# Next financial steps for me?



## smooth (15 Jan 2011)

Age: 35
   Spouse’s/Partner's age: -

   Annual gross income from employment or profession: 75 - 95k
   Annual gross income of spouse: - 

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

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

   Rough estimate of value of home: 170k
   Amount outstanding on your mortgage: 240k
*What interest rate    are you paying? *Tracker

   Other borrowings – car loans/personal loans etc

   Do you pay off your full credit card balance each month? No
   If not, what is the balance on your credit card? nearly 1k

   Savings and investments: 20k and 3k in shares

   Do you have a pension scheme? Yes, for a few years

   Do you own any investment or other property? No

   Ages of children: -

   Life insurance: Yes



Hi there!

I'm a mid 30's single, childless guy on 75k with about 20k saved and another 3k in shares. I have 30yrs left on my mortgage but am planning to rent my place out soon and head to australia for an unknown amount of time, probably a few years ... luckily my salary is going to go up by another 20k in the move.  I don't have a pension that long, a few years maybe and I'm quite conscious about this. My car loan will be paid off in a few months and I've no debt tied to me.

I'm wondering what my next financial steps should be? I was planning on buying another house here on the basis that there's great value to be had, I hate my current place and don't intend to live in it again. But I'd like to know what peoples opinions are on this move or would I be wiser doing something else with my savings?


----------



## niceoneted (16 Jan 2011)

If you are going to Oz for an unknown amount of time I think with the amount outstanding on your mortgage and the term along with the hassles and expenses of renting from such a distance, I would be inclined to off load the house before you go and make a clean break. 
I appreciate that there will be a shortfall in the sale price and mortgage but you may have a car for example to get rid of and other stuff. 
Try then to do a deal with bank so you may be leaving with a small loan which given your wages you should be able to clear quickly. 

I would also look at the way you spend money. for what you earn you are in a position to have more saved.


----------



## Brendan Burgess (16 Jan 2011)

I would be inclined to sell the house as well, given that you don't want to live in it when you come back. 

The bank might not let you sell it but you should be able to convince them given that you are going to Australia and you have a low cost tracker.

In fact, I would be asking them to do a deal on reducing the balance outstanding. I think that they will refuse, but it's worth trying.


----------



## smooth (18 Jan 2011)

Thanks for the responses guys. I'm surprised to see you both recommending to sell the place. Didn't expect that!

My figuring on it was if I try to sell now I'm looking at, at least a 70k shortfall. However, if I rent the place to the council they will do a four year 'rent guaranteed' income. This is negotiable but in their favour I'm sure, so if I'm looking at supplementing this by between say 100-300e/pm it's not too bad a hit, compared with just paying of the remnants of my stupidity and having nothing for it. 

I was planning on buying another place here, even though I'm leaving for a while. Obviously this is on condition of the bank giving me the mortgage. But if I wasn't to do that my savings are just sitting there. What should I do with that? High interest savings account or lock it in somewhere for x-years?

Niceonted, you're right by the way ... I do spend more than I need to and could certainly save a lot more. I'm largely on top of it though! I hope


----------



## Greta (18 Jan 2011)

If you are able to rent your house to the council and have no hassle for 4 years, and also to keep your tracker, it might be worth your while keeping the house. 

Buying a *second* property seems way too risky though, making you overexposed to one asset class - Irish property. Also with the relatively low amount of savings, you may not even be able to get another mortgage to buy another property.


----------



## Bronte (19 Jan 2011)

As a non resident landlord I certainly wouldn't like to be doing it from as far away as Oz.  These council rental schemes sound wonderful but how are you going to deal with any issues.  

Not sure how long you are on such a high salary but there is something wrong with you having such low savings relative to salary.  Also surprised you didn't overpay the mortgage when you know there is negative equity.  If you are getting a mortgage in Australia, do not get anything higher than 20 years.  25 and 30 year mortgages are not advisable.  Why  on earth do you not pay off your credit card every month.  Have you calculated how much you have paid in credit card interest in the last 12 months.  

Presumably your life insurance is for the mortgage only and is term insurance as you are single?

Pension, this is something that a lot of people overlook in their lifetime, it's something that should be revisited every couple of years to ensure that you are sure it will pay out what you expect at retirement age.  Also should look at how much of it is going on management and fees.  

My advice to you is to sell and save and buy later, if you return.  If planning to stay in Oz for a number of years I'd look at buying there within 6 months of arriving.  But do the maths.  And location.


----------



## Greta (20 Jan 2011)

Bronte said:


> My advice to you is to sell and save and buy later, if you return.  If planning to stay in Oz for a number of years I'd look at buying there within 6 months of arriving.  But do the maths.  And location.



OP may not be able to buy in Oz within 6 months of arriving, with such low savings - or none,  if he sells his house and uses his savings to reduce the negative equity, and is then still left with a large debt to the bank. That is, if the bank will even allow him to sell his house if the proceeds won't clear the mortgage. 

He might in fact be stuck with this house and have no option but to rent it out. Though it *is* risky, considering how far Oz is from Ireland

Good advice about 30 year mortgages, I too can't see why people have them if they can afford to overpay and reduce the term, as 30 years is an awfully long time to have a mortgage hanging around your neck.


----------



## fizzelina (20 Jan 2011)

smooth said:


> I was planning on buying another place here, even though I'm leaving for a while. Obviously this is on condition of the bank giving me the mortgage. But if I wasn't to do that my savings are just sitting there. What should I do with that? High interest savings account or lock it in somewhere for x-years?


 
Property is not the only option at all for those savings and buying a house is adding debt to yourself as well as risk. I would look at An Post savings bonds / savings certificates etc and consider saving the money rather than investing in property when you plan to leave the country. Also personally I would sell the 1st house so I didn't have tenant hassles while away but it might work if you have guaranteed rental income and a family member here who could deal with issues on your behalf.


----------

