Lump sum and Future Planning

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Age: 35
Spouse’s/Partner's age: 38

Annual gross income from employment or profession:
  • Annual Gross income €67,500 + 15% Bonus (Typically Receiving about 7k Gross due to company performance over last number of years, this is used to pay for holidays)
  • Annual gross income of 92,000 (recently increased to incorporate annual bonus)

Monthly take-home pay: 8,200 currently, maternity leave at the moment so 7600 in 2020

Type of employment: e.g. Civil Servant, self-employed
Both Private sector

In general are you:
(a) spending more than you earn, or
(b) saving?
Having cleared all of debt with exception of mortgage, we are now in a saving position.
Child Allowance has always been diverted into An Post Child Saver Account but we are saving other money in addition to this also

PPR
Rough estimate of value of home: €475,000 (pre March)
Amount outstanding on your mortgage: €295,000
What interest rate are you paying? 2.6% with Ulster Bank €1,244 per month. Break fee when checked in December 19 was 4,800 so we paid 10% off in December and a further 10% off in Jan to circumvent the breakage fee

Other borrowings – car loans/personal loans etc – N/A All have been cleared recently

Do you pay off your full credit card balance each month? N/A

Savings and investments:

Circa €7,500 in cash in State savings
Circa €5,500 in Credit Union
Shares in Revolut total about €3,000
Circa €160,000 in cash in bank and a further €80,000 to be received in July
Potential future shares value €300,000 in 5 years time

Do you have a pension scheme?
7.5% contribution, company matches 5% to a PRSA. Current value of it and a former PRSA is €40,000. Pension started in 2018
Spouse contributes 5% matched by 5% from company. Current value €170,000
AVC’s for 2019 have been paid into both.

Do you own any investment or other property?
Property Value €190,000 - prices in the estate are erratic, as low as €160,000 as high as €220,000 for similar properties
Mortgage Balance €130,000 ECB + 1.1%. (BOI) Monthly Income 1,200. Agent Fees and Tax see it break even or there about annually.


Ages of children: 8, 4 & 4 months

Life insurance: Through Employer for both

Other Info
Childcare - N/A at the moment but once maternity leave is over and I return to full time work this will be €2,500. Full Time for 1 year old, and 2 after school. Hoping this may reduce if I can work from home a couple of afternoons a week which shouldn't be an issue but this is worst case scenario
Other monthly outgoings committed would be €200 ish on other activities for kids
Children’s allowance is saved, previously used as emergency cash but we will be leaving that in State savings as each account expires on its 5th anniversary, we can take it out and put it somewhere else.

Specific Question:

What should we be doing with the cash sum on deposit currently in a bank earning nothing.
The €80,000 will go towards an extension and probably some of the €160,000 . Should we put as much as possible towards the build and not take out a further mortgage to finance it. We are looking to complete a double story extension so the cost will be circa €175,000~€200,000 we think, I’d love to be corrected on that . Putting so much liquidity into the house is daunting to me.

Should I be increasing my pension percentage when I go back to work? Or should I pay down the mortgage down. I reckon I will have an extra €600 disposable income per month from mid next year that I can either put to the mortgage or increase my pension pot
Spouse puts an AVC in after year end to minimise tax due for rental property. If we cant continue this should he look to increase his pension contributions?

Our tenants have been with us a number of years, given their circumstances they move out in the next couple of years. Should we think about selling it when/if they do. They have been great tenants and we ended up being landlords rather than choosing to invest in a rental property.
 
You should have no difficulty in raising a mortgage when you want to build the extension, in the meantime, you should use the cash to pay off your home mortgage. 2.6% after tax return and a reduction in risk. It's a no brainer.
 
You should have no difficulty in raising a mortgage when you want to build the extension, in the meantime, you should use the cash to pay off your home mortgage. 2.6% after tax return and a reduction in risk. It's a no brainer.


Thanks for the details that I added I forgot to add that the extension will be completed in next 12 months more than likely.
 
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