# two mortgages, creche and negative equity. married couple.



## asker

Age: 33
   Spouse’s/Partner's age: 33

   Annual gross income from employment or profession: 75k
   Annual gross income of spouse: 50k

   Type of employment: e.g. Civil Servant,  self-employed 
wife is a civil servant, i work for a major multinational

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

A !

   Rough estimate of value of home
house 1 - cost 400,000 , current value is around 300,000 i would estimate
house 2 - cost 300,000, current value is around 250,000 estimate


   Amount outstanding on your mortgage: 
house 1 - 360,000
house 2 - 293,000

*What interest rate    are you paying? *
house 1 - 4.99% fixed until april 2011
house 2 - 60,000 fixed @ 5.89% until june 2013
            - remainder variable @ 3.85%

   Other borrowings – car loans/personal loans etc
I have a personal loan for 11,000
Wife has personal loan for 7,000


   Do you pay off your full credit card balance each month? 
we try to.

   If not, what is the balance on your credit card? 
for both of us its around 1000 euro

   Savings and investments:

   Do you have a pension scheme? 
yes, currently has 20,000 in it.
Wife has one too, dont know her balance

   Do you own any investment or other property? 
yes, as stated above

   Ages of children: 
    3 and 1.5 , creche fees are 1500 a month.

   Life insurance: 
    with Aviva , 100 euro per month.

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

*we are interest only currently on both mortgages and are barely above water, the rental property we are getting 750 euro pm, mortgage is 1004 + 50 euro life assurance is a loss of 300 euro pm.

we come off interest only in both houses in 2011, with an increase of around 600 euro per house. 

Ideally i would like to get rid of the rental property which we are losing money on and is a headache with two small kids in the house having to go over and do repairs etc..


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## alaskaonline

Are you living in Dublin?



> Ages of children:
> 3 and 1.5 , creche fees are 1500 a month


 that's a lot for a Creche. Did you "shop" around? My dd is in a perfectly fine Creche for far less money. Also if you have two, a childminder might come "cheaper".



> the rental property we are getting 750 euro pm


 what type of property is it?


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## fizzelina

asker said:


> Ideally i would like to get rid of the rental property which we are losing money on and is a headache with two small kids in the house having to go over and do repairs etc..


 
You would have 43k negative equity if you get rid of it though. To be honest your situation is a little confusing, you earn 125k gross which is very high and it would be helpful to see how your net income is spent, see other threads for example of breakdowns given. Then people here could advise you better if they know the net income monthly and where it goes. Also if you don't know where it goes start keeping track and a budget as with such a high income you are in a good position to pay off your loans if you are focused on doing that and not spending too much elsewhere. For your original q I would say selling the rental is not necessarily a good idea, it would put you into more debt for neg equity. Is there no way you can try interest only again on it, maybe ask the bank.


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## asker

alaskaonline said:


> Are you living in Dublin?
> 
> that's a lot for a Creche. Did you "shop" around? My dd is in a perfectly fine Creche for far less money. Also if you have two, a childminder might come "cheaper".
> 
> what type of property is it?



My wife organised the creche, and it is a very good one which we are happy with, i would have thought that for Dublin that was a good price ?

Property 1 is in dublin and is 4 bed semi, property 2 is in meath and is 4 bed detached.


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## giles

I think you should sell the rental property. Yes you will be in 43k negitive equity but sometimes you have to cut your loses. Theres no point throwing good money after bad especially when your hearts not in it. From what you say this house is becoming a burden for you.


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## FioBi

There is a tax break on creches where if the employer agrees to pay the creche directly you can have it deducted from you salary and therefore receive tax relief at marginal rate. This could significantly reduce your fees.

I think the employer has to agree to this for all employess if they wish to use a creche. Our company do it and have agreements with several creches. They have to make some small contribution to the creche to satisfy the revenue conditions but its all perfectly legal.

Perhaps the creche can explain this type of scheme to you.

From the Revenue site

*Crèche/Childcare Facilities*

*Employer-provided facility*

Where an employer provides free or subsidised childcare facilities for employees, a taxable benefit does not arise where the childcare facility is provided on premises which -

meet certain requirements of the Child Care (Pre-School Services) Regulations 1996, and
are made available-
solely by the employer
by the employer jointly with one or more other participants in a joint scheme and the employer is wholly or partly responsible for either -
financing and managing the facility, or
providing capital for the construction or refurbishment of the premises, or

by any other person or persons and the employer is wholly or partly responsible for either -
financing and managing the facility, or
providing capital for the construction or refurbishment of the premises.


