Property or fund?

A

apollo11

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Messages
33
Age: mid 40s
Co-mortgagee age: early 40s
Both single.
Annual gross income from employment or profession: €47k
Annual gross income of spouse:
N/a
Monthly take-home pay
€2700
Type of employment: e.g. Civil Servant, self-employed
Private sector
In general are you:
(a) spending more than you earn, or
(b) saving? - this one

Rough estimate of value of home €240k
Amount outstanding on your mortgage: €160k
What interest rate are you paying? 0.6%

Other borrowings – car loans/personal loans etc - none

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card?

Savings and investments: €85k

Do you have a pension scheme?
Yes - see below
Do you own any investment or other property?
No
Ages of children:
None
Life insurance:
Only that required by mortgage

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

I've got about €85k in savings. I had my savings in notice accounts up to about 18 months ago when I decided to move to demand accounts in preparation to buy a "pension" property.

I have been putting any spare money into this savings pile at the expense of AVCs (only about €15.5k in that fund) thinking that when I did eventually get the property I could start horsing some of the return from that as well as my usual savings to make up the gap in AVCs. However, I'm really not having a huge amount of luck in the property search for one reason or another and also I'm reading more and more that property is just not worth it, that the returns aren't worth the effort? I'd be looking for something small enough; I have mortgage approval for property purchase up to 125k, so a one or two bed apartment, possible rental itr of €750-850pcm.

Let's face it interest rates for savers are rubbish right now, so what do you all think? Should I keep looking for another wee while for a property or should I try something else like an etf with some of it (I'm a little risk averse but I would only put some in) and then max out AVCs?

I'll need to buy a new car probably in the next 24 months as I'm hearing stories of ridiculous insurance bills on older cars (better car also sacrificed for the 'property pot'!)

Other info: I have a joint account with my co-mortgagee, a younger relative, living in the house, working well enough. We pay all bills out of that inc mortgage of €1064/month (overpaying a bit - actual itr of 900). All house stuff split 50/50. We also have rent a room income of €580/month, which is pretty stable.

Thanks in advance.

 
Just at a quick glance at your situation,I would stay away from property specially in such a small way.Theres alot of hassle and a lot of unseen expenses with investment property,everyone seems to have a hand in your pocket,If it were me I would probably go for a handful of blue chip shares with some of your lump sum, and maybe a monthly savings plan with some of your income.All in all you seem to be in a good overall situation.


Pat
 
Given current yields, BTL mortgage rates and our punitive tax regime, a leveraged property investment very rarely makes commercial sense in the current environment.

I would suggest that you should definitely be maximising your use of whatever tax-deferred pension space you have available to you.
 
Thanks all. Good to get advice from folks with a bit more know how than me! Appreciate it.
 
Agreed that you should keep away from property. You already have an investment in property.

The best return from your money is most likely to be in shares held via a pension fund, so max your contributions to that.

apollo11 said:
Age: mid 40s
Co-mortgagee age: early 40s
Both single.
Click to expand...

Are you happy enough with being a co-owner in the longer term? Have you or your co-owner any plans to go your separate ways and buy your own properties?

Even if you are, things can change. So you definitely should not tie yourself into an investment property which would be difficult to sell quickly and where the mortgage would limit your capacity to buy.

A few possible developments:

1) Your co-owner meets someone and wants to buy you out or sell the property. With a decent amount of cash and no borrowings, you may be able to buy him out and retain the tracker mortgage. (If you have an investment property, you might not qualify for the mortgage.)

2) You meet someone and want to buy a house together. With a decent amount of cash and not tied into an investment property, and a very profitable investment property, you should be able to do so. (If you have an investment property, your options would be limited)

3) There is a remote chance that the lender might sell on the tracker to a vulture fund who might do a deal with you for early repayment of the mortgage.

There are variations of the above as well. You both want out at the same time. You buy out your co-owner and then transfer the tracker to a new home.

Although you may have no such plans at the moment, circumstances change very quickly. The best way to exploit any such changes is to be flexible. Plenty of cash and low borrowings.

Brendan
 
Thank you Brendan. Yes it would be good to at least have the potential for my own place at some point; some food for thought.
 
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