of the most expensive in our county, property-wise, and prices are increasing. To move home within the village (so we have walking distance to things), houses are either 900k (decent second hand), or 500k+400k (price plus renov. costs for fixer-uppers). So there is no moving for less than 900k-1million. We have been watching things for 6 years, [and bid on a few, and got out around the 800k mark] so feel confident about these estimates.

The other option is stay put, and to extend into the roof of our semi-d (we would have a nice view from dormers up there if we did this) and extend out the back for more room & light downstairs. We have had a first chat to an architect and cost would be about 200k all-in approx. This would solve the light/ space problem, but I know the value of the house would not go up that much because it is still a semi-d in an estate. And it was always a dream to get something bigger.

Overall my priorities are: to not be too stressed about money, to have something to pass on to the kids, to start boosting my pension, to enjoy our time right now.

Conscious I am 15 years off retirement too, so costs for mortgages are high for us.

Also conscious the kids will moving out (if all goes well!) in 7 or 8 years, so I guess need to be planning for this time of life rather than right now. We might have missed the window to move, being away in UK

So I guess the question is: does it make sense to move, or to improve? Can we afford to move if something comes up at the prices above, without being stressed about money? Or should I start topping up the pension?

Any help much appreciated. I am sure this is a common dilemma.

 

[Pinoy adventure]

Improve seems the cheaper of the two options

 

[Zion2022]

Few of my thoughts on your situation:
- You can afford to upgrade to €1m based on the maths. It would be less than 30% of your income on a 15 year mortgage. However given you are only saving €1.5k pm (even with no mortgage?) it would suggest your spending is significant. Only you know if the reduction of €2.500 pm in disposable income is worth the house you’d get for that money.
- You’re way too young and not wealthy enough to be thinking about leaving your kids money at this stage. Too many variables left to play out. Either way, upsizing is a tax effective long term investment. When your kids get older they won’t want you to have spent your 50s/60s worrying about their inheritance. Live your life and make wealth maximising decisions where you can.
- 57k per annum + two state pensions is plenty for retirement but you could choose to fund it more whilst still upsizing with a 9k net income
- If you choose not to upsize immediately. Having such a sum of money in state savings for a long period of time is too conservative for your age and wealth. If it’s been in there for a prolonged period already, investing it in almost anything would have given you your upsizing money through capital gains. No point crying over past mistakes but you can rectify going forward.
- Significant renovations can be extremely testing and time consuming. We have just completed one. Architect said it would be 200k also. Ended up being significantly more. It’s also extremely stressful, particularly with kids. You also rarely increase your property value by as much as you put in to it. I would lean heavily towards moving.

 

[Clamball]

An extensive renovation will cost you significantly more than quoted, maybe double more. I have no idea why this is, but it happens all the time. There is massive disruption in renovating your own home (we moved out for 6 months). But you will end up with a living space that you want and will see you into old age. Therefore I would not worry about the resale value.

You could readily afford the 1 mil home, and if it is within the village, with the views what is not to like, snap it up and move. You have 20 years to retirement - it will prob be 67 then. The main issue is, what if a house does not come up for sale or you are outbid again.

It is a tough question. If you renovate and the house you want comes up the month after the renovation is complete, would you move or not?

 

[Mamamia22]

Personally I’d be careful about taking on too much additional debt approaching 50. There are no guarantees health wise and I think getting back into a mortgage with rates so high would be a concern. Who wants to work until 65. Full time ? Id prefer less debt and the option to retire fully at 60. Maybe go part time. A million euro in one house is a lot on your income. Agree about not worrying about kids. Think about you needs at age 60. Will you want or need a bigger house to clean and maintain especially when kids may have moved on ?

 

[misemoi]

I was thinking along same lines. Assuming kids will move away for college, could you consider swapping to a smaller house or apartment with the views you are after ? Unless you spend the million you are looking at a couple of years from now being in a finished property by the time you buy/sort out a builder/planning.

Maybe just do the downstairs for more space and light, realistically how much time can you spend enjoying views now and for the next few years with busy kids schedules and work? Or do you have any other things you would love eg holiday home or place for kids to live in college instead of having everything in your ppr?

