Take the following scenario:
My colleague Aidan has a PPR worth 400K in Galway, with a 195K mortgage on it. His job is mobile and he can re-locate anywhere in Ireland and his job earns him 70K per year gross. His wife has a fixed place of work in Galway and she earns 40K per year gross. Aidan also has an investment property in Donegal worth 250K with a 214K interest only mortgage on it and €700 per month rental income, just lagging the mortgage payment at the moment. Less than 30% of Aidan's net income services both mortgages. Aidan and his wife’s plan is to re-locate to Donegal at some point, but the critical question is when ?
Capital appreciation on the Galway house and the Donegal house has been extremely positive. Both houses offer a similar standard of living, the Donegal house being slightly larger and detached.
If Aidan were to sell his Galway house, he could clear his Donegal house mortgage completely (with a minor adjustment), re-locate there and live mortgage free and carry on with his job as normal. He could then expect to invest 30-40K per year into new projects, and provide a passive income for his family. On the other hand his wife would be un-employed for a period, and would probably struggle to find a job in Donegal approaching the standard of the job in Galway. In the current economic climate, does it make financial sense to give up one job and be essentially mortgage free? Aidan’s wife to date has not managed to find a job she could transfer to in Donegal but does not particularly mind being un-employed for a period in between.
If Aidan stays in Galway, neither he nor his wife would be able to clear their Galway mortgage for a long time (20 years on existing payments), and have no particular long term plans to stay there. At the moment they are staying because of a rising property market, but are conscious of not being too greedy in that respect either.
This I suppose is essentially a lifestyle choice for Aidan and his wife but I thought I would run it past you so that you could highlight anything you think is relevant.
My colleague Aidan has a PPR worth 400K in Galway, with a 195K mortgage on it. His job is mobile and he can re-locate anywhere in Ireland and his job earns him 70K per year gross. His wife has a fixed place of work in Galway and she earns 40K per year gross. Aidan also has an investment property in Donegal worth 250K with a 214K interest only mortgage on it and €700 per month rental income, just lagging the mortgage payment at the moment. Less than 30% of Aidan's net income services both mortgages. Aidan and his wife’s plan is to re-locate to Donegal at some point, but the critical question is when ?
Capital appreciation on the Galway house and the Donegal house has been extremely positive. Both houses offer a similar standard of living, the Donegal house being slightly larger and detached.
If Aidan were to sell his Galway house, he could clear his Donegal house mortgage completely (with a minor adjustment), re-locate there and live mortgage free and carry on with his job as normal. He could then expect to invest 30-40K per year into new projects, and provide a passive income for his family. On the other hand his wife would be un-employed for a period, and would probably struggle to find a job in Donegal approaching the standard of the job in Galway. In the current economic climate, does it make financial sense to give up one job and be essentially mortgage free? Aidan’s wife to date has not managed to find a job she could transfer to in Donegal but does not particularly mind being un-employed for a period in between.
If Aidan stays in Galway, neither he nor his wife would be able to clear their Galway mortgage for a long time (20 years on existing payments), and have no particular long term plans to stay there. At the moment they are staying because of a rising property market, but are conscious of not being too greedy in that respect either.
This I suppose is essentially a lifestyle choice for Aidan and his wife but I thought I would run it past you so that you could highlight anything you think is relevant.