I think we need some more insight on your income... Is all of your income subject to volatility? Or is €40k consistent (non-artist) income? €50k is volatile (artist related)?I know it’s generally not recommended to fund your pension where there’s no tax relief, but in a way, with the artist’s exemption, I’m getting the tax relief up front, so my situation might be the exception to the rule.
By reducing your mortgage & thus your cost base, you less exposed to the impact of your income volatility.
in a way, with the artist’s exemption, I’m getting the tax relief up front, so my situation might be the exception to the rule.
Thanks sm. I see where you're coming from—that makes a lot of sense. I could definitely put additional savings toward overpaying my mortgage. If I stick to the overpayment my current provider allows, I could possibly pay around 100k off the mortgage in the next year and a half. (1st payment before month 12, 2nd at 13 months, and 3rd at 25 months).By reducing your mortgage & thus your cost base, you less exposed to the impact of your income volatility. So your current strategy of overpaying makes sense. Given you are still making €3k saving with your 2 years of living expenses already saved, could you afford to overpay more?
I think we need some more insight on your income... Is all of your income subject to volatility? Or is €40k consistent (non-artist) income? €50k is volatile (artist related)?
Thanks Brendan. I had discounted ptsb when choosing a mortgage initially (higher rates, etc) but I must look into this as an option. I might be stuck for the present as I’m not even a year with my current lender and I see ptsb might not allow a switch before 24 months. I’ll contact my current lender (FI) to find out exactly how an overpayment is handled by them and check the current break fee, and I’ll check with ptsb if it would be a firm no to a switch this early.Check out permanent tsb and consider switching to them.
They have very high mortgage rates but they have one very useful facility.
Any overpayment is considered to be a credit against future mortgage payments.
With your current lender, if you overpay by €100k, and then your income collapses and you miss payments, you will go into arrears. With ptsb, the payments are deducted from your overpayment, so you don't go into arrears until the €100k is used up. (Maybe check in writing with your current lender that this is the case.)
If you decide to switch to ptsb - then don't overpay your mortgage until after you have switched. You will get 2% cash back so the more you borrow the better.
Brendan
You make a good point regarding pension and not factoring the artist’s exemption into that decision. I’m very grateful for the exemption, it’s been a real benefit to me, and I want to use that benefit to best secure myself financially. That was the angle I was coming at with regards to my pension, but I can see exactly what you’re saying. Securing myself financially now should be the priority. And paying down my mortgage looks like the best way to do that.This is very woolly thinking. You are getting the artists' tax exemption, whether you make a pension contribution or not.
If you have some ethical or political view that you should not be getting the artists' tax exemption, that is a separate issue.
You can secure your immediate future by clearing your mortgage. This also secures your long-term future.
Pension contributions only secure your long-term future. You could well get into trouble in the immediate or medium term future.
Brendan
I’ll contact my current lender (FI) to find out exactly how an overpayment is handled by them
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