We have stayed in what some consider a starter home for a number of reasons, the main one being I don't think I would be much happier in a bigger home and have plans for the money we would have spent upgrading that I think will make us all happier.

 

[theObserver]

Financial you are better doing nothing and investing the 175k held in savings to fund your retirement. I guess the question is: how many extra years do you want to work to pay for a new home with better views or to pay for home improvements?

Is your current location good for a future-you aged 65+? Does it have transport links for when you can't drive anymore, access to good doctors, food delivery services, a support structure? Is it safe from flooding and potential climate change? If the answer is no, eventually moving closer to the village center could be wise.

In your position I would either improve or do nothing and invest the money until the kids move out then reevulate how I feel about moving.

 

[Premos]

I would try to identify exactly what you need and make a decision based on that. I would not consider a view to be a need though. Investing an additional 600k in a new house at your age seems a lot.
However if your house feel small now, wait until the teenager years... About 5 years ago, when my children were in your children age bracket, I wanted to move as I didn't feel our house was going to be big enough. Financially it would have been feasible and actually as we have had some financial changes since then, it would not have been that difficult. My husband was against it. Move forward a few years and personally I find it a strain to live in so close proximity to now older children/adult who will probably be with us for another few years as they will go to university locally. The children are fine. It's just that, for me, we lack space.

 

[Premos]

.

 

[Bronte]

You have around 600k and need about 300k so I don’t see the issue about a mortgage costing not even 2 k over 20 years? Particularly as you are a civil servant, it’s a no brainer.

I Dafted Skerries and Wexford, to get an idea of price, size, location. In seaside locations. You will always pay a premium for a sea view, but far more important is light. Drop the sea requirement and aim for light and airy. You are prevaricating about moving. You should do it now. Or you will not do it. Fully get the light and airy, we had that until last year, but our house was upside down to get it. Could not stress enough the importance of this. Our neighbours, did a massive renovation on a tiny dark house, they made a huge mistake in not going upside down, so now they have bright and airy bedrooms and dark living.

Renovations are very stressful, if there is no guaranteed price, and guaranteed result, with no capital increase you would be mad to do this.

 

[Bronte]

Here’s something in Skerries for 600k

42 Kelly's Bay Promenade, Skerries, Co. Dublin, K34W228 is for sale on Daft.ie

42 Kelly's Bay Promenade, Skerries, Co. Dublin, K34W228 a 4 Bed Semi-D is now for sale by Paula Marry on Daft.ie with an asking price of €599,000

www.daft.ie

This one in Wexford has the wow factor. Will cost a ton to decorate though.

Artramon Grove, Artramon Grove, Crossabeg, Co. Wexford is for sale on Daft.ie

Artramon Grove, Artramon Grove, Crossabeg, Co. Wexford is now for sale on Daft.ie

www.daft.ie

Interesting house built to be a forever homemade

7 Grange Lough, Rosslare Strand, Co. Wexford., Y35Y3KP is for sale on Daft.ie

7 Grange Lough, Rosslare Strand, Co. Wexford., Y35Y3KP a 4 Bed Detached is now for sale by Declan O'Leary on Daft.ie with an asking price of AMV: €650,000

www.daft.ie

And look at this for ‘just’ 600k in Skerries.

7 The Brambles, Skerries, Co. Dublin, K34VK06 is for sale on Daft.ie

7 The Brambles, Skerries, Co. Dublin, K34VK06 a 4 Bed Semi-D is now for sale by Louise Shannon on Daft.ie with an asking price of €595,000

www.daft.ie

I’m clearly missing where you need to spend 900k? Could you give us an idea of location and house type from those that speak to you?

 

[Southwesterner]

Improve seems the cheaper of the two options

Thanks for that-- yes it does

 

[theObserver]

Here’s something in Skerries for 600k

42 Kelly's Bay Promenade, Skerries, Co. Dublin, K34W228 is for sale on Daft.ie

42 Kelly's Bay Promenade, Skerries, Co. Dublin, K34W228 a 4 Bed Semi-D is now for sale by Paula Marry on Daft.ie with an asking price of €599,000

www.daft.ie

This one in Wexford has the wow factor. Will cost a ton to decorate though.

