Moneymakeover House sell & buy question

C

ClubLemon

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Personal details
Your age: 47
Your spouse's age: 44
Number and age of children: one - 16

Income and expenditure
Annual gross income from employment or profession: 70k
Annual gross income of spouse/partner: 84k

Monthly take-home pay: 86k

Type of employment: Employees

Employer type: I'm Public Sector, spouse is Private Sector.

Summary of Assets and Liabilities
Family home value: approx. 750k
Mortgage on family home: 350k
Equity: approx 400k
Car loan: 25k

Value of pension:
Myself 15 years public sector pension so far, plus 3 years AVC for public sector.

Family home mortgage information:
Lender: main Irish lender.
Interest rate: 2.1% green mortgage
Type of interest rate: set up 4 years fixed term from Jan 2023.

Help Requested / Question to ask:
Wanted to ask your opinion and advice if we should sell the current house and relocate to a house close to work.

Our house is in the north Wicklow, which is 27km distance to my work place in Dublin South.

It takes me 30 minutes one way driving without traffic, however normally in the morning it takes me 50 minutes - 1 hour one way driving at rush hours. With this length of time of rush hour driving, I'm sick of the driving and travelling for going to work.

At the beginning, we were thinking this current house is our forever home in terms of the size, space, BER and beautiful sea view and we will be living here for life.

But I recently had the thought that want to sell the current house and buy a house and move to Dublin 18, which is 10km to my work and only 15 minutes drive to work. The house size that we want is 4 beds house, so it will cost in the range of 825-850k in D18.

We don't have much savings as we paid a large deposit when we purchased the house. And also the child is in a private school costing 7,000 annual fees.

So the question is, should we sell and buy going for a house in Dublin South at 825-850k with having to take a mortgage of 425-450k mortgage at our ages?

May I ask - what would you do in our situation considering access to work and to future college?

Many thanks.
 
ClubLemon said:
Family home value: approx. 750k
Mortgage on family home: 350k
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ClubLemon said:
825-850k in D18.
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So you will want a mortgage of about another €150k to cover costs and some improvements you will want to make to the new house.

So your mortgage will be about €500k on a house worth €850k - so a LTV of about 60%. That is comfortable.

ClubLemon said:
Annual gross income from employment or profession: 70k
Annual gross income of spouse/partner: 84k
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€500k/€150k = 3.3 times your combined income. That is high enough for your age.

€500k @ 3.5% over 20 years will be a repayment of about €3,000 a month.

Given that you already have €25k of a car loan and presumably no savings and investments, it doesn't sound as if you are great with money?

You can't afford €7k for a private school. This luxury should really only be spent if you have plenty of excess income.
 
You can have anything you want. But you can’t have everything you want.

You have to choose - everything comes at a cost.

Is an additional €100k (ish) on the mortgage worth a 45 minute saving on the daily commute?

Well, it would be to me but then I wouldn’t live in a 4-bed house with only one child.

You don’t say whether your spouse has any retirement savings - that would be my big concern. At 47 that should be a major focus.
 
Thank you for your message and suggestion.
I understand that 4 bed is bit big and luxurious for us, as you said we can't afford it.

Just don't want to compromise the living size, as we are now in a 4 bed house, with office room, gym room etc. But what we want is at that price. Cheaper option, of course is a 3 bed.

Bray's traffic is worse than further places in Wicklow. Also, it is not a big reduction in the distance to work. Plus, a 4 bed in Bray with a better BER is similar price too.
Finally Dart station is not close to work place.
 
Can you move your work hours? Start early / leave early.

Can you do 35 hours over 4 days & have one day free?

Can you work from home two days a week?

Can you change jobs?

Can you take on additional help at home? Garden / cleaning?
 
Thank you Brendan for your calculation. Very helpful. We wouldn't take a 500k mortgage, 450k mortgage is the maximum that we want to take, maybe 425k. A new build in that area is at 825k this year.
I understand the private school is a luxury for us.
But I have been paying the private school fees in the past 9 year, since half way of primary school. And the private school fee is one more year to finish. So I will be able to save then. We nearly there.

Thank you Danny for your questions.

Can you move your work hours? Start early / leave early. - No I can't. I have to finish at 5:30 if working in office.

Can you work from home two days a week? - Yes 2 days work home and 3 days office.

Can you change jobs? - No can't it's permanent.

Can you take on additional help at home? Garden / cleaning? - No additional help. But didn't quite understand this question.

Thank you for your comments and questions.
 
ClubLemon said:
Can you change jobs? - No can't it's permanent.
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Are you indentured or something?
ClubLemon said:
Can you take on additional help at home? Garden / cleaning? - No additional help. But didn't quite understand this question.
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Hiring someone to take care of these chores can ease the time pressure.

Commuting 3 days a week is doable. I don't think I'd take on additional debt in your circumstances.
 
You have a house that you like with a beautiful sea view and a high BER rating. You have a secure public service job with Hybrid working. The commute is 27 km each way and it costs you 6 hours per week. You are fed up of it but many people would be delighted with a commute of that length. As the commute is annoying you, have you fully explored how you could do it differently. For example, drive part of the way and cycle the rest? Or if you changed the days that you work from home, would you experience less traffic and a shorter weekly commute?
 
