DINKs looking to purchase property & aim for FIRE

Discussion in 'Money makeover' started by peaceofmind, 14 Apr 2019 at 5:43 PM.

  1. peaceofmind

    peaceofmind New Member

    (relaxed FIRE, that is, both of us like our jobs and foresee working in them for quite some time after reaching FI state)

    Age: 37
    Partner's age: 40

    Annual gross income from employment or profession: ~90,000
    Annual gross income of spouse: ~60,000

    Monthly take-home pay: 6,500

    Type of employment: private sector

    In general are you: saving (approx. 3k/mo)

    Rough estimate of value of home: Looking for one now, likely 250k
    Amount outstanding on your mortgage: Currently have €110k in cash + £105k from sale of UK home, can either get mortgage up to €124k or use some/all cash to pay outright (or be very close)
    What interest rate are you paying? Pre-approved with Ulster Bank for 2.3% 2yr or 3.1% variable

    Other borrowings – none

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

    Savings and investments: Included in €110k above

    Do you have a pension scheme?
    Me: $60k in US401k, £160k in UK pensions, €30k in Irish pension; I contribute €3800/mo to my Irish pension
    Partner: £90k in UK pension (need to set up Irish pension - will contribute max allowed for age)

    Do you own any investment or other property? No

    Ages of children: n/a, 2 dogs + will adopt/foster more pets but they're lower cost ;-)

    Life insurance: €200k joint policy

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

    1) does it make sense to get a mortgage for €100k or is there a strong argument for buying outright (if we can swing it)? Prefer safety net of stronger cash position with mortgage (outright purchase would wipe out all savings, including EF), but willing to be convinced otherwise. Mortgage payment on €100k @ 3.1 is €560/mo which is half what we've been paying for rent or mortgage.

    2) If going for mortgage, plan would be:
    Immediate: €15k EF (6mos expenses), €20k family EF (mainly if partner's parents die & need to fund funeral and/or moving costs), €20k house maintenance/renovation fund (if anything needs doing immediately)
    On-going: ~€2k/mo can go towards FIRE, assume this would go directly to mortgage each month if on variable rate

    3) thoughts on 2yr fix vs variable rate? Hesitant re: fix due to limited OPs, but variable rate is, by definition, variable. OTOH, €100k seems low enough exposure that even if rate went to 5-10% it would still be manageable. If we went with fix we'd just save extra and OP as and when allowed.

    4) once mortgage is settled (as appropriate), & partner's pension is sorted, long-term plan is:
    1. pay off mortgage ASAP, likely within 3-5 years
    2. possibly save for any bucket list things we think of while doing #1
    3. start investing extra for pre-pension passive income. Have a feeling this is more complicated than in the US, but haven't dug into options yet.

    Anything else we should consider? We moved here in 2017 so are still getting our heads 'round the ins and outs of Irish finances.
  2. NoRegretsCoyote

    NoRegretsCoyote Frequent Poster

    I would think a small mortgage adviseable.

    It gives you some flexibility if circumstances change. You can't eat a house, and an Irish bank can't foreclose on one either:)

    If you think you can get a >3% return long term on pension then it's better to borrow and put excess funds into pension, especially if there's headroom with tax relief.