I have a dream to be mortgage free by the time I'm 45, which I'd equate with financial freedom. This would mean doubling the current mortgage payment I would estimate, but it might be doable.
Rough estimate of value of home: 425k
Amount outstanding on your mortgage: 275k
Savings and investments: 75k (30k of which is in cash)
This is reasonable on a number of levels. However, the best college saving plans would be to clear the mortgage down before then, meaning more disposable income for everyone. Its personal choice after that - but you would need ~5% interest before tax, to match the saving on the mortgage. That said, a balance between both may be the best answer for some. Have you any intention of sending your children to private secondary school or boarding school - if so you will need access to that fund earlier.Look at opening some sort of long term saving for the kid(s). €100 a month into a fund will add up by the time junior is ready for college
As per another thread, the 'living' cost depends on the family and the personal circumstances they have. It also depends on what is included in living expenses and whether it is month on month expenses such as food, utilities, car etc or also includes annuals such as holidays, property tax, insurances etc or capital expenses such as home improvements. The latter two can skew the number considerably.2.3k a month on "living" strikes me as high for 3, even allowing for a toddler which I know are expensive. You should do a full review of just what you are spending the money on and see can you make savings. it doesn't have to be crazy but for example we feed 4 easily for around €400 a month without going near a German supermarket.
- The big conundrum is whether to move or extend. We like our house, and the area we live in. There are schools and good public transport nearby. The only rub is that while extending will definitely be cheaper, from what I understand I doubt the house would immediately be worth 50k more as a result.
1) Extend current house (€ 60-65k, could probably be paid for in cash if we wait till 2019)
And a shot in the dark...
3) Move house and keep/rent out current house (additional € 450-500k mortgage, how far I'm getting from my original post...)
Quick update on proceedings. I've reflected on the advice and have been considering a few options vis-a-vis our accommodation needs.
1) Extend current house (€ 60-65k, could probably be paid for in cash if we wait till 2019)
Personally I would not consider being a landlord at the moment in Ireland. The government are swapping and changing rules every 1-2 years and there is no clear direction for the sector. All the odds are stacked in the tenants favour (in my view). I can see landlords leaving the market over the next 12-18 months as the new rules take effect
if you want to seriously consider this, you have to really crunch the numbers and decide is it something you want the hassle of, especially with 2 small kids (assuming you go for the second)? Also is it wise to have that level of debt hanging over you at 3.3% - bearing in mind you would not be able to remortgage as it would be considered BTL. I would post the numbers into the property thread if you are serious about that as an option - the experts in the area hang out there
What's the alternative? Investing what I would be spending on the new house's mortgage to build up my existing investment portfolio is the only other viable option I can see, certainly it would be more liquid, but no investment is risk-free.
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