Age: 36
Spouse’s/Partner's age: 39
Annual gross income from employment or profession: 75k
Annual gross income of spouse:60k
Type of employment: e.g. Private and Public
In general are you:
(a) spending more than you earn, or
(b) saving? Saving
Rough estimate of value of home: 400-450k
Amount outstanding on your mortgage: 360k, 22 yrs left, ca. e1700/mnth
What interest rate are you paying? ECB+0.85%
Other borrowings – car loans/personal loans etc: None
Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card?
Savings and investments:40k shares, 15k cash
Do you have a pension scheme? Yes
Do you own any investment or other property? Yes
Value: ca. 200k
Mortgage1: 104k at ECB+0.85% Int only
Mortgage2: 52k variable (3.6%) Int only
Ages of children: 6 mnths
Life insurance: Yes
What specific question do you have or what issues are of concern to you?
We bought our house with a 25yr mortgage of 478k in March '07. We also used a 52k equity release from our former house (which we couldn't sell) to fund the cost of the new house (600k). The balance we paid with cash.
We have been renting the old house since with no issues. Rent is e800/month.
In Mar '08, we switched the mortgages on the rented house to interest only for a 3 year period which is up next April. Currently it costs ca. e300 per month to service the int only mortgages.
We have also being overpaying on our PPR to bring the mortgage from 478k to where it is now at 360k. We keep 15k cash as a rainy day reserve.
My question is:
our strategy to date has been to put excess cash into our PPR mortgage to reduce it. We had planned to continue on the same path until the mortgage on the PPR was about 2xgross income in about 2 years time (280k) and then maybe relax the overpayments. We had been doing this by overpaying the mortgage by about e1300 per month and by making a minimum 10k per annum as an extra lump sum payment.
However our little fella is starting into childcare in Oct which will cost e900/month and the int only period on the rented house will be up next April so our costs will be increasing over the short term.
My question is what is the best strategy from this point?
1. continue to overpay on the PPR mortgage to get towards 280k (albeit at a lesser rate because we now have to fund childcare from Oct).
2. don't overpay the PPR mortgage anymore because it's a good tracker rate and we are only dimimishing our TRS. This could let us focus on paying down for example the 52k mortgage which is at a higher rate.
My personal attitude is as follows, I don't really think there is much money to be made routing the excess cash to a deposit a/c as after dirt there is not much difference in interest. I also don't make any AVCs although my spouse does. I have an emotive desire to reduce our debt particulary on the PPR. The rented house is in a very good area, is currently profitable and I would be reluctant to try and sell it in the current climate.
Is there another option I am not considering? We are taking holidays every year and are not over-pressurizing ourselves with the overpayments however it is a lot of money and I want to make sure our strategy is OK. We have no need to upgrade our PPR in the medium term.
Any advice on our strategy from here would be great thanks,
Spouse’s/Partner's age: 39
Annual gross income from employment or profession: 75k
Annual gross income of spouse:60k
Type of employment: e.g. Private and Public
In general are you:
(a) spending more than you earn, or
(b) saving? Saving
Rough estimate of value of home: 400-450k
Amount outstanding on your mortgage: 360k, 22 yrs left, ca. e1700/mnth
What interest rate are you paying? ECB+0.85%
Other borrowings – car loans/personal loans etc: None
Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card?
Savings and investments:40k shares, 15k cash
Do you have a pension scheme? Yes
Do you own any investment or other property? Yes
Value: ca. 200k
Mortgage1: 104k at ECB+0.85% Int only
Mortgage2: 52k variable (3.6%) Int only
Ages of children: 6 mnths
Life insurance: Yes
What specific question do you have or what issues are of concern to you?
We bought our house with a 25yr mortgage of 478k in March '07. We also used a 52k equity release from our former house (which we couldn't sell) to fund the cost of the new house (600k). The balance we paid with cash.
We have been renting the old house since with no issues. Rent is e800/month.
In Mar '08, we switched the mortgages on the rented house to interest only for a 3 year period which is up next April. Currently it costs ca. e300 per month to service the int only mortgages.
We have also being overpaying on our PPR to bring the mortgage from 478k to where it is now at 360k. We keep 15k cash as a rainy day reserve.
My question is:
our strategy to date has been to put excess cash into our PPR mortgage to reduce it. We had planned to continue on the same path until the mortgage on the PPR was about 2xgross income in about 2 years time (280k) and then maybe relax the overpayments. We had been doing this by overpaying the mortgage by about e1300 per month and by making a minimum 10k per annum as an extra lump sum payment.
However our little fella is starting into childcare in Oct which will cost e900/month and the int only period on the rented house will be up next April so our costs will be increasing over the short term.
My question is what is the best strategy from this point?
1. continue to overpay on the PPR mortgage to get towards 280k (albeit at a lesser rate because we now have to fund childcare from Oct).
2. don't overpay the PPR mortgage anymore because it's a good tracker rate and we are only dimimishing our TRS. This could let us focus on paying down for example the 52k mortgage which is at a higher rate.
My personal attitude is as follows, I don't really think there is much money to be made routing the excess cash to a deposit a/c as after dirt there is not much difference in interest. I also don't make any AVCs although my spouse does. I have an emotive desire to reduce our debt particulary on the PPR. The rented house is in a very good area, is currently profitable and I would be reluctant to try and sell it in the current climate.
Is there another option I am not considering? We are taking holidays every year and are not over-pressurizing ourselves with the overpayments however it is a lot of money and I want to make sure our strategy is OK. We have no need to upgrade our PPR in the medium term.
Any advice on our strategy from here would be great thanks,