# Looking for advice on Investment or not



## Edenbridge14 (7 Nov 2020)

*Age:* 47
*Spouse’s/Partner's age:* 68

*Annual gross income from employment or profession:* €60,000
*Annual gross income of spouse:* 30,000 - pension - retired

*Monthly take-home pay* €3,800 (including 800 rent a room from Granny flat on side of family home)

*Type of employment:* Public Sector

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

*Rough estimate of value of home* €500,000
*Amount outstanding on your mortgage: €*60,000
*What interest rate are you paying?* 0.9% tracker - BOI - 9 years

*Other borrowings – car loans/personal loans etc *None

*Do you pay off your full credit card balance each month? *N/a

*Savings and investments:* €33,000 (Rainy Day Fund)

*Do you have a pension scheme?* Public Sector pension - last 5 years 

*Do you own any investment or other property?* No

*Ages of children:* 20 & 17

*Life insurance:* Death in service, 150,000 & mortgage protection.

*What specific question do you have or what issues are of concern to you?*

1. Should I surrender the tracker on family home and remortgage for 200,000 to purchase a second property?
This mortgage is 50% LTV so should get a preferential rate

The repayments on this mortgage of 200,000 over 20 years is approx 1100 a month.
In addition to this there is the rental income from the granny flat which is 800. 
Collectively both rental incomes cal pay the mortgage off in the 20 years - any excess would be put straight into a pension pot which is tax free.

At the end of 20 years i have the 2nd property paid off - i can move into that and rent out the family home.

2.  As the hubby is 68 i will be taking this mortgage out in both our names but obviously i am the main earner.  He does have life insurance of 100k.  But could this be a problem with his age in the proposed plan of remortgaging obove?

Any advice ?


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## mtk (7 Nov 2020)

May I ask what are you trying to achieve?


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## Edenbridge14 (7 Nov 2020)

mtk said:


> May I ask what are you trying to achieve?


Good question - i'm looking to have a pension worth while. 
I'm only in public sector 5 years.  After speaking with my Pension crowd my lump sum is 3000 and pension is 500 a year.  If i stay in public sector then this will not be fruitfull.  
Prior to this i was a stay at home mum with part time work and returned to college getting a degree and a Masters etc.
By the same token this second property/investment could double up as an inheritance to my 2 kids and possibly a family home for one of them if needs be.


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## Sarenco (7 Nov 2020)

Edenbridge14 said:


> Good question - i'm looking to have a pension worth while.


I think you would be better advised to concentrate on purchasing notional service and/or making AVCs.

Re-mortgaging your PPR to purchase a rental property does not seem like a viable or sensible strategy in your circumstances.


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## _OkGo_ (7 Nov 2020)

This sounds like a bad idea. If I understand correctly between this thread and your other thread, you want to remortgage your PPR so that you can purchase a second property for ~€150k with €12k rent.

Firstly, I don't believe any bank will allow you to remortgage your PPR for that purpose and secondly, you will not get your partners name on a 20yr mortgage at 68.

Even if you could get the mortgage in your name only, I still believe that you don't fully understand the numbers involved. I would suggest taking time to read many of the posts on AAM to understand whether it is profitable. On a €12k rental, you are probably making €4/5k net profit after tax. However you want to take out a mortgage of €200k at 2-3% interest. This is€4-6k interest so your investment is not profitable, if anything it is likely to cost you money.



Sarenco said:


> I think you would be better advised to concentrate on purchasing notional service and/or making AVCs.



Sarenco's suggestion is probably your best option.


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## moneymakeover (7 Nov 2020)

Have you checked if you can get mortgage approval?

You will put you savings towards the investment?

Is the such properties available to buy? And you would move in in twenty years?

I think the idea makes sense. If you can make it work financially. If when you retire you have the current house plus the granny flat rented out.


