two mortgages, creche and negative equity. married couple.

A

asker

Guest
Age: 33
Spouse’s/Partner's age: 33

Annual gross income from employment or profession: 75k
Annual gross income of spouse: 50k

Type of employment: e.g. Civil Servant, self-employed
wife is a civil servant, i work for a major multinational

In general are you:
(a) spending more than you earn, or
(b) saving?

A !

Rough estimate of value of home
house 1 - cost 400,000 , current value is around 300,000 i would estimate
house 2 - cost 300,000, current value is around 250,000 estimate


Amount outstanding on your mortgage:
house 1 - 360,000
house 2 - 293,000

What interest rate are you paying?
house 1 - 4.99% fixed until april 2011
house 2 - 60,000 fixed @ 5.89% until june 2013
- remainder variable @ 3.85%

Other borrowings – car loans/personal loans etc
I have a personal loan for 11,000
Wife has personal loan for 7,000


Do you pay off your full credit card balance each month?
we try to.

If not, what is the balance on your credit card?
for both of us its around 1000 euro

Savings and investments:

Do you have a pension scheme?
yes, currently has 20,000 in it.
Wife has one too, dont know her balance

Do you own any investment or other property?
yes, as stated above

Ages of children:
3 and 1.5 , creche fees are 1500 a month.

Life insurance:
with Aviva , 100 euro per month.

What specific question do you have or what issues are of concern to you?

we are interest only currently on both mortgages and are barely above water, the rental property we are getting 750 euro pm, mortgage is 1004 + 50 euro life assurance is a loss of 300 euro pm.

we come off interest only in both houses in 2011, with an increase of around 600 euro per house.

Ideally i would like to get rid of the rental property which we are losing money on and is a headache with two small kids in the house having to go over and do repairs etc..
 
Are you living in Dublin?

Ages of children:
3 and 1.5 , creche fees are 1500 a month
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that's a lot for a Creche. Did you "shop" around? My dd is in a perfectly fine Creche for far less money. Also if you have two, a childminder might come "cheaper".

the rental property we are getting 750 euro pm
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what type of property is it?
 
asker said:
Ideally i would like to get rid of the rental property which we are losing money on and is a headache with two small kids in the house having to go over and do repairs etc..
Click to expand...

You would have 43k negative equity if you get rid of it though. To be honest your situation is a little confusing, you earn 125k gross which is very high and it would be helpful to see how your net income is spent, see other threads for example of breakdowns given. Then people here could advise you better if they know the net income monthly and where it goes. Also if you don't know where it goes start keeping track and a budget as with such a high income you are in a good position to pay off your loans if you are focused on doing that and not spending too much elsewhere. For your original q I would say selling the rental is not necessarily a good idea, it would put you into more debt for neg equity. Is there no way you can try interest only again on it, maybe ask the bank.
 
alaskaonline said:
Are you living in Dublin?

that's a lot for a Creche. Did you "shop" around? My dd is in a perfectly fine Creche for far less money. Also if you have two, a childminder might come "cheaper".

what type of property is it?
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My wife organised the creche, and it is a very good one which we are happy with, i would have thought that for Dublin that was a good price ?

Property 1 is in dublin and is 4 bed semi, property 2 is in meath and is 4 bed detached.
 
I think you should sell the rental property. Yes you will be in 43k negitive equity but sometimes you have to cut your loses. Theres no point throwing good money after bad especially when your hearts not in it. From what you say this house is becoming a burden for you.
 
There is a tax break on creches where if the employer agrees to pay the creche directly you can have it deducted from you salary and therefore receive tax relief at marginal rate. This could significantly reduce your fees.

I think the employer has to agree to this for all employess if they wish to use a creche. Our company do it and have agreements with several creches. They have to make some small contribution to the creche to satisfy the revenue conditions but its all perfectly legal.

Perhaps the creche can explain this type of scheme to you.

From the Revenue site

Crèche/Childcare Facilities

Employer-provided facility

Where an employer provides free or subsidised childcare facilities for employees, a taxable benefit does not arise where the childcare facility is provided on premises which -
  1. meet certain requirements of the Child Care (Pre-School Services) Regulations 1996, and
  2. are made available-
    • solely by the employer
    • by the employer jointly with one or more other participants in a joint scheme and the employer is wholly or partly responsible for either -
      • financing and managing the facility, or
      • providing capital for the construction or refurbishment of the premises, or
    • by any other person or persons and the employer is wholly or partly responsible for either -
      • financing and managing the facility, or
      • providing capital for the construction or refurbishment of the premises.
 
At the minute, for mortgage interest and creche fees you are paying approx €4k a month.

without knowing your exact tax affairs, I'd estimate you are taking home around €5k a month after tax and between rental income and childrens allowance, around another €1k.

Therefore the question is, what are you spending €2k a month on, after you've paid your mortgage?

