Struggling , juggling kids and work.

sonandheir

Registered User
Messages
42
Hi Ford25,

I would not pay down your mortgage based on a 1.1% return on your money.

You've just had the 200k tied up in a saving account for 6 years which you could not touch to earn around 1% return per annum.

If you pay the mortgage you will never be able to access that money ever. I know the consensus here on AAM is that you can save the mortgage payments over the next few years but with a 6 person household the money day to day/month to month just goes. I have 4 kids too and have stopped prioritising overpaying the mortgage so that I have cash in hand for the inevitabilities of life that arise.

Think of your mortgage as an insurance policy. You can hang on to the 160k and only have to pay 1% interest(that's assuming you don't do anything with it, and I would say supporting your family and raising your kids through their most influential years while working only 3 days is a super investment in your family's future)
 
  • Like
Reactions: jim

Brendan Burgess

Founder
Messages
44,868
Think of your mortgage as an insurance policy. You can hang on to the 160k and only have to pay 1% interest

That is a reasonable way of looking at. However, it's a repayment mortgage, so he is obliged to repay chunks of capital every month. With 17 years, to go, he will be just saving his money to repay the capital a few years later and paying interest in the meantime.

He will still have plenty of cash after he clears his mortgage, so clearing his mortgage is correct in this case.

1633954122312.png
 

Ford25

New Member
Messages
17
That is a reasonable way of looking at. However, it's a repayment mortgage, so he is obliged to repay chunks of capital every month. With 17 years, to go, he will be just saving his money to repay the capital a few years later and paying interest in the meantime.

He will still have plenty of cash after he clears his mortgage, so clearing his mortgage is correct in this case.

View attachment 5825

That's a great calculator, I was just looking 10 year state savings pays 10% after 10 years.
If I put 160k in I'd make 16k
If I pay 160k off mortgage adding 10 years interest it's 12.7k.
I'm trying to work out what I'm missing that's obvious as interest on mortgage is higher than savings 1.1% v 0.96%.?
 

Brendan Burgess

Founder
Messages
44,868
Don't worry about those calculations. Just pay off your mortgage.

If the interest on your loan is higher than the interest on your deposit, you are going to pay more.

And the interest rate on your mortgage will increase, while the rate on the state savings is fixed, I assume.

Brendan
 

NoRegretsCoyote

Registered User
Messages
3,180
If he had a mortgage of €160k and €30k cash, then it would be worth considering paying the 1% interest as an insurance premium to keep access to the cash.
I keep about as that much in cash. There is an opportunity cost of course.

But if, like the OP, I had enough to clear my mortgage in full AND have €50k left over I would clear it all tomorrow!

The OP and wife are in bulletproof employment and don't need huge amounts of precautionary savings.
 

Sarenco

Registered User
Messages
6,894
An extra 800 or so a month. I'd like to automate it that 400 of that went somewhere useful so we don't just spend it.
Maybe set up a direct debit to a regular savings account. Rates are obviously very low at the moment but at least the process will be automated.
 

time to plan

Registered User
Messages
324
That's a great calculator, I was just looking 10 year state savings pays 10% after 10 years.
If I put 160k in I'd make 16k
If I pay 160k off mortgage adding 10 years interest it's 12.7k.
I'm trying to work out what I'm missing that's obvious as interest on mortgage is higher than savings 1.1% v 0.96%.?
Things your missing:
1. Your mortgage balance goes down each month as you pay the capital off, so you are paying interest on 160k at the start but on a reducing amount as time passes.
2. As well as saving the 12.7k interest on the mortgage, you will also have the monthly interest payment that you are no longer paying, to invest and make a return on.
 

KOW

Registered User
Messages
418
Paying off the house loan can be argued both ways.
Your childs disability would seem to require "above the care of a similar aged child" and would qualify for Domicilliary Allowance of 309 euro per month as mentioned in previous post and disability allowance of around 208euro automatically at age 16.
The fact that you have a child with a disability allows you to claim a tax credit not a tax allowance of 3300 per annum allowing you to pay 275 month extra off the house loan should you wish to do so. This tax credit is paid up to 18 and can be extended if your child is in some form of training/further education.
 

