Mortgage repayments in retirement

Poc-ar-buille

Registered User
Messages
18
Age: 55
I am due to retire in 2030 age 65.

I am looking for opinions on carrying repayments into retirement : two loans extent until 2035 and two loans until 2045.

Already contributing to pension, and hope to have a decent defined contribution pension.

Currently rental income on Invest1 is €1800 and hopefully over time this will increase.



PropertyBalanceMaturesRepayment TypeInterest RateMonthly Repayment
PDH30k
2035
Capital and Interest
Tracker 1.1%​
200​
PDH60k
2035
Capital and Interest
Tracker 1.1%​
380​
Invest1105k
2045
Capital and Interest
Tracker 1.1%​
410​
Invest1180k
2045
Interest Only
Tracker 1.1%​
160​

So my question is: is above manageable in retirement? Or I should target one or more of those repayments to be paid off before retirement?

Another idea is to accelerate payments into the 105k loan so that by age 70 (2035) I would have just one loan remaining : the interest only €160

In other words by putting approx 50k into the Invest1 105k early it would be paid off by 2035.

Would that make sense?
 
Last edited:

cremeegg

Registered User
Messages
3,560
Is this 2 properties with 2 mortgages on each ?

If so you will have about €35k outstanding on the PDH when you retire with monthly repayments of €580.

You will have €252k (approx ) outstanding on the Investment property with monthly repayments of €570.

Rental income €1,800 (I wouldn't count on any increase).

Even after tax that's probably manageable. Then after 5 years the mortgage on the PDH will be cleared and your repayments will go down to €570.

When you are 80 if I understand correctly you will have a demand for the €180k repayment, presumably the plan is to sell. What is the current value of the property, how likely are you to achieve that price.

How concerned are you having to manage property and tenants into your late 70s. Do you see it as a worry or something that will keep you busy/active.

What options do you have, the question 'is it manageable' is irrelevant if you have no choice. Could you sell and clear the mortgage on the investment property, would there be deferred taxes. Only if you could sell is it worth thinking about.
 

Poc-ar-buille

Registered User
Messages
18
Is this 2 properties with 2 mortgages on each ?

If so you will have about €35k outstanding on the PDH when you retire with monthly repayments of €580
Correct

Just thinking about it

By paying down the 30k and 60k quicker eg before retirement, which will cost 35k
would mean having additional monthly cash of €580 age 66 onwards. Which would be useful before state pension kicks in.

That probably makes most sense.

Then having €570 repayments on the investment for remaining 15 years. At least will have interest deduction on tax.
 

Brendan Burgess

Founder
Messages
44,659
Take the investment property first.

Your retirement date is completely irrelevant.

  • The rental income exceeds the repayment comfortably.
  • It is a cheap tracker, so it's very profitable.
So, you do not overpay it or pay it off early.

The only exception would be if it becomes difficult to manage, but that is a personal choice.

Brendan
 

Brendan Burgess

Founder
Messages
44,659
If you are going to repay any loan, it should be the home loan because you get no tax relief on the interest paid, whereas you get tax relief on the rental property.

And the investment tracker is more valuable as it's for a longer period.

Brendan
 

Brendan Burgess

Founder
Messages
44,659
is above manageable in retirement?

This illustrates another principle.

Don't make any hard decisions now about something that might happen in 9 years.

So look at today's situation and the question becomes

Should I repay a cheap tracker mortgage now or do something else with the money?

You don't give us any other information e.g. about your income or pension situation. But with 10 years to go to retirement, you should be stuffing your pension fund, unless you already have it exceeding €800k. And even if it is exceeding €800k, you should probably be stuffing it ahead of paying down your mortgage.

You will get 25% of whatever you put into your pension fund back tax-free. So if you build up a fund of €400k, you will have enough to clear your mortgage with the tax-free lump sum.

Brendan
 

Brendan Burgess

Founder
Messages
44,659
Ah, I see that we have already asked you for the full information and that you are €20k in arrears.


So you should clear the arrears on your mortgage first.

Brendan
 

Poc-ar-buille

Registered User
Messages
18
Thanks Brendan

The arrears already cleared. Mainly via arrangement with the bank.

And yes I am contributing to the pension.

So I'm not neglecting the pension.

Thanks again
 
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