Savings query for moving house

PTSBCase

Registered User
Messages
85
Hi, I’d like some advice please about how I should be saving:
Salary: €73,000
Age: 40
Marital status: Single
Savings: €25,000
Loans: none
Credit card: none
Shares: €55,000 (work scheme)
Salary forgo: €12700 into work scheme annually which includes annual bonus & €500 per month from salary (tax efficient)
Pension: DB
Plus avcs: 7.5% of salary into scheme
Rent: €500 rent a room scheme Monthly
Mortgage: €205,000 remaining
Mortgage term: 20 years remaining
Mortgage overpayment; €35,000 (mortgage should be €240k)
Mortgage: PTSB, 3.25%
My question is: I would like to move within the next few years.
Should I keep putting my savings into (a) mortgage, or (b) cash savings or (c) sell shares?
Thanks for all your advice
 

PTSBCase

Registered User
Messages
85
Hi, I’d like some advice please about how I should be saving:
Salary: €73,000
Age: 40
Marital status: Single
Savings: €25,000
Loans: none
Credit card: none
Shares: €55,000 (work scheme)
Salary forgo: €12700 into work scheme annually which includes annual bonus & €500 per month from salary (tax efficient)
Pension: DB
Plus avcs: 7.5% of salary into scheme
Rent: €500 rent a room scheme Monthly
Mortgage: €205,000 remaining
Mortgage term: 20 years remaining
Mortgage overpayment; €35,000 (mortgage should be €240k)
Mortgage: PTSB, 3.25%
My question is: I would like to move within the next few years.
Should I keep putting my savings into (a) mortgage, or (b) cash savings or (c) sell shares?
Thanks for all your advice
Should have said my property is worth €260k. Thanks in advance
 
Last edited:

skrooge

Registered User
Messages
345
Looking at your income, mortgage and repayments it looks to me as if you will have to sell to buy if you want anything around the value of your current property.

Logistically you will need enough funds for a booking deposit. Without this you don't be able to proceed with a purchase. A booking deposit will be about 10% of purchase price. Ideally you will have this in savings. Not sure what your intentions are but between your savings and stocks you likely have this. I would keep this amount in cash/savings rather than stocks.

If you have any stocks left over after the above the question becomes where's the best place to have this wealth. You're currently paying 3.25% on your mortgage. One way to look at your current position is you've leveraged your home to invest in stocks. For this to be a positive investment the after tax income on your stocks would need to produce a guaranteed (after tax) return in excess of 3.25%. That's a high bar in the current environment, a better use might be to offset the value of the stocks against your current mortgage.

Looking at your current mortgage, a rate of 3.25% seems high for your current LTV (<80%). I would look to take advantage of your overpayments and reduce the rate. You're probably better off switching provider. If your aim is to move in the next couple of years you should also look to maximise cashback offers now. Cashback will trump rate reductions in the short term. Even if you don't move house if you're an aggressive overpayer the same logic holds.

If you decide not to move an alternative option would be to get your LTV below 60% to avail of even lower rates. You're savings and stocks combined would get you very close to this but your probably better off doing this incrementally. It's always good to have a rainy day fund. The benefits of availing of cashback offers would still apply in this case.
 

50andOut

Registered User
Messages
140
Is there a minimum holding period for the company share scheme to avail of tax breaks?
 

Brendan Burgess

Founder
Messages
44,659
The key thing we need to know is what is the price range of the house you wish to trade up to?

I presume you are not trying to keep your current home as an investment?

As a single person, it's much easier to sell you own home first and then be free to buy. With kids, it's much more difficult.

1) Cash is king - stop making any voluntary payments into your pension scheme. You can catch up after you have bought the house and know where you stand. If your gross is higher, you may be able to get a larger mortgage.
2) You should not have shares in your employer's company after the tax benefit has expired. So, no matter how good you think it is as an investment, sell as man as you are allowed to.
3) You will have 10% in cash , so you do not need any other emergency or rainyday fund.
4) permanent tsb is the most expensive lender for existing customers. But I don't think it's worth switching as you intend to move to a new lender when you buy your own house.

When you are ready to trade up

1) Get loan approval from one of the non-cash back lenders. Avant is the cheapest followed by Finance Ireland and AIB.
2) I would not go to an expensive lender like permanent tsb to get cash back and hope to switch. The market is changing with the departure of KBC and Ulster. Pick a good lender now and plan to stay.
3) Put your own house on the market and if you get a good offer sell. When you have exchanged contracts, you will be able to exchange on a new house.

Brendan
 

PTSBCase

Registered User
Messages
85
The key thing we need to know is what is the price range of the house you wish to trade up to?

I presume you are not trying to keep your current home as an investment?

As a single person, it's much easier to sell you own home first and then be free to buy. With kids, it's much more difficult.

1) Cash is king - stop making any voluntary payments into your pension scheme. You can catch up after you have bought the house and know where you stand. If your gross is higher, you may be able to get a larger mortgage.
2) You should not have shares in your employer's company after the tax benefit has expired. So, no matter how good you think it is as an investment, sell as man as you are allowed to.
3) You will have 10% in cash , so you do not need any other emergency or rainyday fund.
4) permanent tsb is the most expensive lender for existing customers. But I don't think it's worth switching as you intend to move to a new lender when you buy your own house.

When you are ready to trade up

1) Get loan approval from one of the non-cash back lenders. Avant is the cheapest followed by Finance Ireland and AIB.
2) I would not go to an expensive lender like permanent tsb to get cash back and hope to switch. The market is changing with the departure of KBC and Ulster. Pick a good lender now and plan to stay.
3) Put your own house on the market and if you get a good offer sell. When you have exchanged contracts, you will be able to exchange on a new house.

Brendan
Thanks Brendan. I’m hoping to buy a home up to €350k. I’m hoping equity, savings and shares bridge the gap. My current home will be sold.
 

Brendan Burgess

Founder
Messages
44,659
You have €135k So you will need a mortgage of €215k which should be ok on a salary of €73k

But it's tight enough. A crash in the shares might put you in difficulty.

So the earlier advice of conserving cash and suspending pension contributions is even clearer now.

Brendan
 
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