Can't make up my mind on Trading Up

P

Priory

Registered User
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I have the opportunity to trade up.
Selling my semi detached for circa 330,000 and buying detached, 4 bed for 346,000. The house is exacty what and where we want. My mortgage will increase from €1,050 to circa 1,300 per month. The house is a further half hour from work for both myslef and my partner which means an extra €150 per month on petrol plus added car maintenance cost plus the long commute.
We earn €61,500 per year between us with no other loans. Also getting married next year but SSIA is looking after that. Ultimately I feel we can manage it but may struggle at certain points. House must also be kitted out from top to bottom - which can of course be done over time.

Has anyone else experience of something similar? Is the trade off between financial worries and standard of living worth it?

This is a bit of a rant but I'm so muddled any advise would be appreciated.
 
What is the original and outstanding mortgage on the existing property?
What sort of mortgage would you need on the new house?
Are you looking to borrow from the most competitive lender for your situation?
 
Original Mortgage - €230,000
Outstanding - €225,000.
New Mortgage - €260,000.

Mortgage Rate - ECB + 0.75% for 2 years. rolling to ECB + 1.05%
 
Have you factored in additional expenses such as legal/conveyancing expenses for the sale and new purchase, the cost of replacement/additional mortgage protection life assurance, moving costs etc.?

A rough calculation using [broken link removed] (assuming that you were already married and one spouse earning €31.5K and the other €30K) suggests a combined monthly take home of about €4.4K in 2007 so €1.3K on the mortgage doesn't necessarily seem excessive on the face of things. Of course circumstances could change (e.g. wife may take time of to have kids, changing/losing job etc.) in which case this may change.
 
I have, ClubMan. I have lumped the admin fees into the mortgage. I have got a deal on the mortgage protection and home insurance also which means I'll be paying much the same as now, €750 legal fee contribution and 10% of removal costs. I have also added €10k (will have a very good deal on a kitchen, plus some tiling and florring) into the mortgage for necessary work we will need to do. The rest would have to wait.
 
Priory said:
I have, ClubMan. I have lumped the admin fees into the mortgage.
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Do you mean that you will be paying these fees over 30 years? That's probably not a good idea!

On the face of things the figures sound manageable. Unless, for example, you have other debts and/or an extravagant lifestyle or other living expenses that might dictate otherwise. Have you outlined your normal budget and then adjusted it for the new scenario?
 
Ya, I realise it's not ideal!! Hate adding on to my mortgage as it is. What should I do in this case?
We don't have any debts other than the mortgage. Certainly don't lead an extravagant lifestyle!
I have done the comparison between now and then. It's manageable, eg. our SSIA money is now freed up, I can pull out of the Share Scheme at work to free up cash but I worry about "what ifs". I will need a car soon, something goes wrong with the house or one of the cars, etc. Usually I'm not a a worrier and am pretty clear in my decision making but not on this occassion which does worry me.
 
Priory said:
Ya, I realise it's not ideal!! Hate adding on to my mortgage as it is. What should I do in this case?
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Well you could always just accelerate the repayment of the mortgage if/when you get a chance so you don't end up paying such expenses over 30 years.
We don't have any debts other than the mortgage. Certainly don't lead an extravagant lifestyle!
I have done the comparison between now and then. It's manageable, eg. our SSIA money is now freed up
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Have you done a detailed budget listing all existing incomings/outgoings and adjusting this for the new situation? If you have and it looks manageable then I personally would say go for it.
I can pull out of the Share Scheme at work to free up cash
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Is that a good idea? If this is an ESPP then surely this can yield guaranteed returns (if you exercise and sell immediately) of c. 15% gross or 9% net (once RTSO1 tax has been paid)?
but I worry about "what ifs". I will need a car soon, something goes wrong with the house or one of the cars, etc. Usually I'm not a a worrier and am pretty clear in my decision making but not on this occassion which does worry me.
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It seems reasonable to me to consider these what ifs. But you need to see if you can attribute ballpark risk factors to the various scenarios to see how likely they are to actually transpire. Obviously this is an inexact exercise but it may help you to come to a decision.

Do you have any other savings/investments?
 
The extra half hour commute would put me off. That's and hour a day you don't get to spend in any home. If you feel you are going to be under pressure financially why not wait a year or two. Moving is stressful and with a wedding to organise this may not be the best time for you. Trust your instint, don't try to talk yourself into it, if there are just the two of you do you really need a bigger house ?
 
Is that a good idea? If this is an ESPP then surely this can yield guaranteed returns (if you exercise and sell immediately) of c. 15% gross or 9% net (once RTSO1 tax has been paid)?

Yes, circa 9% net. This is a security blanket - I can pull out of this at any time if the going gets tough.

It seems reasonable to me to consider these what ifs. But you need to see if you can attribute ballpark risk factors to the various scenarios to see how likely they are to actually transpire. Obviously this is an inexact exercise but it may help you to come to a decision.

I will do that in full tonight.

Do you have any other savings/investments?
SSIA - Will have €27k coming from that but the wedding will gobble the majority of that (killer!)

Put €100 per month into an Acorn Life Long Term Fund, but that's only a year old.