Artramon Grove, Artramon Grove, Crossabeg, Co. Wexford is for sale on Daft.ie

Artramon Grove, Artramon Grove, Crossabeg, Co. Wexford is now for sale on Daft.ie

www.daft.ie

Interesting house built to be a forever homemade

7 Grange Lough, Rosslare Strand, Co. Wexford., Y35Y3KP is for sale on Daft.ie

7 Grange Lough, Rosslare Strand, Co. Wexford., Y35Y3KP a 4 Bed Detached is now for sale by Declan O'Leary on Daft.ie with an asking price of AMV: €650,000

www.daft.ie

And look at this for ‘just’ 600k in Skerries.

7 The Brambles, Skerries, Co. Dublin, K34VK06 is for sale on Daft.ie

7 The Brambles, Skerries, Co. Dublin, K34VK06 a 4 Bed Semi-D is now for sale by Louise Shannon on Daft.ie with an asking price of €595,000

www.daft.ie

I’m clearly missing where you need to spend 900k? Could you give us an idea of location and house type from those that speak to you?

I'm writing this not far from some of those locations in Wexford. The sea views are about 12 months away from turning into a view of wind mill farms, there's a new motorway planned bypassing Wexford town through villages for the Port and parts of Rosslear has seen historic levels of flooding last year.

 

[misemoi]

I think the key thing is how long your kids will be with you. Will they 100% move out for college ? Will they be adventurers who has off to Austrailia or will they tend to want to move back in once they start work if they can feasibly commute from your home ? Are they missing out now due to lack of space eg can't get a pet, can't store sports equipment etc. If you asked them in 10 years, would they have preferred more space as teens or a deposit for their first home that would have life long benefits for them ?

How do you plan to fund college for them if they do move out and how would this cash flow impact on your plans ?

And again thr question of lifestyle...can you live your current life if you have a mortgage again? How much of this move is because you think you should live in a nicer than standard home or because you want to or really need to? Will you still want to live where you do when your children have fled the coop, ie do you have strong family or community ties there ? Or could you get your dream house in a different location on retirement for less money ?

BTW these are all questions I ask myself ! I look regularly at myhome and assess and know that sometimes doing nothing is still a decision! And then I go for a walk on the beach when I can and soak in thr views !!!

 

[Southwesterner]

Few of my thoughts on your situation:
- You can afford to upgrade to €1m based on the maths. It would be less than 30% of your income on a 15 year mortgage. However given you are only saving €1.5k pm (even with no mortgage?) it would suggest your spending is significant. Only you know if the reduction of €2.500 pm in disposable income is worth the house you’d get for that money.
- You’re way too young and not wealthy enough to be thinking about leaving your kids money at this stage. Too many variables left to play out. Either way, upsizing is a tax effective long term investment. When your kids get older they won’t want you to have spent your 50s/60s worrying about their inheritance. Live your life and make wealth maximising decisions where you can.
- 57k per annum + two state pensions is plenty for retirement but you could choose to fund it more whilst still upsizing with a 9k net income
- If you choose not to upsize immediately. Having such a sum of money in state savings for a long period of time is too conservative for your age and wealth. If it’s been in there for a prolonged period already, investing it in almost anything would have given you your upsizing money through capital gains. No point crying over past mistakes but you can rectify going forward.
- Significant renovations can be extremely testing and time consuming. We have just completed one. Architect said it would be 200k also. Ended up being significantly more. It’s also extremely stressful, particularly with kids. You also rarely increase your property value by as much as you put in to it. I would lean heavily towards moving.

Thanks Zion2022, much appreciated. On your point "However given you are only saving €1.5k pm (even with no mortgage?)", we do need to be saving more. Our spending is not big, so we can.
"You’re way too young and not wealthy enough to be thinking about leaving your kids money at this stage"-- thanks for this. I think that having bought a house just before the 2008 crisis, I find it hard not to be overly conservative and nervous when it comes to anything to do with money matters, ever since then. So it is great to get this input (and everyone's).
"Having such a sum of money in state savings for a long period of time is too conservative for your age and wealth." We were trying to keep it relatively liquid in case a house came up. And State Savings was deemed the best return for deposit at the time on this forum and others. Would be great to hear where else you would suggest to invest this kind of sum-- for going forward? If we needed access potentially with say a months notice.
"Significant renovations can be extremely testing and time consuming."-- it is really valuable to have your thoughts here, especially that you have just gone through it yourself. Will take this on board and think very seriously-- and with the other posters' saying similar

