# Excess mortgage debt-what is best approach to improving financial situation



## Pinkpanter (26 Apr 2011)

Age: 30
Spouse’s/Partner's age: 31

Annual gross income from employment or profession:*48k civil servant (2400p/m)*
Annual gross income of spouse:*70k private sector (3900p/m)*

In general are you:
(a) spending more than you earn, or
(b) saving?
*I tend to be a saver, husband a spender!!*

Rough estimate of value of home *250k*
Amount outstanding on your mortgage: *463k (mortgage 515k*)
*What interest rate are you paying? 2.15% tracker 31 years left*
*1700 per month*
Other borrowings – car loans/personal loans etc
*car loan 340 per month*
Do you pay off your full credit card balance each month? 
If not, what is the balance on your credit card? 
*Husband has 1500 balance*
Savings and investments:
*8000 in aib (online saver)*
Do you have a pension scheme? 
*both have defined benefit. also AVC's (me 200 p/m, husband 350p/m).*
Do you own any investment or other property? 
*yes I have investment property bought 2004 (174K) balance 145k 18 years rent 550p/m mortgage 930 p/m).*
Ages of children: none

Life insurance: yes mortgage cover.

Question we are in negative equity on our apartment. We will have some excess cash before we have children. How should we proceed. Put cash on deposit with bank or pay down mortgage. Would love to be in a position to move to a house not urgent (3bed apartment in central location near work and family).

Can probably stay in apartment for 10 years or so. Is it possible to raise a family in a 1000 sq/ft apartment?
Reluctant to pay down mortgage with such a good tracker mortgage (0.9% above ecb). Any suggestions to put us on more secure financial footing.


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## Lilia (5 May 2011)

Raising a family in a 1000 sq/ft apt that allows you a reasonable standard of living is a much better option than a 2,000 sq ft house that has you up to your eyes in debt.  Either way 1000 sq ft is about the size of most standard semi-ds.  The kids will know nothing else anyway and as long as they have a happy environment to live in that's the main thing.  Living in a big house that is crippling their parents financially and stunting any sort of decent life style is far worse than having to share a room for a few years.


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## pc7 (11 May 2011)

You are taking in 6300 a month, taking away your mortgage, avcs and car loan, top up to rented property leaves you 3340 a month. First thing would be to clear the 1500 on cc, that can be done in 1 month. How long left on your car loan? You have a very substantial income yet only 8000 in savings. Have you looked at a spending diary to see where the money is going? Not all your out goings are listed so hard to have the full picture, but you seem to be in a good position to load up on your savings.


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## Pinkpanter (11 May 2011)

Got married  4 weeks ago so a large part of our savings went on that ie 25k. After everything paid we were left with 8k. Thankfully we got alot of cash gifts which helped us not to have to get a loan. Need to sit hubby down and do a proper budget and spending diary.


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## Bronte (12 May 2011)

Just curious are you living in an apartment of 1000 sq foot that cost 515K?

You should sell your investment property as it's only costing you.  That will net you nearly 30K and the mortgage that you are subsidising from income can be saved instead and put to better use.  

If you are *sure* that you will do it then every spare penny should be put in the hightest paying deposit account until you can off load the apartment with no negative equity and enough for a deposit on a house.  Problem is you say your husband is a spender, this will have to be tackled.  If you are not sure than over pay the mortgage instead.  The idea is that you'll get more interest on deposit then you would gain by paying off your mortgage but it only works for those who are commited.  

Also recommend paying off the car loan as no doubt there is a lot of interest, make sure there is no penalty for doing so.  How much interest is that 1500 on the credit card costing, that should also be tackled.    

On those good salaries you should be out of the woods in no time if you apply yourself.


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## Pinkpanter (12 May 2011)

Investment property is in negative equity circa 30k?
Had it on the market for 15 months with no buyers 2007-2008 (worst time ever). Have good tenants and am going to hold onto it for 4-5 years and then hopefully offload it. I was thinking of reducing the term of our mortgage from 31 to 25 years. What are the pros and cons to this given tracker 0.9 plus ECB. Hubby good at paying loans but not saving. Any suggestions.