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## Edenbridge14 (7 Nov 2020)

moneymakeover said:


> Have you checked if you can get mortgage approval?
> 
> You will put you savings towards the investment?
> 
> ...




Mortgage application is with a broker - he seems to believe i can get it with dilosk

Yes - i found a property that is 150k for 2 bed with a garden in a lovely quiet area opposite a golf club on the coast

Long term Rental potential of 1200 per month - and as it has access to its own private beach could rent out in summer months at 750 - 1000 a week. The PPR is 3 miles from this property so i'm available for any queries too. 

So would I be better then using savings to deposit 30% on this BTL property and borrowing 110k as a BTL in my own name rather than releasing the equity on the PPR ?

Then in 20 years, move into the beach side home, and rent out the family home as its 5 bed it would generate a higher income than 2 bed


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## moneymakeover (7 Nov 2020)

Sounds good and yes borrow against the new property preferably.

You would need to decide to let long term or short term (per week). Even though higher rents in summer you could end up with it empty for the winter. Long term letting would mean less effort on the part of the landlord.

And then again if it's on the coast will there be demand for long term letting?


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## Bronte (8 Nov 2020)

Are you holiday letting or not, you must decide. Yes to using your savings and yes to borrowing on the rental property. Rather than  trying to pick your retirement home now, an impossible task, concentrate on what property gets you the most rental income.

The granny flat rent is tax free, and will not be added to the other rental for tax purposes. You may gain tax wise there if rental income is half your husbands as tax bands are better the older you are.

Your income on 60 k is 3 k a month, plus your husbands income, plus rental. Where does the money go, are you able to buy another pension etc as others have mentioned.


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## Edenbridge14 (8 Nov 2020)

Bronte said:


> Are you holiday letting or not, you must decide. Yes to using your savings and yes to borrowing on the rental property. Rather than  trying to pick your retirement home now, an impossible task, concentrate on what property gets you the most rental income.
> 
> The granny flat rent is tax free, and will not be added to the other rental for tax purposes. You may gain tax wise there if rental,income is half your husbands as tax bands are better the older you are.
> 
> Your income on 60 k is 3 k a month, plus your husbands income, plus rental. Where does the money go, are you able to buy another pension etc as others have mentioned.



Its only recently i've been promoted to that salary. Prior to this was on a lower wage. And when we came back from UK in 2003 hubby decided to stop working a age of 50 to look after the kids.  So honestly the granny flat was a saving grace as it always paid the mortgage.  Then in the later years of kids second level education we decided to put them in fee paying schools as they showed dedication and promise - eldest lad is now in medicine in UCD with the 2nd daughter now showing the same potential.  So keeping all this going on one wage, with 2 cars is a lot.  Hubby is only getting his pension in last few years and thats how we have the savings built up.  

If i was to top up my pension with AVC's of 6000 a year will the children benefit if i don't live to see my pension ??  I'd hate to invest 60,000 over 10 years of a pension and not live to see it, or anyone to benefit from it apart from the shareholders

If i buy an investment property - that investment won't disappear if i die - if anything it gets paid off with life insurance policy


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## Sarenco (8 Nov 2020)

@mtk asked what you were trying to achieve earlier in the thread.

You answered that you were trying to ensure that you had a worthwhile pension.

Now you are concerned about maximising the legacy you leave to your kids.

Why?

They seem to be doing fine.

I would suggest you concentrate on boosting your pension entitlements and forget about re-mortgaging your family home to purchase a rental property.


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## Bronte (9 Nov 2020)

Edenbridge14 said:


> If i was to top up my pension with AVC's of 6000 a year will the children benefit if i don't live to see my pension ??  I'd hate to invest 60,000 over 10 years of a pension and not live to see it, or anyone to benefit from it apart from the shareholders


So to make your childen richer you should live out your final years in poverty?  Your son is going into a guaranted career, you and your husband have done everything to get them educated and you're now worried about what you will leave them.  You are making your children reliant on the bank of mom and dad into adulthood?  At what stage do you think it should be about letting them get on with it and concentating on having a nice life for you and your husband who is heading to his seventies.


