Moneymakeover Mid 40s, pay off mortgage?

[Jimmy2times9999]

Personal details

Your age: 45
Your spouse's age: 43


Number and age of children: 3 children. 4,6,8


Income and expenditure
Annual gross income from employment or profession: €72,000
Annual gross income of spouse/partner:€51,000

Monthly take-home pay: €5,500

Type of employment - e.g. Employee or self-employed. Both employees
Employer type: e.g. public servant, private company. Private company

In general are you:
(a) spending more than you earn, or
(b) saving?

Saving

Summary of Assets and Liabilities
Family home value: €450,000
Mortgage on family home: €85,000 remaining
Net equity: €365,000

Cash: 25,000
Combined pension fund: €300,000
Company shares : €110,000



Family home mortgage information
Lender. BOI
Interest rate 2.4% fixed until 2027.


Remaining term: (Original term is not relevant) 16 years
Monthly repayment: 490. We also pay an overpayment of 170 pm

Other borrowings – car loans/personal loans etc n/a

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


Pension information

Value of pension fund: 300k


Other savings and investments:

Total shares of 150k (including the work shares mentioned)


Other information which might be relevant

Life insurance: death in service with work , 4 times salary. Both of us have this.


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

Pay of mortgage now or wait until fixed rate is up in 2027?

Change car in 2027 also, roughly 20k required.

House improvements also in the next 5 years, probably in 2028 or 2029. Estimate of 50k required for that

 

[conor_mc]

First piece of advice is to sell the shares in your employer if you can, too much exposure to the fortunes of one company.

Second is to max out AVC’s, if you’re not already doing so.

Is there a cost to paying off the fixed rate mortgage early?

 

[ClubMan]

Pension information

Value of pension fund: 300k

Are you both maximising your pension contributions?

Key Post - Overpay mortgage or contribute to pension or do something else?

This comes up in a lot of different threads, so I will set out some principles here to kick off the discussion. I will edit it in the light of feedback. There are many options with your savings in excess of your emergency cash fund Pay down your mortgage Build up a fund to enable you to trade...

www.askaboutmoney.com

 

[Jimmy2times9999]

Pension contributions not fully maxed out, almost but not fully.

Is there a penalty for paying off the mortgage early? I had a assumed so, but not certain. I'll check that out asap.

 

[ClubMan]

Pension contributions not fully maxed out, almost but not fully.

You might want to consider maximising them.

Is there a penalty for paying off the mortgage early? I had a assumed so, but not certain. I'll check that out asap.

This thread might be of use here:

Key Post - Switch or re-fix my mortgage? Breakage fee calculator and savings estimates for your case (Ireland)

I am creating this thread as a place where people can request guidance on whether they should switch their mortgage to another lender (also called mortgage refinancing or remortgaging) and, if so, which lenders and interest rates they might consider switching to. You are allowed to switch even...

www.askaboutmoney.com

 

[Brendan Burgess]

Mortgage on family home: €85,000 remaining

Interest rate 2.4% fixed until 2027.

There is unlikely to be a penalty for breaking out. If there is one, it's unlikely to be material.

You can clear your mortgage and still have enough to max your pension, buy a new car and do the work on your house.

So sell the shares in your employer first and use the proceeds to clear the mortgage.

You have €1020k in assets with an €85k mortgage. So if you do decide to retain your mortgage, that is ok. It's not far wrong either way.

But 10% of your assets and 60% of your liquid assets are in your employer. That is not a good idea as Conor pointed out, so sell these as soon as it's tax efficient to do so.

 

[peemac]

Mortgage interest rate will be substantially lower than any possible car finance or an finance required for home renovations.

So with these two expenditures coming up, I'd hold off paying down the mortgage and try and do replacement car and renovations via savings. It will also give the option of doing some renovations earlier than planned.

 

[Brendan Burgess]

I'd hold off paying down the mortgage and try and do replacement car and renovations via savings.

That was my initial view, but when he said

House improvements also in the next 5 years, probably in 2028 or 2029. Estimate of 50k required for that

The house improvements are at least two years away, so I switched to paying off the mortgage as I think he will have plenty of savings to pay for the house improvements.

If he were going to be spending €50k in 2026 and would have to borrow for it, then holding onto the mortgage would be correct.