Age: 45
Spouse’s/Partner's age: 48
Annual gross income from employment or profession: 70K
Annual gross income of spouse: 115K basic (+bonus, shares, approx. 20K pa after tax)
Monthly take-home pay: 7500 after pensions maxed (excl bonus, shares)
Type of employment: e.g. Civil Servant, self-employed: Private sector both
In general are you:
(a) spending more than you earn, or
(b) saving?
We would be saving but we have a lot of capital type projects this year (house, car) which any extra is going towards. Expect from next year we will be saving approx. 1000-1500 pm.
Rough estimate of value of home: 700K
Amount outstanding on your mortgage: 200K
What interest rate are you paying? 2.25% Fixed for 2 years. 11 years left.
Other borrowings – car loans/personal loans etc: None
Do you pay off your full credit card balance each month?: We don’t have a cc
Savings and investments: Approx 50K in shares.
Do you have a pension scheme?
Yes. Me approx. 300k, Spouse: approx. 700k – both in low cost passive global equity funds. Maxing out both @25%
Do you own any investment or other property?
Rental property: Value approx. 380K. Mortgage 90k. Interest: Tracker ECB + 1.1%. Rent : 1575 pm. 6 years left.
Ages of children: 13, 11 and 9
Life insurance: Yes, both of us.
What specific question do you have or what issues are of concern to you?
We have held onto our rental property for several years now with the intention that it become our education fund and eventually an income generating asset. We have always considered ourselves conscientious landlords and have never risen the rent to ridiculous levels even though we are aware the average rent in the area would be at least 2k for a similar property. Our current tenants look after the place well and we have always been on the ball when anything needs doing.
Having said that, we can no longer ignore the fact that the house is 40 years old now and needs a lot of upgrading. We are facing a bill of 6K this year on miscellaneous items and realistically the kitchen will need replacing in the coming years as well as other potential items of expenditure such as insulation and replacing windows.
I fully appreciate that this is all part and parcel of being a landlord but I’m beginning to wonder whether we are cut out for this business given the system seems to be stacked against landlords who don’t set rents to the max.
The original plan was that we continue to max out our pensions for the next 6 or 7 years and once the (investment property) mortgage is paid off, it becomes our education fund and between that and the shares also eventually become a top up for our pensions / allow us to give some family members who have not been as fortunate as us a dig out. Perhaps also to give the kids some kind of a head start (but we don’t know how much we subscribe to that given that myself and my spouse were never handed anything). We would also like to eventually stop contributing to the pension and just need an income to cover our day today expenses so we can consider taking jobs that pay less but offer a better work life balance.
Looking for advice as to whether we should stick it out with the rental property or just sell up and potentially pay off our principal residence. What should we do with the surplus if we do this?
Thanks in advance for reading.
Spouse’s/Partner's age: 48
Annual gross income from employment or profession: 70K
Annual gross income of spouse: 115K basic (+bonus, shares, approx. 20K pa after tax)
Monthly take-home pay: 7500 after pensions maxed (excl bonus, shares)
Type of employment: e.g. Civil Servant, self-employed: Private sector both
In general are you:
(a) spending more than you earn, or
(b) saving?
We would be saving but we have a lot of capital type projects this year (house, car) which any extra is going towards. Expect from next year we will be saving approx. 1000-1500 pm.
Rough estimate of value of home: 700K
Amount outstanding on your mortgage: 200K
What interest rate are you paying? 2.25% Fixed for 2 years. 11 years left.
Other borrowings – car loans/personal loans etc: None
Do you pay off your full credit card balance each month?: We don’t have a cc
Savings and investments: Approx 50K in shares.
Do you have a pension scheme?
Yes. Me approx. 300k, Spouse: approx. 700k – both in low cost passive global equity funds. Maxing out both @25%
Do you own any investment or other property?
Rental property: Value approx. 380K. Mortgage 90k. Interest: Tracker ECB + 1.1%. Rent : 1575 pm. 6 years left.
Ages of children: 13, 11 and 9
Life insurance: Yes, both of us.
What specific question do you have or what issues are of concern to you?
We have held onto our rental property for several years now with the intention that it become our education fund and eventually an income generating asset. We have always considered ourselves conscientious landlords and have never risen the rent to ridiculous levels even though we are aware the average rent in the area would be at least 2k for a similar property. Our current tenants look after the place well and we have always been on the ball when anything needs doing.
Having said that, we can no longer ignore the fact that the house is 40 years old now and needs a lot of upgrading. We are facing a bill of 6K this year on miscellaneous items and realistically the kitchen will need replacing in the coming years as well as other potential items of expenditure such as insulation and replacing windows.
I fully appreciate that this is all part and parcel of being a landlord but I’m beginning to wonder whether we are cut out for this business given the system seems to be stacked against landlords who don’t set rents to the max.
The original plan was that we continue to max out our pensions for the next 6 or 7 years and once the (investment property) mortgage is paid off, it becomes our education fund and between that and the shares also eventually become a top up for our pensions / allow us to give some family members who have not been as fortunate as us a dig out. Perhaps also to give the kids some kind of a head start (but we don’t know how much we subscribe to that given that myself and my spouse were never handed anything). We would also like to eventually stop contributing to the pension and just need an income to cover our day today expenses so we can consider taking jobs that pay less but offer a better work life balance.
Looking for advice as to whether we should stick it out with the rental property or just sell up and potentially pay off our principal residence. What should we do with the surplus if we do this?
Thanks in advance for reading.