Best use of Equity from sale of Property

[1eyeonthefuture]

I did one of these makeovers a nr of years back however circumstances have changed.

My Details:
Age 45
PAYE Worker & Director of current employers with a small shareholding
Income €75,000
Bonus approx. €20,000 PA, of which €5,000 PA single contribution made by business to my pension in addition to that noted below.

Pension: New Ireland Executive Pension
Current Value €195k
Employer Contribution @ €700pm
Current Employee Contribution @ €800pm


Spouse Details:
Age 45
Teacher In position since 1997
Income €74,000
Pension Teachers’ Pension
AVC’s Current annual contributions @ €5,800
Current Value @ €110,000
Moved into mainly equities beginning of 2022...terrible timing


Other:

●3 children, all under 12
●Main PDH – Currently € 90K Mortgage O/S (value circa 500K)
Overpay fixed 10 year 2.9% Ptsb mortgage @ 1000 pm (actual @€680)
●Recently sold rental property - equity realised after costs @ €60,000
●Investment Purchase of Commercial Site / Land – value circa €100K Mortgage free.

● Savings @ €25,000
●Shareholding – currently hold a small % shareholding of business of which I'm a Director which if sold today would be worth approx. €500,000. The value of these shares has grown fantastically over the past 5 years however this cannot be divested until such time my employment ceases or I retire.

No other loans
No credit card debt

I currently have a serious illness insurance policy in place.Also a 4 times death in service policy thru employer.
My wife does not despite suffering from crohns.
We both have life assurance policies in place @€500k each in addition to the mortgage life assurance.

We spent the last 12 months attempting to move home to a larger property which would have left us in debt to the tune of €400k on a €900k property.
Went sale agreed 2 times and both times the vendor took the property off the market. Eventually we had to remove our own house from the market having gone sale agreed.

We got an architect in and have got plans in to change our own current house to give us what we need with the 3 kids getting older.
Cost of works @ €175k - €200k

Query
We have €85k cash in accounts.
Should we get a top up for the balance of between 90k & 115k on the existing mortgage.
Or, is there anywhere to invest this money where we would get a higher rate of return than the cost of getting the full cost of the works refinanced?

- Am I missing anything & is there a different way to do this.?

- Anything else I should be looking at?

Other-
1)We are in a position to increase mortgage payments to 1800 so as to clear the mortgage ASAP and free up money for starting and concentrating on the college fund.
2) will most prob need to change one of the cars in the next couple of years.. Would look to spend circa €15k.

3) In terms of the future and possible injections of capital we are fortunate in that parents have left us very well provided for in the event of thier passing by way of property and cash. Hopefully will not be realised for many years yet but regardless its in the works.

Thanks

 

[Always Learning]

3) In terms of the future and possible injections of capital we are fortunate in that parents have left us very well provided for in the event of thier passing by way of property and cash. Hopefully will not be realised for many years yet but regardless its in the works.

Apologies, I'm not qualified to answer your other queries but I did just notice point 3. If they are in a position to leave to well provided for after their passing, is there any way to start that transfer of wealth now rather than later. It's the norm for people to wait until their parents pass for this to happen, but I know a few people whose parents thought they would rather help their children now and see them benefit from it while they are still alive rather than wait until they die. It makes sense.

It could obviously be a tricky subject to approach, but it might not be depending on your relationship and their attitude. Just throwing it out there as something to consider as an alternative to getting into debt.

 

[RedOnion]

We got an architect in and have got plans in to change our own current house to give us what we need with the 3 kids getting older.
Cost of works @ €175k - €200k

First of all, have you got the estimate from an architect, a quantity surveyor, or a builder? Don't be surprised if it ends up costing way more than you plan!

Or, is there anywhere to invest this money where we would get a higher rate of return than the cost of getting the full cost of the works refinanced?

Not without a lot of risk.
You'll be borrowing at new business rates, which have increased. Whatever rate you borrow at, you'll need to earn twice that rate of return just to break even after tax and fees. I wouldn't, outside of a pension.

Once you draw down the new funds, make sure you are overpaying the highest rate loan first.

 

[1eyeonthefuture]

First of all, have you got the estimate from an architect, a quantity surveyor, or a builder? Don't be surprised if it ends up costing way more than you plan!

Yes, that's allowing for a 15% overrun.
Thanks

 

[1eyeonthefuture]

If they are in a position to leave to well provided for after their passing, is there any way to start that transfer of wealth now rather than later. It's the norm for people to wait until their parents pass for this to happen, but I know a few people whose parents thought they would rather help their children now and see them benefit from it while they are still alive rather than wait until they die. It makes sense.

Yes , absolutely makes sense but for reasons I won't go into not a runner at the moment. Thanks