Nothing other than that.

Is the mortgage rate I have competitive?

[/QUOTE]
 
Priory said:
Is that a good idea? If this is an ESPP then surely this can yield guaranteed returns (if you exercise and sell immediately) of c. 15% gross or 9% net (once RTSO1 tax has been paid)?

Yes, circa 9% net. This is a security blanket - I can pull out of this at any time if the going gets tough.

It seems reasonable to me to consider these what ifs. But you need to see if you can attribute ballpark risk factors to the various scenarios to see how likely they are to actually transpire. Obviously this is an inexact exercise but it may help you to come to a decision.

I will do that in full tonight.

Do you have any other savings/investments?
SSIA - Will have €27k coming from that but the wedding will gobble the majority of that (killer!)

Put €100 per month into an Acorn Life Long Term Fund, but that's only a year old.

Nothing other than that.

Is the mortgage rate I have competitive?
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[/QUOTE]
 
ramble said:
The extra half hour commute would put me off. That's and hour a day you don't get to spend in any home. If you feel you are going to be under pressure financially why not wait a year or two. Moving is stressful and with a wedding to organise this may not be the best time for you. Trust your instint, don't try to talk yourself into it, if there are just the two of you do you really need a bigger house ?
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It's the location as much as the house. It's not the house for now but the house for the years ahead. The commute does put me off especially since we will both be doing it for now, I have always been against using your work location as a deciding factor because it can change.
 
Hi

I had the same dilemma as you all over the Summer. I eventually bit the bullet and decided to go for it. Am also going to give myself a longer commute (its currently taking me on average 5/6 minutes to get into work!, but this will stretch to about 20 minutes hopefully.

At the end of the day, I decided to move further out, push up the mortagage and go for it. Hopefully, I wont regret it.
 
Hi there Priory,
Mr. Bear and I traded up last year - we had a choice - buy a really nice place in Naas - or a standard 3 bed semi in a nice part of Dublin.

We chose dublin - I couldn't leave the city!!!

A 30 minute commute might not sound much but that is really dependant on the time of year and hour you leave. Alot of my friends who like you made the decision to sell up and leave the city - have noticed that as new estates spring up around where they live, in a few short years the 40 minute journney is now 1.5 hours!!!!

There is also another concideration - the amount you will possibly be spending on petrol.. As oil becomes scarer what will the future of the comute be like.

If I were you I would look to trade up within the M50 - get the max mortgage you can - Houses in a good location will always old their value.
 
pinkyBear said:
Hi there Priory,
Mr. Bear and I traded up last year - we had a choice - buy a really nice place in Naas - or a standard 3 bed semi in a nice part of Dublin.

We chose dublin - I couldn't leave the city!!!

A 30 minute commute might not sound much but that is really dependant on the time of year and hour you leave. Alot of my friends who like you made the decision to sell up and leave the city - have noticed that as new estates spring up around where they live, in a few short years the 40 minute journney is now 1.5 hours!!!!

There is also another concideration - the amount you will possibly be spending on petrol.. As oil becomes scarer what will the future of the comute be like.

If I were you I would look to trade up within the M50 - get the max mortgage you can - Houses in a good location will always old their value.
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Hi PinkyBear,

Don't actually live in Dulin. Cork is my city of choice. My commute will go from 20 - 30mins currently to 40 - 60. Same for my girlfriend. I have considerd the petrol issue. The time issue is just as imporrtant really.
 
another thing to consider if you move further out would be the cost of childcare should you end up with a few nippers. my wife and i both work but we would not move further away from our workplaces because of the added stress that this would place on our childcare arrangements.

i appreciate that this event could be a long time away yet but if you add an extra 30 mins to your commute each way, this is one hour less with your child (and one hour extra of childminding...)
 
Many different aspects to "worry" about ....
The core issue for me would be the fact that the new house becomes the home that both of you really want.I think the home side of it is so much more important than the money side (For the right "home" one always seems to have to go above and beyond moneywise to secure.) If it is where you both can see yourselves living for the next 10 to 20 years then it's "the Home" so then go for it.I would give more weight to your partners view on is it the "home".As someone pointed out circumstances do change. Reading all the earlier posts it looks like the money side is "doable" so work out why you can't make up your mind...

Sorry if this is waffle..
 
Is the trade off between financial worries and standard of living worth it?
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The lesser the commute to work, the higher the standard of living surely? Unless you base standard of living on something other than quality time spent with spouse and children. What does a newly wed couple with no kids (sorry presumption there) want with a 4 bed house? Enjoy the time extra hour with the other half and the disposable income, , come back in 5/7 years when you need the extra bedroom.
 
SarahMc said:
The lesser the commute to work, the higher the standard of living surely? Unless you base standard of living on something other than quality time spent with spouse and children. What does a newly wed couple with no kids (sorry presumption there) want with a 4 bed house? Enjoy the time extra hour with the other half and the disposable income, , come back in 5/7 years when you need the extra bedroom.
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Thanks for the reply Sarah. I'm planning for the future. I love where the house is. I don't see an opportunity like this coming up in the next 10 years. The commute distance will change in time. We will sort that.
 
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