@Sean Bateman Sorry to bring up an old thread. I meant to reply to this previously, but things were busy over the summer. We are our 'road BBQ' at the weekend, and one of the discussions I had reminded me of this, so here I am !!
- We owe €700,000 on our home. The interest rate is 2.75% Variable with AIB.
We had saved €350,000 to purchase our new home. €250,000 went on the deposit and we had €100,000 set aside for renovations and furniture. We ended up spending about €350,000, wild I know, although that did include an element of being shafted by a builder). We had it valued at €1.8M recently.
By my calculations, you spent 950k on the house (700k mortgage + 250k deposit). You then spent 350k doing it up, some of which was being shafted by the builder. That means the house cost you 1.3 million.
Sorry, but I am struggling to believe a 1.8m valuation. That's close to a 40% uplift in value in probably a 2 year window.
Very rarely do renovations on a house result in the corresponding increase in value. Normally, the renovations done will add value, but not 1-1 on the money spent. The renovations are done to your taste, which is unlikely to mirror 100% to someone else's. Yes, there are exceptions especially when a house is majorly rundown and the renovations get it back to 'liveable' standard, but not when it comes to high end specifications.
People do those kind of renovations for themselves, and just like buying a new car, its very difficult to get your money back on them.
Coupled with that, there is a slow down in the high end property in Dublin (which I assume you are in). The 1m+ houses are on sale for longer, and have seen a number of houses go sale agreed, only for the sales to fall through.
Personally, if you got 1.25m for the house, I think you would be doing well in the current climate. Now maybe I am wrong, but I just doing see the 1.8m valuation. Of course if you bought the house in 2011/12, that's a different story.
Employment is very secure (more than 12 years in the same place). Not impacted by Brexit and get headhunted reasonably regularly.
Over the last 12 months or so, I have encountered a lot of people in a similar situation to where you would be in 10 years time (early 50's having spent 20-25 years with the same company and at a pretty senior level in it). A surprising number of these have been placed on 'gardening leave', albeit with a package. However, a number are struggling to get back into the market at a level they feel they should be at, or at a similar salary anything close to what they were at. They have been very lucky and grew their packages where they worked, but finding it difficult to transfer that value outside of that company.
During good economic conditions these changes are normally a result of an external event, such as a buy-out or restructuring or something similar. During poorer economic conditions, these changes can be caused by any number of factors.
So while you think your employment is secure for the moment, you need to think of various other factors which may influence your career and earning potential. I don't believe any job is absolutely secure - even public sector got hit with a 15% pension levy in the last crises.
I worked in telecoms when the dot.com bubble went - and saw an entire industry crash to its knees. It made no difference how good or bad you were, no one was hiring for a 2-3 year window and there was massive lay-offs. The number of people who left the industry at the time was nothing short of phenomenal - and a large number would have said 6 months earlier their role was very secure.
In summary, while things are pretty good in the garden at the moment, there are clouds on the horizon and some will impact you along the way. You know you are over leveraged, and your income/debt ratios are too high.
The logical thing to do at the moment is stop paying into a pension fund and may down your most expensive debt. You are basically borrowing at 8% to invest in a pension. I accept pension tax rules may change, but you have more immediate challenges.
While on paper, I would say you should downgrade your new house to something more modest (around 1m mark), I don't believe you will release 800k equity from it, as I don't believe the valuation.
At a career level, I would consider the option of doing a 'jump-ship' relatively shortly (next year or so), so you don't become too institutionalised in the same company. It may offer you more alternatives in the medium term. If nothing else, changing company does refocus people and they tend to get a new lease of life in their career as a result. Just a thought....