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I think it very much depends on the 16 year old. With their ties to your current location, clubs, school friends, etc., will they find it very disruptive to move now just when in their senior cycle. At 16 they seem very young to be completing 5th year, most kids are now 18/19 doing the leaving cert.

But with a potential move to university in 2026 it would reduce your costs if they still lived at home and moving for that reason as well as cutting down the commute would make some sense. But with no savings moving is expensive in terms of the moving costs and fees not to mind the increased mortgage. So would the increase in mortgage be off set by the cessation of school fees and the savings of not paying for college accommodation. Of course they can probably commute to college from your current home as well.

With the ability to WFH 2 days per week, say 25 days AL, 10 days public holidays you only end up commuting 135 times a year, that does not seem too bad. Maybe the issue is not the commute but all the dropping/collecting with the child that explodes in their late teens as they are involved in so many things. And you probably feel you spend all your life in your car.
 
The vast majority of working people would bight your hand off for your current set up.
Upgrade your car to a nice automatic so no changing gears for you horrific commute. Listen to a few podcasts in car.
Think now your going a bit soft in your old age
 
ClubLemon said:
Thank you Brendan for your calculation. Very helpful. We wouldn't take a 500k mortgage, 450k mortgage is the maximum that we want to take, maybe 425k. A new build in that area is at 825k this year.
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Moving home is expensive.
Moving home is risky.

I think you need to budget for a bigger mortgage for a few reasons. The costs of buying and selling. The costs of moving. You will want to redecorate your new place. You may well want to change some part of it.

And your existing house might not get the price you expect and the new house might cost more.

If you budget for a €500k mortgage and end up with a €450k mortgage, great. But if you budget for €450k and it costs you €500k, you will be stretched.

Brendan
 
Personally, I would not decide to move house the year, couple of years before the leaving certificate. My youngest daughter went to a school where she knew few people and found it unsettling. She is fine now but it took a little while.
As your commute is only 3 days a week, it's actually fairly small.
Considering your age and your lack of savings despite good incomes, I would find it risky. All the more so if your spouse pension is underfunded.
Even if your child can commute to university, yearly costs will be closed to 6/7k per year. University costs will not free the 7k of the private school. With no apparent savings, how do you plan to fund the additional borrowing costs of saying about 800 a month?
Do you have any idea of when you want to retire? If it's not something you have given any consideration now, you will probably start thinking about it in the next 5 years. That level of debt make any early retirement more difficult as it increases your monthly commitment for the next 20/25 years and limits the funds available for pension contributions.
 
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I would agree with others and stay where you are. It sounds like a nice house in a good area and it's your child's community. It would be a difficult age to move schools - not guaranteed a place and may not get subject choice etc. Maybe review the situation when they leave school - aim to have loan gone and a bit saved. Can you even get that size of a mortgage without additional cash to cover the legal costs/deposits?

to reduce commute you could go to the gym/ do your shopping etc to knock in an hour before driving home? As suggested a good podcast etc
It's a really good point about adding years to your working life to pay off a mortgage to avoid a commute. Ironic
 
ClubLemon said:
It takes me 30 minutes one way driving without traffic, however normally in the morning it takes me 50 minutes - 1 hour one way driving at rush hours.
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ClubLemon said:
buy a house and move to Dublin 18, which is 10km to my work and only 15 minutes drive to work
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I understand the frustration with your commute but would the new location really be 15 mins? You should leave early some morning and park up in your target area and then start a commute to work in rush hour. Do the same that evening.

What you might find is that it is not as short as you expect... also wait till September when schools are in full swing. Is moving really the solution to knocking a small bit off your journey 3 times a week?

It sounds like you like everything about where you live apart from the commute for 3 days of the week. Moving is an extreme response to a fairly small problem. I'd be more concerned with the impact to your child in terms of school and clubs etc

Financially I don't think you can afford what you've proposed. If you bought a new build at €850k, they usually still require work. Floors, tiling, blinds, curtains etc which could be €20-30k. At the prices involved, the act of moving itself is likely to cost €30k alone. All in you are looking at needing €150k on top of existing mortgage.

I personally wouldn't like to have that size of a mortgage at your age. It's a big monthly commitment all the way to retirement.

I would focus on ways to make your commute better. Leave early or stay late once a week and do a class/activity.
 
_OkGo_ said:
Moving is an extreme response to a fairly small problem.
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I don't think it's a small problem at all.

Some people enjoy driving and do not mind sitting stuck in traffic for 90 minutes twice a day listening to the radio.

Others do not have the temperament for doing nothing. I have always picked jobs and homes within cycling distance. So I fully understand the OP's frustration.

It might be a small problem for others, but for him, it's a big problem, although I don't know what the solution is.
 
Could you try to join a gym two of days you go in? Either before or after work so you are not hitting rush hour?

The 1730 finish sounds draconian for an office role, we allow people to start earlier or later to suit their needs.
 
Brendan Burgess said:
stuck in traffic for 90 minutes twice a day
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50-60 minutes each way in this case.
ClubLemon said:
It takes me 30 minutes one way driving without traffic, however normally in the morning it takes me 50 minutes - 1 hour one way driving at rush hours.
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I'd agree with others that scheduling something to do before and/or after work to avoid rush hour traffic seems like a much more pragmatic solution than moving house, uprooting the family (including the child in leaving cert cycle), and incurring crippling debt.
 
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