As another poster suggested, you should look at what else you are spending money on, and see how you reduce it. Even after the increase in mortgage once you come off interest only, you've still got ballpark €800 a month to live on. Also take a long hard look at your tax affairs and make sure they are in order. Are you claiming for things like bin tax, health expenses etc etc.
 
the tax breaks for creches only applies where the employer owns (or part owns) the creche.

I'd also say that €1,500 a month on creche fees is very reasonable for 2 children. It works out at just under €70 a day.
 
Mpsox said:
At the minute, for mortgage interest and creche fees you are paying approx €4k a month.

without knowing your exact tax affairs, I'd estimate you are taking home around €5k a month after tax and between rental income and childrens allowance, around another €1k.

Therefore the question is, what are you spending €2k a month on, after you've paid your mortgage?

As another poster suggested, you should look at what else you are spending money on, and see how you reduce it. Even after the increase in mortgage once you come off interest only, you've still got ballpark €800 a month to live on. Also take a long hard look at your tax affairs and make sure they are in order. Are you claiming for things like bin tax, health expenses etc etc.
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Monthly expendature.

Creche 1400
house2 1005
house1 1500
life assurance 70
home insurance 50
phone 32
sky 45
car 300
petrol 280
medical 120 My son is on medication.
loans 270
gas/esb/bins 300

Total: 5372

incoming.
Wife Salary 2035
Me Salary 2575
childs allowance 300
rent 750

Total: 5660

Which leaves 288 euro PM to live on, food for a 4 person family for a month, this also excludes car tax and insurance, upkeep for both houses and other misc items i probably forget, also keep in mind that both houses are interest only and this is where we are at.

Of my salary 14000 of it is paid as a bonus yearly, in april net is around 8000.

Ideally i am wondering if i can sell one house at a loss and put the loss on to the mortgage of our primary residence. Is this a good idea and would any bank go for this ?
 
Your salaries look wrong for 50k and 75k gross? You should be getting more than 2k and 2.5k net per month?
 
As stated in above post of my 75000, 14000 is paid as a lump sum yearly bonus so actual salary is more in the region of 60k
 
Yeah but even 60k gross should give you more than 2.5k net?

Same for 50k gross, should be more than 2k net a month?
 
asker said:
As stated in above post of my 75000, 14000 is paid as a lump sum yearly bonus so actual salary is more in the region of 60k
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The take home figure still seems a bit low to me - are you paying VHI, pension, AVCs etc out of that before you get the take home figure?

Your petrol costs seem very high too as do gas/esb and bins - are you using anything heavy duty on the gas/esb? Do you ensure to use things like the washing machine and other appliances on non peak hours?

The rent you are charging seems low for a 4 bed detached house also?

Whats the 300 on car if this excludes car tax and insurance and petrol? Is it a car loan? If so could you downgrade your car?
 
You're in a position whereby when you get your bonus next April you can pay off a large chunk of your personal borriwing.

Your car costs look high, unless you have a long commute. Are you running 2 cars and if so can you reduce to 1 or downgrade?

I agree with what other posters are saying about your tax affairs, even allowing for the extra levies your wife pays as a public servant.
 
truthseeker said:
The take home figure still seems a bit low to me - are you paying VHI, pension, AVCs etc out of that before you get the take home figure?

Your petrol costs seem very high too as do gas/esb and bins - are you using anything heavy duty on the gas/esb? Do you ensure to use things like the washing machine and other appliances on non peak hours?

The rent you are charging seems low for a 4 bed detached house also?

Whats the 300 on car if this excludes car tax and insurance and petrol? Is it a car loan? If so could you downgrade your car?
Click to expand...

Yes i pay around 10% of my salary into a pension as does my wife, healthcare is provided by my employer.

petrol is for my wife she commutes 1 hour journey each day, 300 is for car loan. Our electicity and gas are both with bord gais i think.
 
Take home amounts seem very low - I'm on ~€43,000 and take home (after pension contribution) €2,700.
 
can your wife use public transport? www.taxsaver.ie provides fairly cheap public transport tickets as the cost comes out of the gross income, i would be fairly certain that all public sector companies are signed up to this.
 
no she cant, and has to drop two kids off in a creche on the way to work anyway.
 
This may sound brutal but is it actually worth your wifes time to be working?

Take home salary - creche fees - petrol means she is working for €17 a day. In fact, if you take the car loan, insurance, car tax etc into account, it might actually be costing her to go to work. Is it worth crunching the numbers to see what the impact would be if she could take a career break, take the kids out of creche, not run the car and transfer her credits over to yourself?
 
I agree with Mpsox - plus one partner at home able to have time to do chores etc contributes hugely to quality of life for both as you are not both coming home after long days at work trying to fit chores in and being tired etc...

She could go back to work when both kids are in school and creche fees are down to just after-school hours?
 
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