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## Mpsox

At the minute, for mortgage interest and creche fees you are paying approx €4k a month.

without knowing your exact tax affairs, I'd estimate you are taking home around €5k a month after tax and between rental income and childrens allowance, around another €1k. 

Therefore the question is, what are you spending €2k a month on, after you've paid your mortgage?

As another poster suggested, you should look at what else you are spending money on, and see how you reduce it. Even after the increase in mortgage once you come off interest only, you've still got ballpark €800 a month to live on. Also take a long hard look at your tax affairs and make sure they are in order. Are you claiming for things like bin tax, health expenses etc etc.


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## Nige

the tax breaks for creches only applies where the employer owns (or part owns) the creche.

I'd also say that €1,500 a month on creche fees is very reasonable for 2 children. It works out at just under €70 a day.


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## asker

Mpsox said:


> At the minute, for mortgage interest and creche fees you are paying approx €4k a month.
> 
> without knowing your exact tax affairs, I'd estimate you are taking home around €5k a month after tax and between rental income and childrens allowance, around another €1k.
> 
> Therefore the question is, what are you spending €2k a month on, after you've paid your mortgage?
> 
> As another poster suggested, you should look at what else you are spending money on, and see how you reduce it. Even after the increase in mortgage once you come off interest only, you've still got ballpark €800 a month to live on. Also take a long hard look at your tax affairs and make sure they are in order. Are you claiming for things like bin tax, health expenses etc etc.



Monthly expendature.

Creche    1400
house2        1005
house1        1500
life assurance 70
home insurance       50
phone        32
sky        45
car        300
petrol        280
medical        120 My son is on medication.
loans        270
gas/esb/bins 300

Total: 5372

incoming.
Wife Salary     2035
Me Salary        2575
childs allowance        300
rent        750

Total: 5660

Which leaves 288 euro PM to live on, food for a 4 person family for a month, this also excludes car tax and insurance, upkeep for both houses and other misc items i probably forget, also keep in mind that both houses are interest only and this is where we are at.

Of my salary 14000 of it is paid as a bonus yearly, in april net is around 8000.

Ideally i am wondering if i can sell one house at a loss and put the loss on to the mortgage of our primary residence. Is this a good idea and would any bank go for this ?


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## aristotle

Your salaries look wrong for 50k and 75k gross? You should be getting more than 2k and 2.5k net per month?


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## asker

As stated in above post of my 75000, 14000 is paid as a lump sum yearly bonus so actual salary is more in the region of 60k


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## aristotle

Yeah but even 60k gross should give you more than 2.5k net?

Same for 50k gross, should be more than 2k net a month?


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## truthseeker

asker said:


> As stated in above post of my 75000, 14000 is paid as a lump sum yearly bonus so actual salary is more in the region of 60k


 
The take home figure still seems a bit low to me - are you paying VHI, pension, AVCs etc out of that before you get the take home figure? 

Your petrol costs seem very high too as do gas/esb and bins - are you using anything heavy duty on the gas/esb? Do you ensure to use things like the washing machine and other appliances on non peak hours?

The rent you are charging seems low for a 4 bed detached house also?

Whats the 300 on car if this excludes car tax and insurance and petrol? Is it a car loan? If so could you downgrade your car?


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## Mpsox

You're in a position whereby when you get your bonus next April you can pay off a large chunk of your personal borriwing.

Your car costs look high, unless you have a long commute. Are you running 2 cars and if so can you reduce to 1 or downgrade?

I agree with what other posters are saying about your tax affairs, even allowing for the extra levies your wife pays as a public servant.


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## asker

truthseeker said:


> The take home figure still seems a bit low to me - are you paying VHI, pension, AVCs etc out of that before you get the take home figure?
> 
> Your petrol costs seem very high too as do gas/esb and bins - are you using anything heavy duty on the gas/esb? Do you ensure to use things like the washing machine and other appliances on non peak hours?
> 
> The rent you are charging seems low for a 4 bed detached house also?
> 
> Whats the 300 on car if this excludes car tax and insurance and petrol? Is it a car loan? If so could you downgrade your car?



Yes i pay around 10% of my salary into a pension as does my wife, healthcare is provided by my employer.

petrol is for my wife she commutes 1 hour journey each day, 300 is for car loan.  Our electicity and gas are both with bord gais i think.