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## NiallSparky (9 Nov 2020)

Not sure why a child who has a medicine degree (or similar) is going to need or particularly benefit from an inheritance from you 30-40 years from now. Thinking about your pension/retirement makes sense, I'd recommend focusing on this exclusively rather than any inheritance implications.


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## _OkGo_ (9 Nov 2020)

Bronte said:


> As some one who is now able to pull out income from rent, and more to come in a couple of years I say go for it.



With respect Bronte, your situation is sounds very different and you appear to own your properties or at least have very high equity in them so yes you can protect the capital in case you 'pop your clogs' 

The OP is not in that position. They don't know:

whether they will short term or long term let the property
what the rental potential is ( Both 1200pm Long term or 750 - 1000 a week short term sound extremely optimistic)
whether it is profitable (does not look likely as a 30% LTV BTL).
Right now, they don't have the 30% (plus purchase costs) anyway so their best approach would be to save for 12 months, do a little research and revisit when they have ~€60k on hand and then reconsider if it is sensible. Buying too soon costs you money.


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## Bronte (9 Nov 2020)

The point OKGo was that was the position I was in when I started.  

OP should go for it now, if crunching the numbers makes sense - that I did not wok out -  as she will be getting too old for a mortgage.


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## Sarenco (9 Nov 2020)

Bronte said:


> OP should go for it now, if crunching the numbers makes sense - that I did not wok out - as she will be getting too old for a mortgage.


So you have advised the OP to "go for it" without considering the numbers?

Seriously?!


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## LS400 (9 Nov 2020)

If you really are focused on getting a rental property, You should get crackin, as it will become more difficult for you as the years go by. 

Your in a good position financially speaking, and you have found the property which meets your needs. Personally speaking, if it were me, Id opt for long term rental for the return of €1200. Short term lets will turn an enjoyable investment into a slog imo.

I started a few years before you, property was more affordable, and yet it wasn't easy I can tell you, but, Im glad I did. Apart from one episode in the UK, I have really enjoyed letting properties. Its not for everyone though, and only for the fact its draining to get past common sense to get a loan, Id be in the market again, its just not worth the headache.   

You have security, (Public Service) if you can I would say go for it. 

Pay of this loan as soon as is possible making out of course payments as a priority to this mortgage if and when possible. the sooner you have the deeds, the more enjoyable it becomes

A broker though will look at your position and no doubt will say your in a good position to obtain a mortgage, its the banks that will put you off this path, as, they will do everything they can to frustrate your goals. As i say , common sense will be in short supply there.



     .


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## Bronte (9 Nov 2020)

Sarenco said:


> So you have advised the OP to "go for it" without considering the numbers?
> 
> Seriously?!


You're against propety investment are you not. So no matter what I post what difference.  Why don't you post what her investing in her pension will give her back. 

She hasn't given us concrete numbers, she has a deposit, she can get a mortgage, she can't figure out holiday or long term letting and is confusing the issue by trying to buy her final home.  She can do better on the rent if she buys smart.  That's what she's not seeing as she is clouding the issue.  And to make matters worse it's turned from property investment for income into adult children's inheritence.


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## Sarenco (9 Nov 2020)

Bronte said:


> You're against propety investment are you not.


No Bronte, I'm not.


Bronte said:


> Why don't you post what her investing in her pension will give her back.


The OP works in the public sector.  There's no mystery what purchasing notional service will achieve.


Bronte said:


> She hasn't given us concrete numbers, she has a deposit, she can get a mortgage, she can't figure out holiday or long term letting and is confusing the issue by trying to buy her final home. She can do better on the rent if she buys smart. That's what she's not seeing as she is clouding the issue. And to make matters worse it's turned from property investment for income into adult children's inheritence.


And yet you advised her to "go for it"!  

Weird.


