opinion on my financial situation

G

Giulia

Registered User
Messages
16
Age
Me: 29
Spouse: 28
Employment
Me: treasury operator
Spouse: recruitment consultant

Gross Income
Me: 32k
Spouse 44k+bonus (another 30k now before it was higher)


Property
Family home: worth 290k, 310k fixed mortgage with EBS @ 4.80 , 27 years left on mortgage
with the interest relief taking into account our mortgage is 1,250 per month.Other Borrowings: None. 2 credit card paid in full each month

Savings
11k in AIB saving account

14k in Bank of Ireland Saving Account

5k shares

13 K Irish Life Fund

5k built up between our two current accounts

right now we are saving around 2,000 per month

Pension: Me: No Spouse: yes

Kids: Yes , 1 daughter 2yrs old

Life Insurance: Just mortgage protection policy

Spender or Saver: Savers

My Question/s:

Three years ago we bought an apartment, with our daughter getting older we would like to move in the next 5 years. With house prices falling I'm worried that in five years things will be worse for us.
We would like to keep the apt as an investment as it's 2 miles from the city centre (Dublin) and eventually our daughter will have it.
We are being very carefull with money, no phone bill, no internet, tv basic package, one old car, we bring our lunch to work, my husband cycle to work..
I'm just worried in general. Just would like to know what you think.
Thanks
 
Can you clarify if the apartment if your family home or if you have a family home plus an apartment?
 
Hi Giulia

You don't face any immediate decision do you?

You are not in a position to trade up just at the moment, so don't worry about it.

You are managing your finances fairly well.

You have a mortgage of 310k and 48k in savings. If you can pay this off your mortgage without penalty, you should do so.

I don't think you will be in a position to retain the apartment as an investment and buy a family home. If you think that you might be able to do so, then you might hold off paying down the mortgage. This is because you are better off having as high a mortgage as possible on an investment property.

I really would not worry about what happens to your daughter in 20 years. Surviving the present and the next few turbulent years with a decent financial base should be everyone's priority.

Brendan
 
I don't really get this thread. There is nothing in the post to suggest that you should be 'worried', as you put it.
 
My worry is to not to be able to move in the next 5/6 yrs , if houses prices keep falling.
The location of the apartment now suits me but eventually I would like to move.

My strategy now is just saving as much as I can.

Welfarite: you are right, my issue is probably that I worry too much.

Thanks
 
Brendan said:
Hi Giulia

You don't face any immediate decision do you?

You are not in a position to trade up just at the moment, so don't worry about it.

You are managing your finances fairly well.

You have a mortgage of 310k and 48k in savings. If you can pay this off your mortgage without penalty, you should do so.

I don't think you will be in a position to retain the apartment as an investment and buy a family home. If you think that you might be able to do so, then you might hold off paying down the mortgage. This is because you are better off having as high a mortgage as possible on an investment property.

I really would not worry about what happens to your daughter in 20 years. Surviving the present and the next few turbulent years with a decent financial base should be everyone's priority.

Brendan
Click to expand...

my mortgage has a fixed rate until november 09.

Thanks
 
If house prices are falling, you are saving 2k per month and you are not planning on selling your apartment - where does the problem lie?

In your hypothyetical scenario -
in 5 years your savings will have increased - the price of houses decreases and the apartment is irrelevant as you will keep/rent out.

so surely this market is ideal for your situation and future plan?

Paddy
 
Giulia said:
Employment
Spouse: recruitment consultant
Spouse 44k+bonus (another 30k now before it was higher)
Click to expand...

:eek::eek:

Some bonus! The only worry I would have on this thread is that that would drop off very soon.....
 
Well you are in major trouble with the appartment in 5-6 years you can expect it to be worth 80k I'm afraid as with all the property available now nobody wants an appartment.
 
I think that flippant comments like that SteveW9 are very unhelpful. Unless you know for certain that it will be worth 80k in 5 years then I would not make sweeping statements like that.
 
Stewe: that probably would'n be so bad because I could buy a house with my savings then and keep the apartment.
 
Thats true Giuila, thought about Steves post afterwards and I was thinking I would love it if I could get a nice apartment for 80k in a few years time!
 
paddyodoors said:
If house prices are falling, you are saving 2k per month and you are not planning on selling your apartment - where does the problem lie?

In your hypothyetical scenario -
in 5 years your savings will have increased - the price of houses decreases and the apartment is irrelevant as you will keep/rent out.
Click to expand...

I think this is a bit of a simplistic view. If (as you assume here) house prices continue to decrease over the next five years, the apartment will move further and further into negative equity. I would assume that having a mortgage on an apartment in negative equity will have an impact on the amount a bank would offer as a new additional mortgage?
 
jnh said:
I think this is a bit of a simplistic view. If (as you assume here) house prices continue to decrease over the next five years, the apartment will move further and further into negative equity. I would assume that having a mortgage on an apartment in negative equity will have an impact on the amount a bank would offer as a new additional mortgage?
Click to expand...

Worrier as I am, I wouldn't add a mortgage to another one. that would kill me:D
 
Giulia said:
Worrier as I am, I wouldn't add a mortgage to another one. that would kill me:D
Click to expand...

Then I'm confused - if you intend keeping the apartment and buying another house, do you intend buying without a mortgage?
 
deedee80 said:
Thats true Giuila, thought about Steves post afterwards and I was thinking I would love it if I could get a nice apartment for 80k in a few years time!
Click to expand...
All indicators point to the fact that you will be able to
 
and what will you do with the appartment when it falls you will not even be able to rent it out
 
In 5 years time you will have reduced the mortgage somewhat. If at that time the rent will easily cover the mortgage plus other costs, there would be no reason why you could not keep it. The location is very important in relation to this. If you continue to save you should be able to have a large deposit and thereby having a low mortgage on your new home. There are tax advantages to having a mortgage on a rental property which is why it is nearly always better to have a high mortgage on rental propety. One can only really look at the circumstances nearer to 5 years time as it is too difficult to 'predict' what way prices will go. You are easily covering your current mortgage and saving too, I don't see any problems currently for you.
 
Sorry if I'm being dense, but why is it a good idea to have as high a mortgage as possible on an investment property?
 
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