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## Bronte (13 May 2011)

Pinkpanter said:


> . I was thinking of reducing the term of our mortgage from 31 to 25 years.  Hubby good at paying loans but not saving. .


 
On that basis your strategy is better, you're going to increase your monthly payments to bring down the term and as the loan amount has gone up your hubby will pay it and you can look at it as a way of saving.  Plus you're going to pay a lot less interest.


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## Pinkpanter (22 Jul 2013)

*Update of financial situation*



Pinkpanter said:


> Age: 30
> Spouse’s/Partner's age: 31
> 
> Annual gross income from employment or profession:*48k civil servant (2400p/m)*
> ...



 Update******
Just to update ye of current financial situation
Income -me public servant 50 k €2600 per month
Husband 74k private €4000 per month
Avcs me 15k
        Him 20k
Credit union car loan paid off
Savings 10k cu
              5 k online saver
             30k shares 

Mortgage 1) 131k balance bought 2004 (174k) €963pcm rent €550 rate 4.4% 15 years remaining.
Mortgage 2) 438k balance bought 2006 (515k) €1530pcm live here 1.4% tracker 28 years remaining.

Have a newborn baby and have been thinking of getting a negative equity mortgage. What are our chances? Not an urgent move but if we have second child could child are costs prevent us from doing this. Don't really want to rent elsewhere. Would keeping the two properties and getting a new mortgage be a non runner. Should we try get neg equity mortgage before child care becomes an issue?


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## random2011 (23 Jul 2013)

Out of interest, is your husbands net income of 4000 inclusive of his avc. Or would you still need to subtract his pension contributions from the 4000.


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## Pinkpanter (23 Jul 2013)

3200 approx net has salary forgone for shares
avc. Also bik on health insurance and medical
expenses.


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## goingforgold (24 Jul 2013)

So you have a very large income between you, have good savings/shares and AVC's. Would you not stop the AVC's (especially given you have a DB pension scheme) and concentrate on increasing your savings to give you more options in short/medium term?


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## Pinkpanter (29 Jul 2013)

Husbands defined benefit pension is closing and 
becoming a defined contribution later in the year and 
we will do a re think on AVCs .


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## Brendan Burgess (29 Jul 2013)

It seems to me that the overall factors are still the same as they were two years ago.

You have a very cheap apartment. At 1,000 sq ft it's big enough for all three of you and even for another one for at least 5 years.

Over those 5 years, you will be paying down the mortgage at a very fast rate as you are on a very cheap tracker. 

Your investment property is very profitable as well. 

No need to change anything. Don't pay additional sums off the mortgage. Build up your savings. If the lenders every give a deal for paying off capital, take advantage of it then.

Stop the AVCs.

Give us an update in 2018.

Brendan


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## Pinkpanter (30 Jul 2013)

Thanks Brendan. I'm resigned to that scenario! 
I'm hoping we can continue high levels of saving with the 
cost of childcare.
With paying the two mortgages p+I we are paying
down our debt by 18 k per year. We are saving
about 12-14k. Hopefully in 5 years we will be on a much 
better footing financially.


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## annR (30 Jul 2013)

>>I'm hoping we can continue high levels of saving with the 
cost of childcare.<<

I don't want to sound harsh here and I admit I haven't gone through your figures.  But you're on a very high joint income.  So many people are stuck in negative equity apartments with children and wish they weren't.   You don't have to be like that. Ok your apartment is big but you may well come to the point in the future where you really really want to move to a bigger house.  You have no reason to be stuck in the apartment with your incomes.  Make sure that doesn't happen and save up the cash.

I write this as someone who did manage to recently buy house of our dreams from mostly cash savings (bank wouldn't give a higher mortgage because I'm on a career break) and boy are we glad we were able to move what with 2 kids and another one on the way.  Believe me this is where you want to be and you can make it happen with your incomes - I think you need to be more determined about it and think about the outcome if you don't have enough cash in the future. 'hoping' isn't good enough - make it happen.