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## LS400 (9 Nov 2020)

In fairness Sarenco, rightly or wrongly, you only ever advocate pensions, full stop. And, com,on, your property investment adverse. You know it, and I know it.

I say rightly and wrongly, as there are time when some folk are not in a position and should not go anywhere near an investment property, and they rightly should be steered away, but I’m glad I didn’t have that voice in my head when starting out on the property investment road.

If I ever saw a post of yours encouraging the paying down of a mortgage or investing in property, I’d write to Ripleys Believe it or not.

There are broader views out there. I quite happily do both. I have investment properties AND pay into a pension, and would encourage both roads to take.


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## NoRegretsCoyote (10 Nov 2020)

LS400 said:


> I say rightly and wrongly, as there are time when some folk are not in a position and should not go anywhere near an investment property, and they rightly should be steered away, but I’m glad I didn’t have that voice in my head when starting out on the property investment road.



I look at a lot of these threads. 

In many cases it makes sense to hold on to an investment property if you kind of stumble into it: received an inheritance, want to hold on to a property because kids will go to college in a few years, got married and spouse had an apartment, etc, and you don't mind property management.

For most people starting out the yield just isn't worth the risk for one property especially if they are paying tax at the higher marginal rate, which nearly everyone will be.

Being a landlord makes sense at scale, with low leverage and in unfashionable locations. There are posters here who seem to have a basket of apartments in places like Limerick city where you can buy a property for not much over €100k get >10% yield. The 9.6% yield the OP hopes for seems pretty optimistic to me too for a rural property.

In @Edenbridge14 's case the business plan might work, but there is a lot of risk. As @Sarenco says you know what you are getting when you buy an AVC.


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## POC (10 Nov 2020)

You say you’re looking to maximise retirement income - you haven’t mentioned your contributory person in your calculations. Also I find it hard to believe your public service pension will be only 500. I know the schemes vary depending on when you joined, but I think you should try to understand your scheme and get a figure you can be confident in. (Early Riser on AAM is very knowledgeable.)
At the moment you seem to be financially secure. You have a child in college, another in a fee paying school, your mortgage is nearly finished, you have savings - and you’re managing this with one salary and a pension. 
I definitely wouldn’t be looking at taking on another property, with all the possible tenant pitfalls and financial obligations. I‘ve read about lots of tenant issues on AAM and in the newspapers, as well as hearing plenty on Joe Duffy! I wouldn’t want the sleepless nights.....
A second property would also give you less flexibility about your own retirement age, as you would have the mortgage obligations.  
If I were you, I’d be looking at retiring early to spend time with my husband, but I’d get the kids through college first.
You haven’t mentioned something very important - what does your husband think?


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## Bronte (10 Nov 2020)

Roughly: 

Purchase price 150K
Mortage 110K (not sure where OP is getting 40K from as she only has 33K)
Repayments 1100 = 13200 (of which it's 4/6K interest. So worse case scenario it's capital repayments of 7K
Rent 12K

Tax is rent 12K - 6K interest - 1K running costs - depreciation 1K = 4K taxable 50% is 2K (or 4K if the interest is 4K) 

So she has 12K rent, pays 1K running costs, mortgage 13K, 2K tax = 16K shortfall of 4K annually.  But she ends up in 20 years with ownership of the property.  Worth 150K which costs her 80K. 

At age 67 she has an income of 12K rent.  And she still has her capital.  As her salary will be gone and she'll be on pension the tax should be a lot less as she shouldn't be hitting the higher rate then.  

Meanwhile in a couple of years her children are finished education and she has more income from that costs being gone, also through salary rises and she can pay down the rental mortgage faster, saving her interest, so she will get the income sooner.


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## Bronte (10 Nov 2020)

Sarenco said:


> The OP works in the public sector.  There's no mystery what purchasing notional service will achieve.


