probably makes more financial sense long term to hold onto it given the cheap finance
I get that in absolute terms holding onto it will likely make us ultimately more wealthy, but I guess what I'm toying with is whether people think the trade off of less wealth from the investment but more time to enjoy the improved quality of life is worth it.You said it yourself
Paying down your PPR mortgage would clearly improve your cash flow and that's certainly a valid consideration.I know it probably makes more financial sense long term to hold onto it given the cheap finance, but the potential quality of life improvement by being mortgage free by our mid/late forties when we're young enough to enjoy it might outweigh having more money than we need in our 60s, given that all things being equal, we should have adequate pension provision, even without the likely inheritances.
Income | 16,800 |
Costs inc interest | 2,500 |
Tax | 7,200 |
Approximate Profit | 7,100 |
Investment | 133,000 |
ROI | 5.3% |
Cash outgoings Repayments, Tax, Costs | 10,800 + 7,200 + 1,000 = 19,000 |
Cash Income | 16,800 |
Cash Deficit | 2,200 |
I get that in absolute terms holding onto it will likely make us ultimately more wealthy, but I guess what I'm toying with is whether people think the trade off of less wealth from the investment but more time to enjoy the improved quality of life is worth it.
Rent is currently 1350 pcm, will rise to 1400
That looks like a material underestimate - the mortgage interest alone will come to €1,681.Costs1,000
That looks like a material underestimate - the mortgage interest alone will come to €1,681.
I would suspect that the net, after-tax profit on the rental is in the region of €5,500 - €6,000.
By cashing out the equity in the rental, the OP would save around €4,207 in interest payments ((€153k@2.75%).
Is a €1,300-€1,800 differential sufficient reward for all the risk and hassle of running a property rental business?
That still looks a bit on the low side to me - even if the rental is self-managed.Costs inc interest2,500
The OP now seems to be confident that the house would sell for €330k (equivalent to the original purchase price).I wouldn't count on any capital appreciation, but it could happen and the first €20k would be tax free.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?