 

[Zion2022]

Thanks Zion2022, much appreciated. On your point "However given you are only saving €1.5k pm (even with no mortgage?)", we do need to be saving more. Our spending is not big, so we can.
"You’re way too young and not wealthy enough to be thinking about leaving your kids money at this stage"-- thanks for this. I think that having bought a house just before the 2008 crisis, I find it hard not to be overly conservative and nervous when it comes to anything to do with money matters, ever since then. So it is great to get this input (and everyone's).
"Having such a sum of money in state savings for a long period of time is too conservative for your age and wealth." We were trying to keep it relatively liquid in case a house came up. And State Savings was deemed the best return for deposit at the time on this forum and others. Would be great to hear where else you would suggest to invest this kind of sum-- for going forward? If we needed access potentially with say a months notice.
"Significant renovations can be extremely testing and time consuming."-- it is really valuable to have your thoughts here, especially that you have just gone through it yourself. Will take this on board and think very seriously-- and with the other posters' saying similar

Nothing wrong with being conservative, but just think it’s too early to be focusing on your children’s inheritance.

Fair enough on the state savings. It comes across like you’re somewhat half committed to making a move. If the perfect house at a bargain price comes up type scenario. This is unlikely in the current climate so I’d sit down with your other half and make a clear decision. Stick or twist.

If you decide a move is right for you both then go for it 100% and get it done. You’ll like feel like you’re ‘overpaying’. Thats the market these days. You should not invest in anything ‘riskier’ if you decide to move as you’ll need the money in the short term.

If you decide not to move, I’d take your money out of state savings. Maximize your pension contributions for you both (whilst still getting full tax relief). Any money leftover put into a life wrapper equity fund if you’re not overly financial inclined. A diversified portfolio of shares if you are.

The indecision has been very costly to you as all of property, share prices and renovation costs have rocketed whilst your money has sat on the sidelines. It’s not a wealth maximising strategy in the long term so I’d make a definitive decision one way or another and get on with it. In addition to the financial benefits, a clear decision should also hopefully lift the mental burden of decision paralysis.
Best of luck!

 

[Blackrock1]

Here’s something in Skerries for 600k

42 Kelly's Bay Promenade, Skerries, Co. Dublin, K34W228 is for sale on Daft.ie

42 Kelly's Bay Promenade, Skerries, Co. Dublin, K34W228 a 4 Bed Semi-D is now for sale by Paula Marry on Daft.ie with an asking price of €599,000

www.daft.ie

This one in Wexford has the wow factor. Will cost a ton to decorate though.

Artramon Grove, Artramon Grove, Crossabeg, Co. Wexford is for sale on Daft.ie

Artramon Grove, Artramon Grove, Crossabeg, Co. Wexford is now for sale on Daft.ie

www.daft.ie

Interesting house built to be a forever homemade

7 Grange Lough, Rosslare Strand, Co. Wexford., Y35Y3KP is for sale on Daft.ie

7 Grange Lough, Rosslare Strand, Co. Wexford., Y35Y3KP a 4 Bed Detached is now for sale by Declan O'Leary on Daft.ie with an asking price of AMV: €650,000

www.daft.ie

And look at this for ‘just’ 600k in Skerries.

7 The Brambles, Skerries, Co. Dublin, K34VK06 is for sale on Daft.ie

7 The Brambles, Skerries, Co. Dublin, K34VK06 a 4 Bed Semi-D is now for sale by Louise Shannon on Daft.ie with an asking price of €595,000

www.daft.ie

I’m clearly missing where you need to spend 900k? Could you give us an idea of location and house type from those that speak to you?

The skerries houses don't look like much of an upgrade on a starter home? And why would the one in crossabeg cost a fortune to decorate (they have been for sale a while I think the thick end of a million for crossabeg is punchy)

 

[Southwesterner]

An extensive renovation will cost you significantly more than quoted, maybe double more. I have no idea why this is, but it happens all the time. There is massive disruption in renovating your own home (we moved out for 6 months). But you will end up with a living space that you want and will see you into old age. Therefore I would not worry about the resale value.