Ford25

New Member
Messages
17
Things your missing:
1. Your mortgage balance goes down each month as you pay the capital off, so you are paying interest on 160k at the start but on a reducing amount as time passes.
2. As well as saving the 12.7k interest on the mortgage, you will also have the monthly interest payment that you are no longer paying, to invest and make a return on.
Ok thanks that clears things up.
 

Ford25

New Member
Messages
17
Paying off the house loan can be argued both ways.
Your childs disability would seem to require "above the care of a similar aged child" and would qualify for Domicilliary Allowance of 309 euro per month as mentioned in previous post and disability allowance of around 208euro automatically at age 16.
The fact that you have a child with a disability allows you to claim a tax credit not a tax allowance of 3300 per annum allowing you to pay 275 month extra off the house loan should you wish to do so. This tax credit is paid up to 18 and can be extended if your child is in some form of training/further education.
We have only recently become aware of DCA and also the tax credits.
We have a diagnosis of a disability over 7 years now so it foolish on our part to not know about this.
I do remember a few years back been asked if we are claiming carers allowance and I stupidly was thinking it would be means tested, and tbh as new parents you don't realise that extra care needed compared to another child until you have another child and even then you just kind of get used to it.

I guess if we are lucky enough to get this it wouldn't change the advice to pay off mortgage.
If we did get this though I think I'd funnel that money towards the second youngest who is currently been assessed but we have been told it's likely he's on the spectrum from some initial tests but there's a 3-4 year waiting list for services so I'd go private straight away.
 

Cavanbhoy

Registered User
Messages
32
If your child qualifies for Dca one of you could claim Carers Benifit of 220 per week for a period of two years.
To claim this payment whoever claims could not work more than 18.5 hrs per week and not receive salary of greater than 335 per week. The spouse's salary is not counted. After the 2 year period you would be legally entitled to return to your previous hrs of work.
 

Ford25

New Member
Messages
17
If your child qualifies for Dca one of you could claim Carers Benifit of 220 per week for a period of two years.
To claim this payment whoever claims could not work more than 18.5 hrs per week and not receive salary of greater than 335 per week. The spouse's salary is not counted. After the 2 year period you would be legally entitled to return to your previous hrs of work.
Thank you for this information. I've sent over forms for DCA fingers crossed, from reading online it's very hard to get DCA even with a diagnosis of a disability it can be a battle.
 

Cavanbhoy

Registered User
Messages
32
Thank you for this information. I've sent over forms for DCA fingers crossed, from reading online it's very hard to get DCA even with a diagnosis of a disability it can be a battle.
Best of luck with your application.
Re the 335 euro figure might have changed with the budget but if it has it will be a higher figure
 

Ford25

New Member
Messages
17
Paying off the house loan can be argued both ways.
Your childs disability would seem to require "above the care of a similar aged child" and would qualify for Domicilliary Allowance of 309 euro per month as mentioned in previous post and disability allowance of around 208euro automatically at age 16.
The fact that you have a child with a disability allows you to claim a tax credit not a tax allowance of 3300 per annum allowing you to pay 275 month extra off the house loan should you wish to do so. This tax credit is paid up to 18 and can be extended if your child is in some form of training/further education.
We got the doctor to sign off on them forms for the incapacitated tax credit and submitted them to revenue. So we should have an extra 275 a month going forward if revenue approve it. That's great thanks
 

Ford25

New Member
Messages
17
Best of luck with your application.
Re the 335 euro figure might have changed with the budget but if it has it will be a higher figure
Thanks, it was an ordeal to fill it out, not a very nice to thing to have to do listing all the behavioural problems and day to day routines.
 

Zizigirl

Registered User
Messages
12
You can claim incapacitated child tax credit backdated 4 years depending but if you are 7 years post diagnosis you should have no issue claiming the backdate.
 
Top