Moneymakeover Pay down mortgage and live a little (or not)

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Notterbox

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Personal details

Your age: 44
Your spouse's age: 44

Number and age of children: 4 kids (13, 10, twins - 6)


Income and expenditure
Annual gross income from employment or profession: €122,000
Annual gross income of spouse/partner: €70,000 (working shorter days)

Monthly take-home pay: €8,100

Monthly cost of 'running the house' including mortgage on a monthly basis is circa €5,250 (based on detailed analysis of last 3 months spend) which we contribute proportionately to a joint account. Outside of that and personal spending we save, contribute to AVC''s and spend money on trying to have a life of our own.

Type of employment - me in public sector and spouse in private sector

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


Summary of Assets and Liabilities
Family home value: €650,000
Mortgage on family home: €95,000
Net equity: €545,000

Cash: €70,000 total
State Savings Childcare €35,000
Credit Union €18,000
Term savings €17,000
(Not including separate holiday savings account and account for minor house work / rainy day fund with fluctuating balances)

Pension Information
Self €90,000 in historic employer scheme and actively contributing €250 per month to PRSA AVC (balance of €5,000). Currently am a member of public sector pension scheme since 2018.
Spouse €130,000 and historic DB scheme forecast to pay €4k p/a in todays money

Total net assets: €745,000


Family home mortgage information
Lender AIB
Interest rate 2.1%
Type of interest rate: tracker, variable, fixed. Fixed (paying €1350 per month)
If fixed, what is the term remaining of the fixed rate? Ending March 2026
We have been overpaying throughout and although the term can be pushed to 2038 it is on track to be paid sooner

Remaining term: (Original term is not relevant)
Monthly repayment:

Other borrowings – car loans/personal loans etc

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

Other savings and investments:


Other information which might be relevant

Life insurance: Policy with mortgage and public sector pension scheme also provides adequate cover. Spouse has separate adequate cover.

I am the co-owner of property with siblings which will most likely be sold in 2029 (for tax reasons). This currently makes a very low net return of circa €2k per annum but on sale could yield circa €150k. As this is not fully in my control and makes low yield I have not included it above.

Kids will not be attending fee paying school.

We are seriously considering an attic conversion costing circa €70,000, although this is not urgent and can wait until 2029.

No interest or need to change house in the medium term.

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

We are currently reassessing what to do in the medium to longer term and using the end of the mortgage fixed term as an opportunity to decide. We are very lucky to be in secure employment, have 'broken the back' of the mortgage and are through the hard years with the kids. We are looking to live a little more, spend money on experiences with kids while it is mutually enjoyable and take a whole fresh re-look at our finances.

For years we had been earmarking savings for attic conversion, but for various reasons do not want to do this in near term. My current thinking is that we reduce the mortgage by circa €60,000 next March (leaving a balance of €30k). We push the mortgage term out and reduce monthly payments to circa €300 per month, paying it off at our ease. It would involve leaving circa €6,000 rainy day fund and top up holiday account by circa €9,000.

I am conscious that we are very likely candidates for 'lifestyle creep' and want to be deliberate in avoiding this by segregating money for specific purposes (holidays and longer term work to house).

Also aware that most advice would perhaps push us to max out AVC's but at our ages I still think we have ample time to build up pension pots, however I get the feeling that the window to live a little with our kids is getting shorter and we should strike while we can.

Life ain't a spreadsheet, but I would welcome any advice, especially if the proposal to make a lump sum payment off mortgage sounds daft!
 
Prioritising enjoying family life is the right idea.

You are well off and you have ok pensions for your age.

I would keep things simple and set the €70k against the mortgage. You can do that now. You don't need to wait until the fixed rate is up. Any penalty will be very small.

You don't really need a rainy day fund with two good salaries and a low mortgage.

Of course, keep enough money for any actual envisaged expenditure in the very near future e.g. holidays, a new car or an attic conversion.


Keep up the current level of mortgage repayments and you will have cleared your mortgage in no time.

Then come back and ask where you should invest your savings.

Brendan
 
Think about your children's college years.
If you live in or very near Dublin, great - they can live at home.
Otherwise allocate about 60k per kid for a 4 year degree if they go to college - for accommodation, fees and living expenses.

If it were me, I'd not be putting my savings into the mortgage as it's already relatively small and low interest rate.
It'd take a while to earn back 70K in savings.
Just another point of view.
 
15K per year is optimistic for kids living away from home going to college in Dublin
 
Also look at your kids ages. How badly do you need the attic extension? I would argue you might get more benefit from this than paying down your mortgage. Particularly if they will live at home in college, you will almost certainly have to do this work so the sooner you do it the sooner you benefit from it.
 
Thanks for all the replies and feedback. We are in the Dublin area so college options should be accessible enough.

I hear ya @cremeegg and I am (hopefully) not being naive but it does feel like we are through the labour intensive years with the kids and starting to see some of the light - totally acknowledge there is a long way to go yet.

I have read a bit of Morgan Housel recently and alot of what he says makes common sense to me. The decision is probably going to be more of an emotional one that purely financial. I think the feeling of achieving a greater level of financial independence means we will veer toward the downpayment route.
 
I think possibly the attic conversion would be a good addition, teenagers like their own space and that is needed to keep harmony in the home!
Whilst you don't plan to have school fees for the teenage years they are very expensive years in a different way..... school trips/events, Gaeltacht, grinds if needed, extra curricular activities are in my experience a costly part of teenage life
 
Dee1975 said:
I think possibly the attic conversion would be a good addition, teenagers like their own space and that is needed to keep harmony in the home!
Click to expand...
If there is room then a good sized garden room/house is a cheaper investment.
 
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