First World Problems!

[Brendan Burgess]

It is causing the OP stress.

But the stress is not necessary.

You have an €850k mortgage which you will reduce by €300k bringing it down to €550k.

The interest at 5% will be about €2k a month, so very easily affordable.

Don't forget that it's an interest only mortgage.

And his net income is very high.

Brendan

 

[DublinHead54]

Yes and no. It's a cheap tracker. If and when the ECB rate falls, it will be a much lower interest.

Brendan

When will they fall, and will they go back to 0?

Are you suggesting to try and time the market?

 

[Brendan Burgess]

When will they fall,

I don't know.

will they go back to 0?

Very unlikely, but the long-term expectation, as I understand it, is about 2%.

Are you suggesting to try and time the market?

The expression "time the market" is usually used in connection with buying or selling shares rather than interest rates.

Interest rates are a bit easier to forecast. While they are not great at forecasting rates, there seems to be general consensus that an ECB rate of 4.5% is out of line with the historical experience and medium to long-term future. This might not be correct, but it's a reasonable basis on which to plan one's finances.

Brendan

 

[Premos]

I struggle to see how the house is worth all the sacrifices. Yes, in 11 years it will be paid but it also means an awful lot of sacrifices. Some seem to think that spending 5k per month with 3 children (2 teenagers), is a lot. I don't. We are relatively reasonable and we currently spend about 4.5k with 2 teenagers (they cost about 1k) without food or anything we do together. Life is short. We want to enjoy what we want and can.

 

[Steven Barrett]

But the stress is not necessary.



Don't forget that it's an interest only mortgage.

And his net income is very high.

Brendan

We don't know when the inheritance may be due. It could still be decades. Prince Charles was 73 when he got his inheritance!! Waiting for someone to die is never a good financial plan. They need to take steps to address their debt now and use the inheritance to boost their retirement plans, which will be impacted by their plan to pay down debt.

I struggle to see how the house is worth all the sacrifices. Yes, in 11 years it will be paid but it also means an awful lot of sacrifices. Some seem to think that spending 5k per month with 3 children (2 teenagers), is a lot. I don't. We are relatively reasonable and we currently spend about 4.5k with 2 teenagers (they cost about 1k) without food or anything we do together. Life is short. We want to enjoy what we want and can.

No it won't. It's on interest only so under the current plan they will still owe €850,000 on the home in 11 years time.

 

[DublinHead54]

The short term risk is cashflow, outgoings > incomings, and the long term risk is needing 850k in 11 years time. The plan needs to address both.

If you sell the investment properties and net 200k you could pay down your mortgage to 650k reducing monthly mortgage costs from 3700 to ~2800. That will help reduce the short term cashflow issues and partially reduce the liability due in 11 years time.Sell the shares and further reduce your mortgage and monthly mortgage costs.

Then switch focus on how you will generate the remaining balance on mortgage due in 11 years whilst also planning for your retirement.

 

[Ceist Beag]

Some seem to think that spending 5k per month with 3 children (2 teenagers), is a lot. I don't. We are relatively reasonable and we currently spend about 4.5k with 2 teenagers (they cost about 1k) without food or anything we do together. Life is short. We want to enjoy what we want and can.

That's all well and good if you can afford it. The OP cannot afford it.

 

[Premos]

That's all well and good if you can afford it. The OP cannot afford it.

I was speaking in terms of sacrifices for a house. At the end of the day, the op earns 9 k a month, 5k is not excessive but for the house.

 

[Bakewell]

@Brendan Burgess & everyone else who responded, just a quick check in on some points raised and thank you for your contributions and suggestions.

I just filed my tax return on the RIPs and my bill came to €9400.00. I do really need to get rid of them.

On the issue of CGT I'm relieved to say that I had an outstanding capital loss on a disposal of shares and rental property from many years ago, this was used to offset the loss from last year. Theres still 30K CGT loss to carry forward never mind the loss on my most recent foray with the stockmarket.

To respond to the points some of you raised.

On the question of downsizing the home; this would be my first choice however it does present an opportunity as an income stream in the future such as "rent a room" to a student or alternatively taking in foreign students. It also provides the potential for a gift to get the children on the property ladder.

On the question of my wife increasing her income, in January she's taking on more hours increasing her salary from 35K to 50K pa.

@Clamball has asked about my risk tolerance. I would consider this higher than most and foolhardy as I have seen with my current bag of loss making stocks.

@Gordon Gekko asked about moving my pension to a PSRA. I have already consolidated my pensions into Davy self managed pension bonds (4X bonds), unlike my share dealings this is concentrated on ETFs and has performed well.

I'll keep you posted on my progress....

 

[Sarenco]

I just filed my tax return on the RIPs and my bill came to €9400.00. I do really need to get rid on them.

That seems very high given the numbers you previously posted.

What was your taxable rental profit?

 

[Duke of Marmalade]

Surely no inheritance is guaranteed? Who knows what money will be needed to finance elder care. I personally wouldnt count on it.

And Sinn Féin have targeted inheritances.