I don't know what the goal is or how to make best use of our position? Help and advice please.

PebbleBeach2020

New Member
Messages
5
I've been a user and reader on AAM for a year or so now and find it very informative about financial aspects. I wouldn't be as skillful and knowledgeable as others on the site so have been nervous to post and ask for advice and guidance. If I left item of expense below out, I'll add it.


Age: 37

Spouse’s/Partner's age: 37

Annual gross income from employment or profession: €87,000 per annum.

Annual gross income of spouse: Was full-time but now works Part time earning €22,000 per annum. Option of going full-time remains open to my spouse.

Type of employment: – Public Sector and my spouse is Private Sector

PPR: €575,000 with a mortgage of €400,000 outstandin @ 2.8% having fixed with 3 years remaining. Repayments are €1,625 at the moment.

Second property: Value €300,000 with a €30,000 mortgage outstanding. There is 3 years left remaining on the mortgage and the interest rate is 2.9% fixed expiring soon enough. House has been rented out a number of years to reliable tenants for €1,600 a month.

Third property: Value €275,000 with a €140,000 mortgage outstanding. There is 13 years left on this tracker mortgage. House has been rented out for €1,200 a month, which is below market rate.

Other borrowings – Have a loan of €3,000 interest free from a retail store; repayable over the next 2 years.


Other outgoing
1,200 per month Creche fees

Do you pay off your full credit card balance each month? – Don't have any credit cards

Savings and investments: €20,000 in cash in a joint current account. Have €1,000 worth of bank shares which I lost a lot of money on from the Celtic Tiger crash.

Do you have a pension scheme? Yes I am a post-1995 in the civil service and my spouse in the private sector has no pension. At 65, I'll have over the full 40 years service for the pension calculations.

Ages of children: Two children aged 3 and 2.

Life insurance: We have mortgage protection on all the houses which I think it more than sufficient should the worst happen.


Financial Plan – We don't really have one to be honest. We are more savers than spenders although we do take the kids on the summer holidays every year to Spain or USA. We seem to be going along without any real plan in mind though. Keeping the houses or selling the houses, we haven' really looked at. We weren't under pressure to sell at any point, so we didn't consider it. The cheap interest rates encourages us to keep the houses too. Perhaps losing heavily in the shares in the past has put me off investing in these. Happier to invest in houses even though there's no diversification whatsoever in there.

My spouse thought about a pension previously, but we decided to concentrate on paying down debt. Now that my spouse is part time, we don't see the point in investing in pension due to smaller relief allowances. And aged less than 40, the percentage share of income to claim relief on is lower than post 40 years of age.

Long term, we live very close to a university, so if kids go there, the costs will be a lot lower. We have had thoughts of selling one or both houses over the years, but decided to hold onto them. I'm going to meet with a financial advisor to see what they say in the second half of the year, but if you have opinions, thoughts, advice, past experiences, guidance etc, it'd be welcome.

If I have left out any details I should have included, please state and I'll edit where appropriate. Appreciatons.
 

goingforgold

Frequent Poster
Messages
264
Obviously you are in a very strong financial position with 600k of equity at 37 years of age... But one thing to note is that you are heavily invested in property, so a hit to the property market would seriously damage your wealth. Sell one of the properties and pay down PPR. You have a great pension but you could also get exposure to equities via AVC's, and do so in a very tax efficient way. Invest excess cash in state saving certs. Then you would have a balanced portfolio for your wealth
 

jim

Frequent Poster
Messages
523
It seems to make sense to me to sell 1 of the investment properties and pay down your ppr mortgage.
 

moneymakeover

Frequent Poster
Messages
585
Looking at second property,
you don't say what the monthly mortgage is, but let's say it's 1400
Then in 3 years, or sooner, when capital fully paid off you have 1600 minus tax in your pocket
Which will help pay down third property.

The only thing to lookout for, in my view, is the annual tax liability.
Get a good tax advisor.

So why veer away from what you're doing?
Keep paying down debt.
In 13 years you'll have two properties mortgage free.

Time enough to start paying into pension.
Ensure you get any employer pension contribution.
 
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PGF2016

Frequent Poster
Messages
335
Your in a great position but I would suggest paying down debt aggressively. You should be able to live off the larger salary. Divert your spouses salary to paying down the outstanding debt to clear the mortgage with the higher interest rate. If you were to continue as you are you'd probably do OK also.
 

PebbleBeach2020

New Member
Messages
5
This is probably a stupid question, but should we know why we are keeping instead of selling houses? To sell in 20 years time? To give to kids? For what? That's why I think we are aimless really. We have no goals.
 
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