Age: 43
Spouse’s/Partner's age: 40
Annual gross income from employment or profession: €28K for the next 15 months, €44K from Jan 2019
Annual gross income of spouse:€44K
Monthly take-home pay €5500 (incl Child Benefit and other specific allowances. Tax credits are higher than standard PAYE employees)
Type of employment: e.g. Civil Servant, self-employed
Me: Public sector (post 1995, pre 2010), Spouse: Private sector
In general are you:Covering all outgoings, bills, utilities, insurances, therapies for special needs child, mortgages and tax bill on rental property, not saving or reducing credit card bill which is a concern.
Rough estimate of value of home: €400K
Amount outstanding on your mortgage: €310K
What interest rate are you paying? 3.62% SVR - while disposable income is higher than in previous years banks will not consider switching to avail of lower rate as on paper income is reduced. Reason: My income is currently reduced as I chose to reduce hours for 2017 and 2018. Currently earning approx €18k from employment and €10k from Carers Benefit. Carers Benefit will cease in Jan 2019. Ideally would like to continue on reduced hours for another few years after that but will not qualify for any SW payment.
Other borrowings – car loans/personal loans etc:
Me: €300 per month, will finish in 12 months. Spouse: €200 per month, will finish in 7 months.
Savings and investments: None
Do you have a pension scheme? Me: Public Sector Superann Scheme, Spouse: Private Pension
Do you own any investment or other property? Rental Property, former PPR. Approx value: €250K. Outstanding mortgage: €82K. Interest rate: 3.7% SVR. 10 years left on mortgage.
Mortgage: approx €900 per month (incl insurance), rental income: €1350 per month. Property in good location and in good condition.
Ages of children: 7 & 8
Life insurance: Just mortgage cover on both properties
What specific question do you have or what issues are of concern to you?
Number of concerns:
1. The second property has been rented out for the last 7 years. The first 5 years were a struggle as rents achieved were significantly lower than now but sale prices had dropped so much in those years and with very few viewings we chose to hold out and hope for a better selling environment. If we sell now we could have a potential gain of approx €140K taking taxes, remaining mortgage and fees into account. This could reduce the PPR mortgage and allow us to switch to a more favourable rate on PPR as our incomes and the LTV would meet criteria for the banks. However we would still be looking at a 20 yr mortgage. We would also remove the stress of being an accidental landlord and all that goes with that. On the other side the rent on the second property is now more favourable and helps with the reduced income that we now earn. It will be clear of all mortgage debt in 10 years and could potentially clear almost all of the outstanding mortgage debt on PPR at that point which would mean we would be close to mortgage free in 10 years. It feels a little like we managed through the difficult time financially of rents being lower than now and maybe we should see it out now that it is proving more beneficial. We are of course aware that rents and property prices could drop again and the situation may not be as good as it is now. It is, however, appealing to be mortgage free in our early 50's and this is also the time that our children could be looking at third level so we need to consider that expense too.
3. Just to put a spanner in the works spouse employment is looking a little shaky and we could see potential redundancy in the next 12 months or at a minimum significant changes in income and/or T&C's. That said, we always have the option of me going back to work full time and spouse taking over my role as the reduced income earner. It would mean a change in the improved work/life balance that we have achieved this year but needs must.
Just finding it hard to weigh up everything and see a clear picture.
Spouse’s/Partner's age: 40
Annual gross income from employment or profession: €28K for the next 15 months, €44K from Jan 2019
Annual gross income of spouse:€44K
Monthly take-home pay €5500 (incl Child Benefit and other specific allowances. Tax credits are higher than standard PAYE employees)
Type of employment: e.g. Civil Servant, self-employed
Me: Public sector (post 1995, pre 2010), Spouse: Private sector
In general are you:Covering all outgoings, bills, utilities, insurances, therapies for special needs child, mortgages and tax bill on rental property, not saving or reducing credit card bill which is a concern.
Rough estimate of value of home: €400K
Amount outstanding on your mortgage: €310K
What interest rate are you paying? 3.62% SVR - while disposable income is higher than in previous years banks will not consider switching to avail of lower rate as on paper income is reduced. Reason: My income is currently reduced as I chose to reduce hours for 2017 and 2018. Currently earning approx €18k from employment and €10k from Carers Benefit. Carers Benefit will cease in Jan 2019. Ideally would like to continue on reduced hours for another few years after that but will not qualify for any SW payment.
Other borrowings – car loans/personal loans etc:
Me: €300 per month, will finish in 12 months. Spouse: €200 per month, will finish in 7 months.
Savings and investments: None
Do you have a pension scheme? Me: Public Sector Superann Scheme, Spouse: Private Pension
Do you own any investment or other property? Rental Property, former PPR. Approx value: €250K. Outstanding mortgage: €82K. Interest rate: 3.7% SVR. 10 years left on mortgage.
Mortgage: approx €900 per month (incl insurance), rental income: €1350 per month. Property in good location and in good condition.
Ages of children: 7 & 8
Life insurance: Just mortgage cover on both properties
What specific question do you have or what issues are of concern to you?
Number of concerns:
1. The second property has been rented out for the last 7 years. The first 5 years were a struggle as rents achieved were significantly lower than now but sale prices had dropped so much in those years and with very few viewings we chose to hold out and hope for a better selling environment. If we sell now we could have a potential gain of approx €140K taking taxes, remaining mortgage and fees into account. This could reduce the PPR mortgage and allow us to switch to a more favourable rate on PPR as our incomes and the LTV would meet criteria for the banks. However we would still be looking at a 20 yr mortgage. We would also remove the stress of being an accidental landlord and all that goes with that. On the other side the rent on the second property is now more favourable and helps with the reduced income that we now earn. It will be clear of all mortgage debt in 10 years and could potentially clear almost all of the outstanding mortgage debt on PPR at that point which would mean we would be close to mortgage free in 10 years. It feels a little like we managed through the difficult time financially of rents being lower than now and maybe we should see it out now that it is proving more beneficial. We are of course aware that rents and property prices could drop again and the situation may not be as good as it is now. It is, however, appealing to be mortgage free in our early 50's and this is also the time that our children could be looking at third level so we need to consider that expense too.
3. Just to put a spanner in the works spouse employment is looking a little shaky and we could see potential redundancy in the next 12 months or at a minimum significant changes in income and/or T&C's. That said, we always have the option of me going back to work full time and spouse taking over my role as the reduced income earner. It would mean a change in the improved work/life balance that we have achieved this year but needs must.
Just finding it hard to weigh up everything and see a clear picture.
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