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## Maggs065

Take home amounts seem very low - I'm on ~€43,000 and take home (after pension contribution) €2,700.


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## dereko1969

can your wife use public transport? www.taxsaver.ie provides fairly cheap public transport tickets as the cost comes out of the gross income, i would be fairly certain that all public sector companies are signed up to this.


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## asker

no she cant, and has to drop two kids off in a creche on the way to work anyway.


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## Mpsox

This may sound brutal but is it actually worth your wifes time to be working?

Take home salary - creche fees - petrol means she is working for €17 a day. In fact, if you take the car loan, insurance, car tax etc into account, it might actually be costing her to go to work. Is it worth crunching the numbers to see what the impact would be if she could take a career break, take the kids out of creche, not run the car and transfer her credits over to yourself?


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## truthseeker

I agree with Mpsox - plus one partner at home able to have time to do chores etc contributes hugely to quality of life for both as you are not both coming home after long days at work trying to fit chores in and being tired etc...

She could go back to work when both kids are in school and creche fees are down to just after-school hours?


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## Pocket

As the others have pointed out I would definately review with your employers how your income is being taxed. Even after pension contributions I would have thought your incomes should be at least 2.5 and 3K per month, if you earn 50K and 60K.

Saving on the small things such as Sky (basic should be only 22 euros), ESB/gas will help free up some money for once off bigger expenses. But will not resolve your issue with your second house coming off interest only.

Mpsox, has a point. It would be really worth sitting down to do that maths (including getting a better grasp on how you are taxed). Could you wife take a years leave from her job until your elder child is at preschool/school?


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## fobs

His wife is a public servant so would not advise her to give up that job lightly. She may find it hard to get a comparable job in the future and the creche fee will reduce once kids are in school so short term pain.


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## Mrs Vimes

Also, in most of civil service/public service you are not in any way guaranteed a job to go back to after a career break.  I believe they actually hold teacher's jobs and get a temp but for the rest it's bye-bye, if we have a vacancy when you want to come back we'll see you then.  Who knows how long it'll be before the recruitment ban is lifted.  Quite a risk to take.
Sybil


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## dereko1969

1234 said:


> That's not quite true. You are guaranteed a job. Just not the exact one you left. She would get the same pay and conditions in a similar post to the one she left.
> 
> She could also look at Job Sharing or the Shorter Working Week Scheme. I would advise that she talk to HR to discuss what options are open to her.


 
yes but what i think was meant is that you're not guaranteed to get a job (at the same level) when *you* want it, they'll fix you up eventually but there have been stories of people having to wait up to a year to get a job.


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## dereko1969

asker said:


> no she cant, and has to drop two kids off in a creche on the way to work anyway.


 
can you avail of the taxsaver/public transport then?


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## Mrs Vimes

dereko1969 said:


> yes but what i think was meant is that you're not guaranteed to get a job (at the same level) when *you* want it, they'll fix you up eventually but there have been stories of people having to wait up to a year to get a job.



Yes, what I meant is that you have to wait until there is a vacancy being filled.  At the moment that could be way longer than a year since vacancies are not being filled at all due to the recruitment ban.
Sybil


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## aristotle

Asker, can you clarify why your net income seems lower than it should considering your high gross incomes?


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## niceoneted

As others have pointed out sky basic package is 22 + 2 for the childrens channels. 
Gas / ESB / Bins are extremely high so you need to look into these. 
Also agree with others when they say your gross and take home don't match up - I understand that 14k is a bonus. 
I would start a spending diary to see where the money is going on the misc expenditure. 
Would there be a possibility of considering an au pair for a year of two until you can clear the short term debts and your first is in school. 
I would also consider using the 8k you get as a bonus to pay towards clearing the negative equity on the properties. 
Are you claiming all tax reliefs that you are entitled to.


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## orka

Plugging the salaries less 10% for pensions into a tax calculator (so 54K for OP, 45K for wife) gives net salaries of 3,169 and 2,801 rather than 2,575 and 2,035 - so total family income with rent and child benefit should be just over 7K.


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## Mpsox

asker said:


> Yes i pay around 10% of my salary into a pension as does my wife, healthcare is provided by my employer.
> 
> petrol is for my wife she commutes 1 hour journey each day, 300 is for car loan. Our electicity and gas are both with bord gais i think.


 
reduce your pension contributions for a number of years, especially as once you have your finances sorted out, you may have the option of making lump sum payments from your annual bonus


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## asker

thanks for all the replies, my wife is a teacher so a career break is definetely an option.

