Advice on Next Steps after Forever Home Purchase

[Blackrock1]

I always enjoy when people updates threads so here we are 1 year on…..

Age: 36

Spouse’s/Partner's age: 37

Number and age of children: (5, 4, due 2023) 6,5, 11 months

Income and expenditure

Annual gross income from employment or profession: 150k + 20% bonus (private sector)

Annual gross income of spouse: 60-70k depending on over time (public sector)


Monthly take-home pay: Between €8-€9k after deductions

In general are you:

(a) spending more than you earn, or
(b) saving? Saving


Summary of Assets and Liabilities

Family home worth €950k with a €520k €510k mortgage

Cash of €75k €18k

Family home mortgage information

Lender BOI
Interest rate 3%
If fixed, what is the term remaining of the fixed rate? 3 2 years 1% cash back due in 3 2 years


Other borrowings – car loans/personal loans etc
9.5 years left on 70k credit union home improvement loan @4.75% Cleared


Do you pay off your full credit card balance each month? Yes

If not, what is the balance on your credit card?

Other savings and investments:

Do you have a pension scheme? Yes I pay 6% company 4% spouse civil service


Other information which might be relevant

Childcare fees: currently €1500, likely close to €2000 after baby born Just over €2000

Life insurance: Yes, health, mortgage protection, death in service and critical illness


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

Thanks to a higher than expected bonus and following a lot of the advice here, we are possibly in a better position than expected/feared. We used our savings to pay off the home improvement loan upgraded the car with solid, sensible but dull 7 seater 2nd hand car.

I’m not going to lie found the year of reduced income on maternity leave very tough. I obviously knew that our spending had increased inline with earnings but was eye opening to stick to a strict monthly budget.

Plan now is to enjoy income being back for a bit then start to slightly overpay mortgage and increase pension contributions unless anyone else has better ideas.

Don’t get too used to the income you’d be better off going with the increased pension contributions straight away at least rather than doing it later. It’ll be hard to sustain 2 full time jobs with 3 small kids unless the second job is very child friendly (eg a teaching role )

 

[Gordon Gekko]

I would argue that a 6% employee pension contribution from that salary is pretty poor.

 

[DublinHead54]

I would argue that a 6% employee pension contribution from that salary is pretty poor.

This seems pretty standard with Multi nationals in my experience, and usually you have to contribute to get the employer contributions.

 

[fayf]

Now that home improvement loan is no more, and spouse is back working, this gives cashflow latitude, to increase your Employee Pension, and a higher priority, is to reduce that mortgage, by overpaying within the fixed rate limits.

 

[Gordon Gekko]

This seems pretty standard with Multi nationals in my experience, and usually you have to contribute to get the employer contributions.

And 6% is low for an employee that age to be contributing.

 

[fayf]

Its the EE + ER combined total, that counts, and 10 % in this case, is low.

In this case, the EE nett cost, of increasing pension from 6 % to 12 %on salary alone, is 5,400 per annum, while 9,000 goes into the pot.

In practical cashflow terms. The nett additional pension cost of 5.4 k annually, is just a little over half the cost, the OP was paying on the now cleared home loan.