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## Pinkpanter (25 Apr 2017)

Update

extra information
Age: 36
Spouse’s/Partner's age: 37

Annual gross income from employment or profession: nil
Annual gross income of spouse:
175k
Monthly take-home pay 11.7k


Type of employment: e.g. Civil Servant, self-employed

In general are you:
(a) spending more than you earn, or
(b) saving? Saving

Rent 3k
Rough estimate of value of home 315k
Amount outstanding on your mortgage: 390k
*What interest rate are you paying? 0.9%  mortgage €1400 pm. Rent received €1600*

Other borrowings – car loans/personal loans etc 
Nil

Do you pay off your full credit card balance each month? 
If not, what is the balance on your credit card? 0

Savings and investments: 30 k deposit 
60 k shares

Do you have a pension scheme? 
Yes - dc circa 150k in 2 funds

Do you own any investment or other property? Yes 

Worth 150k no mortgage €625 pcm rent received

*Just an update*

our circumstances have changed greatly since my last posting. I have left my job, two kids later and we are living abroad!! Life is good!! We are able to save and have been paying off my investment mortgage (4.4% rate). That is now paid off.

I have a tracker mortgage in our previous ppr and we hope to return home in a few years however that is not definite.
Should we overpay this or save the cash on deposit ( very low rates). We were hoping to buy again in the future but realise our ages will be against us.
We were hoping to keep the apartment and sell the mortgage free house to use as deposit (circa 150k presently). 
With low deposit rates I don't want to leave it to the bank and not put it to work. However I don't want to limit my options in a few years. 
Buying a property in the country we are now is impossible due really high prices.

Any observations?


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## Brendan Burgess (25 Apr 2017)

Pinkpanter said:


> We were hoping to buy again in the future but realise our ages will be against us.
> We were hoping to keep the apartment and sell the mortgage free house to use as deposit (circa 150k presently).



*Should you sell either property? *

As your plan is to return to Ireland, it seems to me that it's not a bad idea for you to retain your stake in the Irish property market. When you come back, you may well come back to that apartment on a temporary basis.  So keeping the apartment seems right. 

It's profitable as an investment.  You can handle any risk of a fall in prices.  Everything argues for keeping both properties. 

By the way, you should not buy in your current location as you are planning to come back.  If prices fall between buying and returning, you could be in trouble.

*Should you pay off your mortgage? *

Which lender is your mortgage with?  

Some of the vulture funds have offered discounts for the early repayments of mortgages. You would be disgusted if you sold your apartment, paid off your mortgage and then, they announced discounts. 

If it's with one of the main banks, you are unlikely to get a discount, but they all have tracker mover products. So when you return, they will probably allow you to move your tracker to a new family home.

So, all in all, it can't be far wrong not to pay off your tracker. And it could be hugely right.

Brendan


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## Pinkpanter (29 Apr 2017)

Our tracker mortgage is AIB. It's is not out of negative equity yet. Psychologically I would like to pay down to where the two meet i.e. 300k. 
Our plan is to hold onto it and add it to our pension income as I now have no pension. ( 10 years Public Sev accrued).
We are saving to buy a family home. With the large price increases in Dublin for properties in our chosen area it is disheartening!!
However I'm not as quick to jump feet in to the property market this time. We will continue to save.


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## Bronte (2 May 2017)

I would be very worried Pinkpanter that you now will have no pension.  Many women live to regret that.  You need to think about it.  Right now while times are good.


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## Pinkpanter (2 May 2017)

I have just recently left my job to mind my children. I have 10 years  of public sector pension accrued. I have an AVC circa 30k.
We will be holding onto apartment  to supplement pension income.

I plan to return to work in a few years in our country of residence. Small issue of needing to learn a new language. If we return home I will resume work but not in the Public Sector and plan to do a PRSA. It was the biggest decision resigning my post. However life is for living. We were only existing when we lived in Ireland , paycheck to paycheck. Giving up my pension and now dependence on my husband took a while for me to overcome.


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