Trade up or give up?

rania

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68
Bought in 06 ,age 41 now
275K 100% mortgage 4 bed detached home in small estate
Now 200K left
Issue is area ,it's a small town and I dislike it would rather move back to city but prices there 430-600K
We have 80K savings separate from education savings. If we trade up the 80k would be the deposit and then a hefty monthly mortgage
Other idea is to buy outright apartment in Spain ,and stick it out in this town ,apartment will mean extended holidays and possibility to move for early retirement,but staying in this town .

Is a huge mortgage worth it to be in a better location
 
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Brendan Burgess

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What is the current value of your home?

Who is the lender and what mortgage rate are you paying?

How much education savings do you have?

I would not live in a town I don't like. You need to sort that out first.

You certainly should not use the €80k to buy an apartment in Spain when you are not happy where you are. Even if you decide not to move now, you might change your mind later and then you will need the money and it would be difficult to get back.

Unless the children are going to start college within 5 years, you should not be distinguishing between savings and the education fund.

They are all part of the same total picture.

If you have a non-tracker mortgage, you should pay down your €200k with both the savings and the education fund. If you have lower repayments, you will be able to pay off the mortgage quicker and then build up an education fund again when you need the education money. Alternatively, you will probably be able to remortgage when you need the education money.

Brendan
 

rania

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68
Thank you
It's a tracker mortgage ,house worth about 200-220k
College fund is about 20k oldest child is 12
Bank of ireland is lender
 

rania

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68
What's the point in paying off the remaining mortgage ? Would moving the mortgage to another property not be viable ,and it will take us a long time to pay it off in meantime no living conditions will change
 

Brendan Burgess

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OK, Assume you get €200k and you want to buy a house for €500k.

The figures will be as follows

House price : € 500k

Deposit : € 100k

Mortgage €400k

Tracker €200k @ 2% (current tracker rate +1%)

Non tracker: €200k @3% (BoI fixed rate)

Do you have a salary of €120k to qualify for a €400k mortgage?

Brendan
 

Brendan Burgess

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37,462
As you have a tracker you should not pay it off.

However, if you do trade up, you should use your education fund to minimise the mortgage.

It makes no sense to borrow money at 3% to put it on deposit where it's earning nothing or to invest it in a risky fund where any gains would be taxed.

Brendan
 

rania

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68
Yes salary 170K now so I think we would be allowed to borrow 400K ,your advice is helpful thanks ,we have had debts and no money at all for the last 12 years ,its only this year we have made some savings etc and much as I want to leave I am afraid I am being selfish as we have a low mortgage now and savings etc but I am not happy here and it wasn't meant to be long term,the house was in negative equity for years it's only recently it's crept up and we would just break even
 

Brendan Burgess

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much as I want to leave I am afraid I am being selfish as we have a low mortgage now and savings etc but I am not happy here
Hi Rania

With that salary, you should be very happy to borrow €400k, half of which would be on a reasonably cheap tracker. You could even borrow more.

Go for it and live in a place where you like. Don't stay where you are with occasional visits to a holiday home you own in Spain.

Brendan
 

Bronte

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13,241
Yes salary 170K now so I think we would be allowed to borrow 400K ,your advice is helpful thanks ,we have had debts and no money at all for the last 12 years ,its only this year we have made some savings etc and much as I want to leave I am afraid I am being selfish as we have a low mortgage now and savings etc but I am not happy here and it wasn't meant to be long term,the house was in negative equity for years it's only recently it's crept up and we would just break even
No you are not being selfish at all. It's awful to be somewhere you don't like. Luckily you can afford to move, so move. Sounds like you guys had a tough decade.

You'd be crazy to buy in Spain. That's just a dream that can turn into a nightmare.
 

so-crates

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1,739
Why are the options:
1) Stay in a specific (though unspecified) small town you don't like
2) Spend a lot of money and move to the city.

(I'm ignoring the Spain angle - as I think that is a sideline dream rather than your main objective)

Is there no option in between? Would there be a larger town that would give more/better amenities for a far smaller cost than moving to (I'm going to guess) Dublin?
 

rania

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68
Hi it's not Dublin ,it's the west and no there is no in between ,we are in a rural commuter town.we have a great house in a small estate but lately the estate has changed and if we move to city even 500K won't buy us a similar house ,it would be a semi much smaller .
 

RETIRED2017

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772
Hi it's not Dublin ,it's the west and no there is no in between ,we are in a rural commuter town.we have a great house in a small estate but lately the estate has changed and if we move to city even 500K won't buy us a similar house ,it would be a semi much smaller .
So for 500K what has changed may follow you or be there already, maybe you just need to move out of the estate,
 

so-crates

Frequent Poster
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1,739
Hi it's not Dublin ,it's the west and no there is no in between ,we are in a rural commuter town.we have a great house in a small estate but lately the estate has changed and if we move to city even 500K won't buy us a similar house ,it would be a semi much smaller .
A city with only one possible commuter town? It seems far fetched. I can understand your wish to get out of your current situation if you feel the neighbourhood has changed for the worse but perhaps widening your search area might prove fruitful. As RETIRED2017 has pointed out, you can't guarantee that where you move too won't have similar issues, a less drastic move might actually be both achievable and worthwhile.
 
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