What next?

[CharlieWork]

Age: 39
Spouse’s/Partner's age: 39

Annual gross income from employment or profession: €55k
Annual gross income of spouse: €41k

Monthly take-home pay: ~€5k

Type of employment: Both Public

In general are you:
Saving

Rough estimate of value of home: €370k
Amount outstanding on your mortgage: 0, paid off
What interest rate are you paying? N/A

Other borrowings – car loans/personal loans etc: No

Do you pay off your full credit card balance each month? N/A
If not, what is the balance on your credit card? N/A

Savings and investments: €65k, no investments

Do you have a pension scheme? Have our public service pension in addition to an AVC, which for me is 20%, wife is in at 10%

Do you own any investment or other property? No

Ages of children: 9

Life insurance: Yes


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

Hi everyone,

So we have just cleared our mortgage and are thinking about moving in the next couple of years. We are basically looking to move to our dream house/area which means the house would be between €500-560k range and that is quite daunting in and of itself. I've always had an appetite to clear the mortgage and as a result a lot of my financial focus was on that but now that we're done I feel like I'm not sure what to be doing with my money going forward. Is it worth keeping our current house and renting it out? Should I start investing? Is there anything I can do to secure our daughter's future?

Thanks.

 

[_OkGo_]

You are in a very healthy position at 39 to be mortgage free on a €370k property with €65k cash and two public sector pensions.

If you plan to upgrade your PPR, then you should not be investing your money in anything until you have moved.

As second time buyers you will need a 20% deposit so between €100-112k for your ideal property. If you are not planning to move in the very near future, I would focus on building your cash deposit to this level (and some extra for costs of buying/selling) so that you can buy and move before selling your current PPR. You should do this by going for a variable rate and when you sell your own PPR, use the proceeds to clear a significant chunk and then fix at the best rate.

If you need to move sooner then you will need to get an exemption from the 20% deposit rule and the LTI of 3.5x income. You would need an exemption on both so I'm not sure how likely that would be. Or alternatively, you sell first and buy second but that can have its own problems of timing or renting in between.

Is there anything I can do to secure our daughter's future?

You are mortgage free now and if you do choose to upgrade, you will probably be mortgage free again before your daughter goes to university. You will comfortably be able to afford any costs of 3rd level or additional support during secondary like grinds if she has ambitions for a high points course. I wouldn't worry too much about specifically putting money away for any of these things.

Your priority now is deciding whether you want to move or not

As for renting, I don't think it would be a good idea for you. It would mean building a deposit of 20% as above for your new PPR and your are limited to 3.5x income for that new mortgage so €336k. That leaves you quiet a bit short of your dream home and it would be a lot harder to get exemptions on both the LTI and deposit rules

 

[Bronte]

We are basically looking to move to our dream house/area which means the house would be between €500-560k range and that is quite daunting in and of itself. I've always had an appetite to clear the mortgage and as a result a lot of my financial focus was on that but now that we're done I feel like I'm not sure what to be doing with my money going forward. Is it worth keeping our current house and renting it out? Should I start investing? Is there anything I can do to secure our daughter's future?

Not sure why it is daunting if you are bringing 370 + 65 to the table = 435. On a purchase of 560 = 125 borrowings. Let's make it 150K because of costs. You could pay off 150K how quickly? And you've two state jobs !! With one child !

 

[Brendan Burgess]

Very good summary from OKGO

Definitely don't keep your former home as an investment. It would be much better to use the proceeds of sale to make the mortgage on your new home as small as possible.

If it's possible, it's nice to hold onto it until you are settled in your new home, but that is also risky. You buy your new home and the property market collapses before you have sold your old home.

Why are you waiting a couple of years to trade up? Everything is in place now. The market is not mad. You have two good incomes. It's a good time to buy and sell. If the market is dead or if the market is going bananas it's risky buying and selling.

If your dream home comes up fairly often, then put your own house on the market now. You might be able to synchronise the buying and selling.



Brendan

 

[CharlieWork]

Thanks to everyone who replied, particularly OkGo! You've really provided some clarity and practical advice!

Not sure why it is daunting if you are bringing 370 + 65 to the table = 435. On a purchase of 560 = 125 borrowings. Let's make it 150K because of costs. You could pay off 150K how quickly? And you've two state jobs !! With one child !

I suppose because we originally bought in 2012 at a great price that took a lot of saving and scrimping at a time when we weren't making great money and it felt like the position we are in now was a million miles away. I think the one time cost of something costing over half a million is psychologically very new to us. We've been a combination of lucky, smart and frugal and I'm hoping to not have to be as frugal going forward but old habits die hard. But ultimately I think you're right, I need to look at where we are and how feasible this is.

Why are you waiting a couple of years to trade up? Everything is in place now. The market is not mad. You have two good incomes. It's a good time to buy and sell. If the market is dead or if the market is going bananas it's risky buying and selling.

If your dream home comes up fairly often, then put your own house on the market now. You might be able to synchronise the buying and selling.

Brendan

That's great advice, thank you. The only reason the move is a couple of years away is once again an intangible and psychological one. We have our daughter in a school she loves, wife is in the middle of a masters and doesn't do well with stress and we're living very close to a terminally ill relative and my wife likes being there for them.

I think this thread just illustrates my own feeling that I second guess myself way too much.