Considering becoming a stay at home mother

C

casie

Guest
I would be very grateful for any advise on this matter - myself & my husband purchased an apartment approx. 2 years ago and are renting it out - we purchased our first family home approx. 3 years ago - we have substantial mortgage repayments on both. However the repayments for the apartment are more or less being covered by the rental income it is generating.

I am now considering staying at home for a few years to mind our children full-time but will be giving up a very generous pay package which will hugely affect our lifestyle. Would it be very foolish for us to change the mortgage on our rental property to an interest only mortgage and use the extra cash this frees up to supplement my husbands wage (he is the lower earner). I think this is the only way for us to be able to afford to go down the route of me giving up my job but obviously if this is in the long term financial madness we will look for another option.
All advice would be greatly appreciated !
 
Re: >>Interest only mortgages for investment property

The question is

Would it be very foolish for us to change the mortgage on our rental property to an interest only mortgage and use the extra cash this frees up to supplement my husbands wage (he is the lower earner).
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I think this would be wise, not foolish. And off-topic, but any chance that he'd give up work instead of you?
 
What would the long-term implications be of changing to an interest only mortgage on a rental property and using the extra approx. €300 per month gained by this move to supplement an income (allowing one partner to give up job and stay at home) rather than reinvesting it in a pension or paying of a PPR ?
 
If you use it as income, then you'll have more spending power each month. If you pay it off your PPR, you will clear your mortgage early and pay out less interest in the long run. If you invest it in a pension, you may be able to reduce your husband's current tax bill and provide for a more comfortable retirement.
 
Assuming that the appartment is registered in both your names and that your husband's salary and the rental income put you in the 42% tax bracket - you could avail of the full €58,800 income tax band at 20% if you transfer the title to the rental property into your name only.

The rental income would then become your only source of income and would be taxed at 20%.

There are also no tax complications as asset transfers between spouses are exempt from tax.

Also don't forget the home carer's tax credit - there's some info on that [broken link removed].
 
casie said:
I think this is the only way for us to be able to afford to go down the route of me giving up my job . .
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Have you considered simplifying your finances by selling the apartment?
 
Yes, we've considered my husband staying at home but we both feel that it would look more acceptable on my cv to take a career break i.e. that my husband might find it difficult in the future to return to work and also with regard to selling the apartment, if I am to give up my pension, the apartment will be security (hopefully) for the future.

Thanks for all the advice !
 
hi casie,
My wife and I took the same decision some months ago. she gave up work to mind the kids. we switched the rental property to int. only. The extra cash (c350e/mnth) makes the ends meet and, all going well with rental markets/yields etc., should do so for the duration that she decides to stay at home.
As was said, the downside is youre not clearing the capital on the house AND/OR youre not putting the extra cash into a pension so your future might not be as comfortable, but what it gives you is the leeway to make the lifestyle choice of staying at home to mind the kids. So to us, it was a matter of either sacrificing lifestyle now for one 20 years from now, or having the lifestyle we wanted now and possibly sacrifing the future one, but thats a decision only you can make for yourself.
 
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