# Thirtyone year old with fourty year mortgage etc!



## terrestrial (13 Sep 2007)

Hi, thanks a million for this new section and the posts so far has already given me great ideas about how others manage their money, and how to better it etc. I realize I am not doing enough (in fact none at all) to keep track of my spending habits etc, I intend to do that from now on (hopefully I will be able to keep the progress updated in this thread!)

Age:  31
Partner's age: 31

Annual gross income from employment or profession: €56000 + Approx 4k bonus and overtime + €4200 from Rent-a-room (short term income)
Annual gross income (girlfriend) : €26000

Type of employment: Payee, IT/Software.

Expenditure pattern: In general are you spending more than you earn or are you saving? 

  Saving approximately €500 to €750 a month (I have to wait till end of the month for clearer picture), however expenses spikes certain months (long haul flight tickets etc)

Rough estimate of value of home: €375K
Mortgage on home: €245K
Mortgage provider: FirstActive
Type of mortgage: Current Account Mortgage (ECB+1.29%)

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

Do you pay off your full credit card balance each month?
Yes, usually. I miss then occasionally, due to being totally unorganized, but I have better methods in place now (online banking etc), so hopefully always in time from now on.

  If not, what is the balance on your credit card? : n/a.

Savings and investments: 

About €20K in FirstActive Current Mortgage linked 'facility account'.
About €10K worth of real estate investments overseas

  Do you have a pension scheme? 
Yes. 5% + 5% employer contribution + 10% AVC. Started some three years ago.

Do you own any investment or other property?  
No. Girlfriend owns property in Dublin, which is being rented out at the moment (approx €1200 pm). She pays the mortgage on that property (approx 600pm). I solely own the property where we both live, and I pay the mortgage on my own (approx €1200pm). She helps me with €350 pm (from her rental income).

Ages of children: No children.

Life insurance: €350 (mortgage related), Work provides insurance cover etc too.

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

*A few to be honest.

1. Prime concern is not financial, but has financial implications. Girlfriend is going thru a number of tests at the moment and if cleared, would be enlisted for a brain surgery within next six months, which could stop her from working for a while, or a few years, cutting her income by more than 60%.

2. Mortgage! Well, no surprises then!! With the house prices going down, and just two years into the 40 year (!!) mortgage, I haven't been able to make substantial dent on the loan, even with nearly 20k in the Current/Facility Account working to reduce the interest). I live well below my means at the moment, imho! I drive a 10 year old cheap but reliable car, get train to work, cooks at home a lot etc. Okay, I don't pack lunch, I guess thats something that I can try to improve on. However I am 31 now, and my expenses are going to go up soon, as we are considering getting married and babies etc, that will reduce the savings ever further, which worries me as the mortgage feels like getting bigger and bigger!

3. Personal commitments to family overseas. We would like to move overseas in next 2 to 4 years to be near my elderly parents (and to return some 10 years later once children reach certain stages of their education - not fully thought thru yet). I am worried that I have already lost that choice with the house prices and slow market etc.

4. Considering my age, profession and length of the mortgage, have I borrowed too much? Assuming I will be in employment here (and relatively similar income overseas when I move) for next 10 - 15 years, supporting my wife and children, is there anything else that I can do now to make sure that I would be able to afford them a good life? Should I sell and rent? Should I start saving even more (stop gym, sky subscriptions etc too?)

Rather long post, apologies! Thanks a million for reading!

Terrestrial!


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## moondance (13 Sep 2007)

*Re: Opinions please!*

I think you're doing fine as you are! Has your girlfriend many years / debt outstanding on her mortgage? One option would be for her to sell and put your mortgage in joint names (if you are talking marriage and babies) and pay off a lump sum on your mortgage with a large portion on what she makes from sale of her place - if she's agreeable to that! It all depends on what she'd make on the sale in relation to what she owes the bank.


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## Purple (13 Sep 2007)

*Re: Opinions please!*



moondance said:


> I think you're doing fine as you are! Has your girlfriend many years / debt outstanding on her mortgage? One option would be for her to sell and put your mortgage in joint names (if you are talking marriage and babies) and pay off a lump sum on your mortgage with a large portion on what she makes from sale of her place - if she's agreeable to that! It all depends on what she'd make on the sale in relation to what she owes the bank.


I agree that this is a good back-up plan. With mortgage repayments of €650 a month I am guessing that she has substantial equity in her property.


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## niceoneted (13 Sep 2007)

*Re: Opinions please!*

Why not look into switching your mortgage. you could use the 20k and offset it and therefore you would have a 60% LTV which would get you a tracker mortgage with NIB of ECB +.6 and look to take it out over say 30 yrs.

Start packing the lunches as you said. I'd have your GF hold onto the house as she is getting a nice income out of it. If she is going to be off work perhaps you might redue the rent she pays you to say 200/250 and then she will have 350/400 for spending a month not a whole lot but better than nothing. 

Wait until your 5 yrs in the house before a move abroad so as if you rent then you will not get caught for stamp duty claw back - I'm assuming you bought as a FTB and did not pay it - this may be incorrect. 