I will have a talk with the payroll department and see if there is an error with my wages, and also have a look over reducing pension contributions, for my wife as she is a teacher afaik pension contributions are mandatory.

i have started using mmex after a good search through the forums today, as far as Tax liabilities are concerned I am hopeless at this stuff and have trouble deciphering the information on the revenue and citizensinformation websites. Can anyone suggest examples of tax reliefs i may be due ?


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## Mpsox

2 obvious tax reliefs would be

Trade union subscriptions (assuming your wife is in one)
Medical expenses, either in total or the difference between what you paid and what you're health insurer reimbursed you. This applies to all your family


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## dereko1969

sorry i can see how you mis-interpreted what i wrote, i certainly didn't mean they'd fit you in at a lower level.

with all the restructuring in place at the moment and more to come due to the Croke Park agreement, there is absolutely no certainty that people will be able to come back into the service at the time they want to. there may not be a vacancy at the grade. anyway this is really OT.


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## aristotle

asker said:


> I will have a talk with the payroll department and see if there is an error with my wages, and also have a look over reducing pension contributions, for my wife as she is a teacher afaik pension contributions are mandatory.


 
Talk to payoll? Come on, you cant honestly say that you are not aware that your gross and net pay don't add up based on the figures you posted. Whats going on?


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## greentree

Is your rental income of 750 after tax? 

We found that after paying tax, an investment property is hardly worth it.


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## alaskaonline

Mpsox said:


> 2 obvious tax reliefs would be
> 
> Trade union subscriptions (assuming your wife is in one)
> Medical expenses, either in total or the difference between what you paid and what you're health insurer reimbursed you. This applies to all your family



Also for the bins. You get tax credits here, too.

It's not much but small things accumulated also make a difference.


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## annR

>>There is a tax break on creches where if the employer agrees to pay the creche directly you can have it deducted from you salary and therefore receive tax relief at marginal rate. This could significantly reduce your fees.<<

My company used to do things this way but I was told it was axed in the October 2008 budget.  If anyone knows different I'd appreciate hearing from them!

Asker  >>I will have a talk with the payroll department and see if there is an error with my wages, and also have a look over reducing pension contributions, for my wife as she is a teacher afaik pension contributions are mandatory.<<

Why don't you just look at your payslips?  It should have all the information you need about gross and net.


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## SteveW9

asker said:


> Monthly expendature.
> 
> Creche 1400
> house2 1005
> house1 1500
> life assurance 70
> home insurance 50
> phone 32
> sky 45
> car 300
> petrol 280
> medical 120 My son is on medication.
> loans 270
> gas/esb/bins 300
> 
> Total: 5372
> 
> incoming.
> Wife Salary 2035
> Me Salary 2575
> childs allowance 300
> rent 750
> 
> Total: 5660
> 
> Which leaves 288 euro PM to live on, food for a 4 person family for a month, this also excludes car tax and insurance, upkeep for both houses and other misc items i probably forget, also keep in mind that both houses are interest only and this is where we are at.
> 
> Of my salary 14000 of it is paid as a bonus yearly, in april net is around 8000.
> 
> Ideally i am wondering if i can sell one house at a loss and put the loss on to the mortgage of our primary residence. Is this a good idea and would any bank go for this ?


 
Your salaries look wrong for 50k and 75k gross? They are way off.


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## aristotle

SteveW9 said:


> Your salaries look wrong for 50k and 75k gross? They are way off.


 
Thats been mentioned a good few times but the OP is refusing to clarify.


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## asker

aristotle said:


> Thats been mentioned a good few times but the OP is refusing to clarify.



I clarified this in the post, 75K includes investments and a lump sum payment, i also pay for train ticket( deducted at source ) and pension contributions of 7% what else do you want to know ? How am i refusing to clarify ? If you dont have something constructive to add then why not just keep out of the conversation...


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## aristotle

Asker, the below is what you have stated....

_As stated in above post of my 75000, 14000 is paid as a lump sum yearly bonus so actual salary is more in the region of 60k_

Now you say the 75k (which is really 60k as you get a bonus) includes investments? What investments? What is your actual salary if its not 60k?

Basically I am trying to figure out how 50k and 60k gross salaries equate to 2k and 2.5k net. That doesn't add up, your net salaries should be a lot higher.

Can you explain the difference?


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## Mynydd

As OP works for a major multinational, I would assume company share plans and AVC's?


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