Start paying off BTL house or load pension

Sarenco

Frequent Poster
Messages
6,265
I don’t see how they afford to do that.

in fact, I’m sceptical that they afford the principal repayments out of their after-tax income even without the pension contribution.
 

_OkGo_

New Member
Messages
7
OP really needs to get professional advice on this!!!

Maybe I'm completely missing something here but this seems to have gotten sidetracked into the merits of a one off BTL

OP is seriously over borrowed on both properties and does not have the funds to pay for both. Loan to income (salary) is >8
There is no sign of saving history (no cash, very small pension , very little equity in properties). IF BTL has been interest only for 10 years, then where has the €50k profit dissipated to?
Cost of changing tenants at least twice in next 10 years, renovations needed, cost of sale means that future rental ''profit'' is totally dependent on house prices

What other living expenses does the OP have? what about cars?

Even with some +/- on the numbers below, I don't see how any of this works unless OP continues into retirement with huge debt
Net IncomeAnnualMonthly
Salary (53k+36k) (Tax calc inc health BIK and current pension) € 66,000 € 5,500
Rent a room € 10,000 € 833
BTL € 5,000 € 417
Total € 81,000 € 6,750
Mortgage expense (karls mortgage)AnnualMonthly
Mortgage BTL (10yr) € (34,416) € (2,868)
Mortgage PPR (10yr) € (45,312) € (3,776)
Mortgage PPR (15yr) € (30,996) € (2,583)
Mortgage PPR (20yr) € (23,844) € (1,987)Not an option, OP will be 70!
BTL 10yr + PPR 10yr € (79,728) € (6,644)
BTL 10yr + PPR 15yr € (65,412) € (5,451)
Leftover for all other expenses (for next 10 yrs)AnnualMonthly
10 year plan € 1,272 € 106
15 year plan € 15,588 € 1,299
 

Brendan Burgess

Founder
Messages
41,032
Hi OKGO

Welcome to Askaboutmoney. That is a very helpful detailed analysis.

I was responding to the question asked.

I got the impression from the following , that after they have increased the payment on the Buy to Let to Capital and Interest, then they will have €1,200 extra.

What specific question do you have or what issues are of concern to you?
I go through our finances and realise that we will have spare cash every month going forward from 2021. For now I would feel comfortable funneling about E1200 of it into either
But your figures show that either I have misunderstood the OP or that the information is incomplete.

If they can't afford the repayments, then there is no question. The property must be sold whether it is profitable or not.

Brendan
 

_OkGo_

New Member
Messages
7
Hi Brendan

Glad to join, have read and learned a lot from this valuable site :)

I think you are absolutely correct in relation to the OP's question. And for someone with a healthier equity and less risky position then it should be a no brainer to hold on to it.

But if the OP want's to retire at 65 with both properties, I'm struggling to see how they can make it work and meet all the capital payments. I think the only way the BTL benefits the OP is if they can negotiate another interest only period to give some buffer to plan the sale

Again just my opinion but I think professional advice needs to be sought to best plan a happy retirement for OP :)
 

SPC100

Frequent Poster
Messages
574
Figures above seem to be off

Annual gross income from employment or profession:
E53,000 due increase 7k
7k additional income not included

Usually max out rent-a-room each year of 10-14k ,
Only 10k modeled

Rolling vesting stock/bonuses of 6k from 2022 onwards tax free
This is not included (granted starts in 2022)

Mortgage on home
E430,000 - we've been paying 1980 pm - 20yrs lef
The cashflow cost of ppr is much lower than modelled

That all would create about 1.5k per month more cashflow than above.
 
Last edited:

_OkGo_

New Member
Messages
7
Figures above seem to be off
7k additional income not included
Not off, just realistic to highlight the issues. OP is 'due' an increase. If it is guaranteed, then great it is another €3.5k net to add above

Only 10k modeled
OP's range was 10-14k. Maybe they don't get to max it every year depending on timing of interns. And as they said, none at the moment because of current climate. They also need to commit to doing this every year for the next 15 years and beyond to rely on. They don't have the luxury of stopping this. +4k if they can guarantee it


This is not included (granted starts in 2022)
If these were granted at no cost to OP and vest tax free, then add to the above figure. If it is a typical ESPP, then OP is currently contributing so the net gain from 2022 onward is probably more like 1-2k, and dependent on share price
+6k or +1k/2k

The cashflow cost of ppr is much lower than modelled
If OP has any chance of retiring at 65, they need to clear the PPR in 15 years. It might make cashflow look good now but how do they fund it at 66-70 when there is not much in the way of pension currently in place

Either way, OP has outstanding debt of 738k on a net income somewhere in the range of 66-76k. If they have only built up ~150k equity in last 10-15yrs, how will they clear 738k equity in the next 10-15 yrs. There are also 2 kids who may or may not go for third level education. Only OP knows these answers and its why I suggest again that they need real professional advice to really plan their finances
 
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