€50k lump sum. Low mortgage rate. Young family

[artvanderlay]

Hi all,

We have a bit of a lump sum, from a sale of a previous investment, that I'm keen to take off deposit.
I can see that the advice in similar cases is to lump it against the mortgage.
We're currently on a 2.35% fix though so I was wondering if that's still the best choice.

Many thanks

Personal details
Age: 41
Spouse’s/Partner's age: 40
Number and age of children: Two – 4 years old and 2 years old

Income and expenditure
Annual gross income from employment or profession: €80,000
Annual gross income of spouse: €45,000 (75% due to parental leave). Uncertain whether she'll ever return to full time

Monthly take-home pay:
- Unsure

Type of employment:
- Me: Private Sector
- Spouse: Private Sector

In general are you:
(a) spending more than you earn, or
(b) saving?
Relatively breakeven. A bit ahead during warmer months. A bit behind during colder months due to heating costs.

Summary of Assets and Liabilities
Family home worth: c. €700k with a €382k mortgage remaining.
Cash of €50k in current account

Pension:
- Me/Spouse: Both have DC pensions.

Family home mortgage information
Lender: PTSB
Interest rate 2.35% fixed Green <60% since June '22

If fixed, what is the term remaining of the fixed rate? 3.75


Other borrowings – car loans/personal loans etc - None
Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card?

Buy to let properties – N/A


Other savings and investments:
Do you have a pension scheme? Both DC
Do you own any investment or other property? No

Other information which might be relevant:
Life insurance: Mortgage Protection
Both kids in creche 3 days a week. That cost will drop off over coming years (and hopefully not be replaced!)

Main queries:

I have a few queries, apologies.

• How to best invest for children’s education etc. (Child Benefit is currently paid into joint account and is being spent as normal income)
• Should we overpay the mortgage? If so, should we put in a lump, or schedule over-payments.
• What should I do with the cash I currently have which is not performing. I could put a portion away for a longish period
• I feel like our energy bills disproportionately hurt us. Our house, a 1930's semi-D, was renovated in 2017. The builders weren't great. I wonder how well they insulated the non-adjoining side as that always feels colder. We have a B2 BER - but I'm not sure the assessor was very thorough. Could there be an angle of investing some of our cash in making it more energy efficient? I understand we mightn't be able to use solar panels as we have gas central heating.

 

[Brendan Burgess]

1) The first thing to do is to address the energy efficiency of your home. If you are not confident in the guy who gave you that assessment, then get someone else to assess it. Because that could well be the best investment of your €50k.

2) While 2.35% is a good mortgage rate , it is a lot higher than the 0% you are probably getting on deposit at the moment. You could get a higher rate through Raisin and keep access to the money in case you need it. So that might be the best strategy.

Brendan

 

[misemoi]

Re the childcare, I would keep a budget in place for that. School going children tend to get involved in extra curricular activities, sports etc and while you may not reach the same costs as creche, there are still plenty of expenses that drip in but when combined are more than you would think! Also pre and post school care is costly too so consider that you might need that for a number of years. Also summers & other school holidays - summer camps on the face of it look v reasonable but the timing of them means you need something else lined up for before and after and that's assuming your kids will agree to them!

I am also informed that once your kids don't require childcare then the budget is needed for clothes, school trips etc. So basically keep a % of family income for your kids, which right now is creche but will just evolve!