My view is nothing ventured nothing gained. I've no idea what purchasing notional service will achieve so if you would inform us of that we can decide if it's a good idea or not.


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## Sarenco (10 Nov 2020)

Bronte said:


> Mortage 110K (not sure where OP is getting 40K from as she only has 33K)


The OP is proposing to re-mortgage her PPR to raise the finance.


Bronte said:


> I've no idea what purchasing notional service will achieve so if you would inform us of that we can decide if it's a good idea or not.


It will increase the OP's pension entitlements.  

There is a sub-forum on public sector pensions if you are interested in learning about purchasing notional service.


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## Bronte (10 Nov 2020)

Instead of my going off looking can you tell us how much the OP could purchase in notional service, how much it would cost and what she'd get out of it.


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## Sarenco (10 Nov 2020)

Bronte said:


> Instead of my going off looking can you tell us how much the OP could purchase in notional service, how much it would cost and what she'd get out of it.


Why not read through some of the threads on purchasing notional service to educate yourself?  

Nothing ventured, nothing gained.


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## Edenbridge14 (12 Nov 2020)

Well i started a debate alright!
Clearly there was more than one function in purchasing this property.
The property would double up as a pension, a retirement property for us both to live in, (and rent out family home) an inheritance for children.
It had the potential to rent out weekly over the summer months and then a lease of 6 months as doing my research once a tenant has more than a 6 month rental can have more tenant rights etc etc 

Anyhow a bidding war started over the weekend and it got to its maximum value of 165k where it was getting silly.  
Hard to believe i wanted to buy in the same estate in 2015 for 80k. At the time I had only started in public sector 9 months and bank wouldn't give me 60k.  I know my property. I know the area and I know what works.  I've never made a bad decision.  Just feels i'm being punished for marrying an older man
Same way when i purchased the family home, i saw the garage and the potential to convert to a granny flat and rent out and qualify for rent free income under rent a room .
Anyhow the liitle house i was trying to purchase is 60sq metres and honestly not worth 165,000 with management fees.  Theres much better value on the market. So i pulled out
So i'm back to saving now all that I can - who knows what next 12 months will bring with Covid depression looming - or so they say....


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## _OkGo_ (12 Nov 2020)

Edenbridge14 said:


> Its only recently I've been promoted to that salary. Prior to this was on a lower wage. And when we came back from UK in 2003 hubby decided to stop working a age of 50 to look after the kids. So honestly the granny flat was a saving grace as it always paid the mortgage. Then in the later years of kids second level education we decided to put them in fee paying schools as they showed dedication and promise - eldest lad is now in medicine in UCD with the 2nd daughter now showing the same potential. So keeping all this going on one wage, with 2 cars is a lot. Hubby is only getting his pension in last few years and thats how we have the savings built up.



I don't think you were punished for the age gap but rather judged according to your circumstances at the time. Your earlier post suggests that you were not a good candidate for a BTL loan in 2015. You were newly employed, a partner who was a stay at home dad (or recently in receipt of pension), 2 dependents in fee paying schools and further education on the horizon, a PPR mortgage that was at >€80k, minimal savings and relying on your rent a room income.



Edenbridge14 said:


> Anyhow the liitle house i was trying to purchase is 60sq metres and honestly not worth 165,000 with management fees. Theres much better value on the market. So i pulled out



You couldn't have pulled out if you were never 'in' in the first place. You don't have the min 30% deposit or mortgage approval in place so this was never a runner. And besides, if your rental projections were accurate, then €150/165k is not a deal breaker.

There is a big difference between seeing the potential in rent-a-room and making a BTL profitable. One is very low risk and very high reward, the other is high risk (when borrowing at 70%) and low reward. If buying a BTL is what you really want to do, it would be much safer for you to save for 3/4 years, reach 50% LTV and then go ahead with your plan. You are not really missing out significant rental profits in those years so why take the risk.



Edenbridge14 said:


> I've never made a bad decision



I wish I could say the same thing


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