Advice on Trading Up

S

SILVER

Guest
Age: 36
Spouse’s/Partner's age: 32

Annual gross income from employment or profession: 72k + Bonus 5k
Annual gross income of spouse: 37k

Type of employment: Finance (Pharma) – Reasonably secure.
Banking - Again should be ok.


In general are you:
(a) spending more than you earn, or
(b) saving?
Saving

Rough estimate of value of home: €315K? (current selling prices for similar properties on my home €350k)
Amount outstanding on your mortgage: €270k
What interest rate are you paying? ECB Tracker +.7%

Other borrowings – car loans/personal loans Car Loan 19k (3 yrs to run)

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: High Interest Saving A/c €35k
Shares Market Value €40k
€2k per month deposited Anglo Saver A/c


Do you have a pension scheme? Yes (Employer 12%, Employee 5%, AVC 13%)

Spouse (Defined Benefit)
No employee Contributions


Do you own any investment or other property? no

Ages of children: N/a

Life insurance: Mortgage protection
Company pays for Permanent & private health insurance and life assurance as part of pension scheme.

We are looking to trade up by the end of 2010, ideally to a 4 bedroom house in Dublin Suburbs Lucan/Wicklow. Approx current price €320K. At current savings rates we should have approx €125k saved by Dec 2010.

We would like to keep our present property for rental, am I deluding myself or does this sound feasible? Advice gratefully appreciated.

Estimated Borrowing: €450k

Current Home €255k
New House €320k
Savings -€125k
 
What's the projected rental income on your home when you rent it out?

Just as an aside, are your savings earning more interest than you are paying out on the loans?
 
As you won't be a first time buyer, have you factored stamp duty into your equations?

Secondly, any plans for kids?, it will increase your outgoings and may reduce your income

I don't think your plan is unfeasible, however there are a lot of unknowns, rental market is down signifcantly so it may be difficult to rent your house, against that, you may find house prices in the area you want to move to will have dropped even further
 
I think it would make more sense to pay off your car/personal loans first, as I'd be pretty sure the interest rates on these would be far higher than what you receive in savings interest.
 
I would say its too far away to know whats going to happen. (Its hard to know what is happening week on week these days!). However, you are doing the right thing with saving if you want your plan to go ahead.

Houses simular to yours are on the market for €350k, knock 20% off and you just survive negative equity at the momment. Could be worse.

If you were to rent your house now what profit would you make? Bare in mind rentals are falling and there is a massive oversupply which is a trend that will probably continue.

Give all this borrowing, €450k on 109k income is fesible BUT i wouldn't do it at your age. Keep saving, get rid of your loans and wait and see.
 
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