You could readily afford the 1 mil home, and if it is within the village, with the views what is not to like, snap it up and move. You have 20 years to retirement - it will prob be 67 then. The main issue is, what if a house does not come up for sale or you are outbid again.

It is a tough question. If you renovate and the house you want comes up the month after the renovation is complete, would you move or not?

Thanks Clamball- again it's good to have the first-hand perspective. Double the quote for renovation seems to be a common theme, and yes, the disruption has to be taken seriously. "If you renovate and the house you want comes up the month after the renovation is complete, would you move or not?" - Probably not, I imagine we would be exhausted (and financially) by that stage!

 

[Southwesterner]

Thanks a million all, so just to respond

@Mamamia22 "Personally I’d be careful about taking on too much additional debt approaching 50. There are no guarantees health wise and I think getting back into a mortgage with rates so high would be a concern. Who wants to work until 65...."
Good idea to consider moving toward part-time working when I am closer to 60; would be a case then of building this into financial planning.

@misemoi "I was thinking along same lines. Assuming kids will move away for college, could you consider swapping to a smaller house or apartment with the views you are after?"
Yes i should have said: the kids will be moving away for college (or jobs if they do this instead) because there are few options near where we are. And i should have said too that we will need to fund this further education from what we have got. So that needs factoring in

"Maybe just do the downstairs for more space and light, realistically how much time can you spend enjoying views now and for the next few years with busy kids schedules and work? Or do you have any other things you would love eg holiday home or place for kids to live in college instead of having everything in your ppr?"-- We dont really have goals like this

"We have stayed in what some consider a starter home for a number of reasons, the main one being I don't think I would be much happier in a bigger home and have plans for the money we would have spent upgrading that I think will make us all happier."

It's true. I think, as another poster said, it is probably a lot about my expectations of "living in a fancier home" (notions I grew up with)... Perhaps time to rethink these. Your approach to having firm plans of for the money otherwise spent upgrading is an excellent one-- gives clarity and also the ability to fully enjoy the consequences of this choice.

@theObserver "Financial you are better doing nothing and investing the 175k held in savings to fund your retirement. I guess the question is: how many extra years do you want to work to pay for a new home with better views or to pay for home improvements? Is your current location good for a future-you aged 65+? Does it have transport links for when you can't drive anymore, access to good doctors, food delivery services, a support structure? Is it safe from flooding and potential climate change?..."

Thanks. In answer to your q's about transport links etc, absolutely yes-- current place has all this-- would be a secure and good place to be 65+ as attested to by very content neighbours in this bracket.

@Premos "I would try to identify exactly what you need and make a decision based on that. I would not consider a view to be a need though. Investing an additional 600k in a new house at your age seems a lot. However if your house feel small now, wait until the teenager years..."

Thanks for this really helpful perspective -- I can see how this is a likely scenario for us-- although as above, not so many local college or job options around for the kids. It is interesting to see how the way we see 'space' changes as the family changes. And yes, you are right-- a view is definitely not a concrete need.

@Bronte "You have around 600k and need about 300k so I don’t see the issue about a mortgage costing not even 2 k over 20 years? Particularly as you are a civil servant, it’s a no brainer.... Drop the sea requirement and aim for light and airy. You are prevaricating about moving. You should do it now. Or you will not do it. "

Thanks for this very frank response. Sets things out pretty clearly. Glad you got the light and airy house in the end! Take your point about renovations and stress

@misemoi "I think the key thing is how long your kids will be with you..." Given where we are, they will move away for a few years anyway for college/ jobs i predict. We will be funding the college. And on their future preferences -- it is a good point-- they aren't really missing out at the moment, they dont have much of a garden, but as teens wont need it i guess. Pets arent a big issue. There is room here for sports gear.

"And again thr question of lifestyle...can you live your current life if you have a mortgage again? How much of this move is because you think you should live in a nicer than standard home or because you want to or really need to?"

You are astute-- i would say 90% is notions about the nicer home (but also the practical thing about where to invest the excess cash-- is a better PPR not a good way to do it? Or are there better investments...?) But the location is great at the moment

Thanks all for these comments

 

[Blackrock1]

There isn't anything wrong with wanting a nicer home if you can afford it, you spend a lot of time there so if that's what you want go for it