Age: Both 43
Annual gross income from employment or profession: €90,000 as employee in a large company
Annual gross income of spouse: €60,000 as a public sector employee
Monthly take-home pay: c.€8,000
In general are you: (a) spending more than you earn, or (b) saving?
Saving. Our monthly mortgage payments exceed the contracted amount and we made a lump-sum payment of €45,000 (from accumulated savings) which has reduced the balance on our home loan from €300,000 to €70,000 over the past five years. We also set aside €2,500-€3,000 a month on deposit which is drawn down for occasional outlays (tax return, property repairs, change of car, etc.). Savings have been higher for the past ten months.
Rough estimate of value of home: €450,000
Amount outstanding on your mortgage: €70,000, repaying c.€3,200 capital a month
What interest rate are you paying? ECB + 1.1%, €70 interest a month
Other borrowings – car loans/personal loans etc.: None.
Do you pay off your full credit card balance each month? Yes, when used (rarely)
Savings and investments: c.€50,000 on deposit, negligible interest
Do you own any investment or other property? Yes, 3 x residential investment properties
Estimated Value: €950,000.
Loan: €950,000 (all properties are covered by the same loan).
Rate: ECB +0.75%.
Current repayment: €600 month interest-only (expires 2032).
Monthly rent: €3,850. Properties are in long-term leases with the LA with annual rent reviews (subject to RPZ restrictions).
Do you have a pension scheme? Yes, both on defined benefit with 20 and 17 years’ service plus contributing €250 a month to a matching AVC scheme.
Ages of children: 14, 11, 8 (no recurrent childcare costs)
Life insurance: Both with €400,000 life cover and €80,000 accelerated serious illness cover. €90 month. Declining based on original 35-year term and assumed 6% interest rate.
What specific question do you have or what issues are of concern to you?
In the last five years we have followed the recommendation to reduce our level of borrowing – and, within that, focused on reducing the balance on our home mortgage. A look back at the other advice given is also interesting. [Can't include link.]
If we maintain our repayments at their current level of €3,300 the home mortgage will be cleared in another 22 months or so. And given current monthly savings we would actually be in a position to clear it and leave a reasonable buffer on deposit by the late summer/early autumn this year.
Our question is what to do after the home mortgage has been cleared?
The interest-only loan on the investment properties expires in 2032. At current interest rates clearing the loan by then would need monthly payments of c.€7k a month. We could switch the money now used for the home loan repayments to making some capital repayments on the RIP loan. Or we could do something different entirely: increased pension contributions, look at other investments, sell one or more of the properties…
Annual gross income from employment or profession: €90,000 as employee in a large company
Annual gross income of spouse: €60,000 as a public sector employee
Monthly take-home pay: c.€8,000
In general are you: (a) spending more than you earn, or (b) saving?
Saving. Our monthly mortgage payments exceed the contracted amount and we made a lump-sum payment of €45,000 (from accumulated savings) which has reduced the balance on our home loan from €300,000 to €70,000 over the past five years. We also set aside €2,500-€3,000 a month on deposit which is drawn down for occasional outlays (tax return, property repairs, change of car, etc.). Savings have been higher for the past ten months.
Rough estimate of value of home: €450,000
Amount outstanding on your mortgage: €70,000, repaying c.€3,200 capital a month
What interest rate are you paying? ECB + 1.1%, €70 interest a month
Other borrowings – car loans/personal loans etc.: None.
Do you pay off your full credit card balance each month? Yes, when used (rarely)
Savings and investments: c.€50,000 on deposit, negligible interest
Do you own any investment or other property? Yes, 3 x residential investment properties
Estimated Value: €950,000.
Loan: €950,000 (all properties are covered by the same loan).
Rate: ECB +0.75%.
Current repayment: €600 month interest-only (expires 2032).
Monthly rent: €3,850. Properties are in long-term leases with the LA with annual rent reviews (subject to RPZ restrictions).
Do you have a pension scheme? Yes, both on defined benefit with 20 and 17 years’ service plus contributing €250 a month to a matching AVC scheme.
Ages of children: 14, 11, 8 (no recurrent childcare costs)
Life insurance: Both with €400,000 life cover and €80,000 accelerated serious illness cover. €90 month. Declining based on original 35-year term and assumed 6% interest rate.
What specific question do you have or what issues are of concern to you?
In the last five years we have followed the recommendation to reduce our level of borrowing – and, within that, focused on reducing the balance on our home mortgage. A look back at the other advice given is also interesting. [Can't include link.]
If we maintain our repayments at their current level of €3,300 the home mortgage will be cleared in another 22 months or so. And given current monthly savings we would actually be in a position to clear it and leave a reasonable buffer on deposit by the late summer/early autumn this year.
Our question is what to do after the home mortgage has been cleared?
The interest-only loan on the investment properties expires in 2032. At current interest rates clearing the loan by then would need monthly payments of c.€7k a month. We could switch the money now used for the home loan repayments to making some capital repayments on the RIP loan. Or we could do something different entirely: increased pension contributions, look at other investments, sell one or more of the properties…