Sell our house to move up the property ladder or keep it as an asset?

NorthernLass

New Member
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3
Age: 31
Spouse’s age: 31

Annual gross income from employment or profession: 47k
Annual gross income of spouse: 67k + approx 7k bonus
Monthly take-home pay: €6100 approx
Type of employment: Public and private
In general are you: Saving

Rough estimate of value of home: 185,000
Amount outstanding on mortgage: Around 120,000
What interest rate are you paying? 2.9% I think. We pay €550 month variable with AIB.

Other borrowings: None.....paid off the wedding and car loans in full last month which felt great!

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

Savings and investments:
35k savings (plus another €4400 that we're waiting on KLM to refund us due to cancelled flights that we will add to our savings). We can save approx 2.5k a month, it has been closer to 4k a month during lockdown but that won't last.

My husband has a scheme at work where he buys €100 worth of company shares every month deducted from his gross pay, I don't know much about that but I think he has approx €3000 in shares.

Do you have a pension scheme?
Yes public pension scheme for me, not sure what that's worth, only joined the public service a few years ago. My husband pays 5% and his company pays 10% in to his pension, not sure what that's worth either. He's only been paying in to a pension for the last 3 years.

Do you own any investment or other property? No
Ages of children: No kids.
Life insurance: Yes €21 a month.



Hi all,

I'm not usually one to pay too much attention to money but all the downtime during lockdown has made me start looking more closely at our finances and our future. It's been a real wake up call to see how much we've saved while the pubs and shops have been closed. I plan to get much more serious with our savings going forward and think we should be able to save €30,000 a year easily enough since our outgoings are low (€750 a month for mortgage and bills). We have been pretty frivolous with money through the years while half heartedly saving to move up the property ladder someday.

We bought a home in 2014 for €138,000 and we had it valued recently for €185000. We never really planned to stay here longterm but it made sense to buy at the time because rents were on the rise and this mortgage was all we could afford, my husband was out of work at the time and I was on a lower income. Our mortgage is €550 a month which is super affordable for us these days. The house is fine, it's an older house but it's city center (not Dublin), 3 bedrooms, 1 bathroom, a decent garden and walking distance to loads of amenities.

The plan has always been to save towards a deposit and eventually sell this home and move up the ladder. We'll be looking in the €350k-€425k range when we move. We're not in any big hurry to move either, where we are suits us fine for now. Somedays I think we should just stay put because I love the disposable income this place gives us. My main issue with our current home is the one bathroom but it's also cold in the winter and hot in the summer.

Now, my question is......are we better off to stick with the plan, save a bit more and sell this house and use the equity towards our next deposit. Or, would it be worth considering saving an entire 20% deposit for the next house over the next few years and keeping this house as an investment? The thinking being that we could rent this house out and use the rental income to cover at least most of the mortgage.

Is it worth the hassle? Is it better to sell soon while the house is worth a lot more than we paid for it or is there more benefit to having it as an asset for the future? Is there any other smarter options that I'm missing?

Sorry I don't know a lot about any of this but I've been reading a lot of threads on this forum over the last couple months which as really made me start questioning what we should be doing with our money. It's thanks to reading this forum that we decided to get rid of all our loans recently and I've cut down on a lot of bills. Up until now we haven't thought much about finances other than ensuring we always save a bit each month.

Very much appreciate any insight!
 

NoRegretsCoyote

Frequent Poster
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1,422
Your plans (if any) to have kids would be very useful to know about.

Childcare is expensive and it impacts what a bank will lend.
 

Sarenco

Frequent Poster
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6,176
One key question to ask is whether the projected rental income from the house, after all expenses and taxes, will exceed the projected interest savings by cashing out the equity in the house and using it to pay part of the purchase price for the new home.

This thread provides a framework for running the numbers -

 

NorthernLass

New Member
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3
This thread provides a framework for running the numbers -
Thanks for the link, it was very relevant and helpful.

I guess what I was thinking is that rental income wouldn't cover all expenses when tax, insurance etc is taken in to account but would at least be paying for the majority of the mortgage and we'd be building up equity for a lot less.

The valuation we got before buying the house in 2014 listed the projected rental income as €950 a month, I don't think our most recent valuation included projected rental income.
 

Drakon

Frequent Poster
Messages
703
When I saw the title one question jumped out at me. Why? Why do you want to climb the property ladder?
Is “climbing the property ladder” not a term from the Celtic Tiger days, like “contracts for difference” or “starter home”?
Admittedly, I’m living in my third house. But the first was in Dublin City, the next in rural Ireland, and an currently Cork City. I moved location considerably so I don’t regard it as property ladder moves.
During the housing bubble, people were encouraged to get in fast, somewhere small, and every few years “trade up”. I just think of the hassle, solicitors, fees, stamp duty, and myriad of expenses.

I think the first thing you should ask is what is wrong with where you are? And what is right with where you are? You know the answers to these yourself. Alas, you can ask the same questions about the next rung, but you won’t know ‘til you’ve climbed it.

When I think of my childhood friends, and my parents, they bought one house and lived in it ‘til old age and death. The few exceptions that did move house were moving town. I certainly know no one of that generation that moved house within the same town or city.
Did they live lesser lives as a result?
Will you be happier if you move?
I can’t answer that last question for you. But I’m pretty sure your bank manager and your solicitor and a few others will be happier.
 

NoRegretsCoyote

Frequent Poster
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1,422
Very much undecided there but I couldn't imagine us having kids before age 35 at least. So not in the next 4 to 5 years.
In my experience you won't really know your needs until you have kids. You will want proximity to a very different set of amenities when kids arrive, and this won't be entirely clear until you do have them. We've moved three times since #1 was born (for various reasons) but only now are we happy with where we are.

Otherwise, and this is life advice not personal advice, don't leave it too long if you want to have kids at all. I know lots of people who encountered fertility issues having started trying only in their late 30s.
 

Setanta12

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Messages
1,177
In my experience you won't really know your needs until you have kids. You will want proximity to a very different set of amenities when kids arrive, and this won't be entirely clear until you do have them. We've moved three times since #1 was born (for various reasons) but only now are we happy with where we are.

Otherwise, and this is life advice not personal advice, don't leave it too long if you want to have kids at all. I know lots of people who encountered fertility issues having started trying only in their late 30s.
+1,000,000 ! So so true. You may think you know what you will need - kids have a fantastic habit of disrupting the best-laid plans.
 

Feemar5

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388
If you are happy in your current home would it be feasible to extend and upgrade it? I would ask myself

1. Is the area convenient to your work
2. Do you drive or use public transport
3 Are there good schools in the area
4. Where would you like to move to and has that area better facilities than where you now live.

Regarding renting you will most likely be paying tax on the profit at the higher rate and laws are changing for landlords so you may not be able to sell the house if you decide to do so two or three years into the tenancy. Is the worth the hassle.
 
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Peanuts20

Registered User
Messages
171
ask yourself a simple question first. Do you want to be a landlord, with all the hassle and costs associated with that at a time when you might be dealing with kids and childminding etc. ? If the answer to that is No, then sell and move on
 
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