Moneymakeover Funding move to larger home - mortgage or remortgage

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Novatown

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Income and expenditure,
Annual gross income from employment : €130,000 (Private)
Annual gross income of spouse/partner: Unemployed
Monthly take-home pay: Me €5,850 (after maxing pension contributions)
Spouse : N/A

Type of employment: I work in private sector
Live off one salary and I save €900 per month

Summary of Assets and Liabilities
Family home value: Estimated €650,000
Mortgage on family home: €201,500 (Tracker 2.75%)

Investment property Value : €320,000
Mortgage Remaining : €2500
Have owned this property for circa 25 years bought for €175,000
In RPZ so rent is €1100 PM

Cash Deposits (various a/cs) : €210,000 Aprox.

Pensions: Employer €960,000
Previous private pension: €6250
Spouse has no pension


Other borrowings – car loans/personal loans etc
Car Loan : 20K at 4%

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? N/A

Other information which might be relevant : Children 21, 19 and 15


What specific question do you have or what issues are of concern to you?
Currently in 3 bed townhouse, family needs a larger home as children will live (are) in home during college
Equity on current home is ~€425,000. Estimate cost of right size house is ~€950,000 :(
I would need a mortgage of ~€450,000 over 16 years (length of time to retirement)
Alternatively it was suggested I could re-mortgage the rental property to fund the larger house ?
Looking for advice on what might be best approach based on my details above ?
 
Novatown said:
Investment property Value : €320,000
Mortgage Remaining : €2500
Have owned this property for circa 25 years bought for €175,000
In RPZ so rent is €1100 PM
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~4% gross yield before costs and taxes?
Doesn't seem like a great return especially for the risks and burdens of being a landlord.
Why not sell it and put the proceeds towards trading up?
 
Novatown said:
Investment property Value : €320,000
Mortgage Remaining : €2500
Click to expand...

Novatown said:
Cash Deposits (various a/cs) : €210,000 Aprox
Click to expand...

Novatown said:
Estimate cost of right size house is ~€950,000
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You have €500k in assets besides your home.
So sell the investment property.
Get a bridging loan of €500k to buy the house you want.
Or maybe get a bigger bridging loan and buy a bigger house as you can well afford it.
Move into the new house
Sell your old house and reduce your total borrowings to €50k

Enjoy life.
 
Novatown said:
Currently in 3 bed townhouse, family needs a larger home as children will live (are) in home during college
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Why if you’ve managed up to now? Child 21 must be nearly finished? Your wife’s lack of pension is concerning. Odd not working with children mostly adults. What are your ages. You sound about 50. Your rental makes no sense. Why have a car loan with your level of savings.

By all means upsize if that is what is required. But it’s very late, child age wise, to do this. So I’m tempted to ask what brought this on? Did you spot a fab house?

Have you considered how all this works if you lose your job? Do you have life insurance?
 
Bronte said:
By all means upsize if that is what is required. But it’s very late, child age wise, to do this
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I have the same thought on that .

Does your wife rental income exceed 5k, if so it allows her to get contributions for the state pension. Something to consider long-term if you decide to sell.
 
Novatown said:
Me €5,850 (after maxing pension contributions)
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If you are in your 50s (sorry if you are not), are you sure you are maxing your contribution. You could contribute 30 per cent up to 115000k. So 34500 per year. Your take home pay seems a bit high. (I know it's not the question but though I would mention it anyway)
 
Bronte said:
You know this how?
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They have 2m of assets.
She might have stop working for 15 years+, what do you want her to do, enjoy herself in an entry level job.

Bronte said:
no pension, dependant financially on another.
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She perhaps contributes to her pension with the rental.

How do you know she is that dependant on another. She might have inherited and contribute to buying the assets. The choice might have been made a long time ago and it's quite outside the scope of the question asked.
 
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Thank you everyone for your replies - it’s really helpful to hear different viewpoints.
To address some of the questions raised:
My spouse was employed up until 2023, when they lost their job. They’ve been actively searching for over two years without success, which has negatively impacted confidence.
I’m can confirm that I'm contributing the maximum allowable AVCs for my age group, as I’m in my mid-50s.
Regarding the timing of a house move: while our 21-year-old will likely be moving out soon, this isn’t a sudden decision. We’ve actually been planning to move for about 10 years, but work commitments kept delaying it. We never intended for our current house to be our long-term home, and now, being in my mid-50s, it feels like its now or never. Additionally it will give spouse a project potentially in the absence of paid work
 
Novatown said:
I’m can confirm that I'm contributing the maximum allowable AVCs for my age group, as I’m in my mid-50s.
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Just to note that up to the year in which you turn 55 you can contribute 30% and from the year in which you turn 55 you can contribute 35% for the full year even if you turn 55 on December 31st.

Tax relief limits on pension contributions

This page outlines the tax relief limits on pension contributions
www.revenue.ie www.revenue.ie
 
Novatown said:
Monthly take-home pay: Me €5,850
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If you were contributing 35 per cent, your take home would be around 4800. Are you personally contributing 35 per cent on top of your employer contribution. It would be around 5100 with 30 per cent contribution. Perhaps you are adding the rental income?
Even if the home cater credit is added, the take the pay seems high.
 
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