Overpay mortgage or AVCs?

[Westsider79]

Personal details

Age: 44
Spouse’s/Partner's age: 45

Number and age of children: Two 13 and 11


Income and expenditure
Annual gross income from employment or profession: 74000
Annual gross income of spouse: 50000

Monthly take-home pay:
Me : 3986
Spouse: 2,955

Type of employment: e.g. Civil Servant, self-employed
Me: Civil Servant
Spouse: private sector

In general are you:
(a) spending more than you earn, or
(b) saving?
Saving more; savings approx 1000 a month but could be more once student rental income returns


Summary of Assets and Liabilities
Family home worth €530000k with a €230000k mortgage
Cash of €15k
Me: civil service pension with 19 years service, would have full pension of 40 years if retire at 65.
Company shares :
Spouse: company pension which is being maxed out with AVC contributions. Projected pension pon on retirement at 65 of 400,000


Family home mortgage information
Lender PTSB
Interest rate 2.5%
If fixed, what is the term remaining of the fixed rate? Ends March 2024

(No need to tell us the monthly repayments or what term is left)

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
Value:
Rental income per year:
Rough annual expenses other than mortgage interest :
Lender
Interest rate
If fixed, what is the term remaining of the fixed rate?

Other savings and investments:

Do you have a pension scheme?

Do you own any investment or other property?

Other information which might be relevant
Rental income from rent a room approx 7k per year

Life insurance:Mortgage protection
Both have income protection too

Main query is we are now debt free apart from Mortgage and have surplus cash each month; I aim to retire by 60 if I can but will be 5 years short of full pension. Keen to get Mortgage down to be able to achieve this retirement goal but should we concentrate on mortgage overpayment or AVC for me or both??

 

[Brendan Burgess]

€230000k mortgage

Annual gross income from employment or profession: 74000
Annual gross income of spouse: 50000

It sounds as if you have adequate pension funds.

You face a big increase in expenditure

• Your repayments will rise when your fixed rate ends
• Your kids will have education fees

For that reason, I think that paying down the mortgage is more important.
In 5 years, when your kids start third level education, your repayments will be lower if you knock €60k off your mortgage between now and then.

If you put it into your pension fund, you won't be able to access it for another 10 years after that, which won't be much good to you.
In fact, I would divert the wife's AVCs to the mortgage as well.

When the mortgage is much lower and the kids are no longer expensive, you can up your pension contributions.

Brendan

 

[Westsider79]

It sounds as if you have adequate pension funds.

You face a big increase in expenditure

• Your repayments will rise when your fixed rate ends
• Your kids will have education fees

For that reason, I think that paying down the mortgage is more important.
In 5 years, when your kids start third level education, your repayments will be lower if you knock €60k off your mortgage between now and then.

If you put it into your pension fund, you won't be able to access it for another 10 years after that, which won't be much good to you.
In fact, I would divert the wife's AVCs to the mortgage as well.

When the mortgage is much lower and the kids are no longer expensive, you can up your pension contributions.

Brendan

Thanks Brendan appreciate your advice; will start focusing on the mortgage so.