Best of luck with it.


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## csirl (14 Sep 2007)

*Re: Opinions please!*



> Rough estimate of value of home: €375K
> Mortgage on home: €245K
> Mortgage provider: FirstActive
> Type of mortgage: Current Account Mortgage (ECB+1.29%)[


 
Considering the equity you have in your home, you are paying way too much for your mortgage. Shop around and get a couple of quotes. Also tell you bank that you will go elsewhere if they cant match the quotes.


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## asdfg (14 Sep 2007)

*Re: Opinions please!*




> Do you own any investment or other property?





> No. Girlfriend owns property in Dublin, which is being rented out at the moment (approx €1200 pm). She pays the mortgage on that property (approx 600pm). I solely own the property where we both live, and I pay the mortgage on my own (approx €1200pm). She helps me with €350 pm (from her rental income).


 
Hate to throw a small spanner in the works but is she paying tax on the rental income. See here for Guide to Rental income which explains what can be deducted in expenses etc. Remember it is the interest only on the loan not the full repayment amount that is deducted. 

Also, when did she purchase the property. If the property was let within 5 years of purchasing the property she may be liable to stamp duty clawbank?


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## terrestrial (18 Sep 2007)

moondance, you have touched something very important there. While I personally would like her to keep and keep that income coming in as others suggested, there are a number of other factors in play here, one of them is that’s her house would be one less thing to worry about, if we decide to move overseas on a relatively short notice. Second one is more important I guess - what happens to properties, savings, mortgage etc when someone marries another person? And what happens if something goes wrong? As you might have gathered, I am not Irish (she is), and I am not that well-versed about the laws and regulations in Ireland when it comes to civil marriages and its legal side of things.

Purple, I think she paid a good bit right up front from her savings and hence have some equity - its not great, especially with the market as it is, and the area where the house is, but I guess its better than my own situation!

niceonted, csirl, thanks for bringing that up - I will try approaching NIB. I did speak to Ulster bank (or rather they talked me into) but the figures were not working out well for me as they could only offer 30 yr options and interest rates were not terribly exciting. Also, I was thinking of holding on to the 20k liquid (or at least half of it in a short notice savings account) as the surgery, wedding etc are coming up! Let me see what NIB can do with the current LTV (62% prob) or may be I can pay off just enough to make it to 60% LTV if they are offering a better rate. Thanks again, that’s really something I should look into. Also, how would I go about asking FirstActive for a better rate? Should I get a quote (offer?) from NIB before I talk to FirstActive or should I just ring up and talk to a mortgage advisor (?) and ask them to reduce the rate, or else I will move? Will that get me in trouble?

Havealaugh, title fixed. Thanks!

Thanks asdfg, she's paying taxes etc. The figures I posted where quick numbers off the top of my head, hadn't worked out details like that.

Thanks again for all the suggestions and comments - great help and much appreciated!!


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## agapanthus (19 Sep 2007)

Regarding your mortgage,  FA will not reduce the rate on your Offset mtg, which by the way is 1.15% over ECB not 1.29%, you would have to switch to a standard tracker mortgage, best rate 4.75%,  NIB is still cheaper.  You would no longer have the offsetting benefit with the 20k but you could invest that between a couple of high earning accounts and not really lose out interest wise.


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## csirl (19 Sep 2007)

> Also, how would I go about asking FirstActive for a better rate? Should I get a quote (offer?) from NIB before I talk to FirstActive or should I just ring up and talk to a mortgage advisor (?) and ask them to reduce the rate, or else I will move? Will that get me in trouble?


 
The banks generally know whats in the marketplace - you can get the rates on the internet. Ring them up and ask to talk to whoever handles you mortgage account. Quote to them the rates of other lenders (obtained from quick quotes they give on websites) and say that you are not happy with your current rate. Tell them that Lender X is quoting Y rate and that you will are considering switching unless they can match. Remind them that your loan to value ratio has improved so you should be on a better rate and also slip into the conversation that banks generally give long term customers even better rates that those advertised.

I did this not to long ago as my house price has risen over past couple of years. Got letter in post about a week later offering me a much better rate.


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## Brendan Burgess (19 Sep 2007)

Terrestrial

I think you are trying to do too much too long in advance.  You are planning the secondary education of kids you don't have yet!  

You are doing quite well. You own two houses. You have good incomes. You are not mad spenders. 

Your girlfriend's house is paying its way. You should keep it. The main issue to deal with is your girfriend's health and the financial implications of this. Stay as flexible as possible. Although the current account mortgage is expensive, it might be best suited to your needs at the moment. When the health problems are resolved and your financial future is a bit clearer, switch to a cheaper mortgage. 

Brendan


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## ACA (20 Sep 2007)

*Life insurance: €350 (mortgage related)*
Seems alot of cash to be paying for mortgage protection/life assurance. Myself and Mr ACA are both 40 and smokers, life assurance is €50.06 for a dual life policy with one company and mortgage protection is €33 with another. Did you have to take out your policies with your lender? .....sounds like you're being done, BIG TIME! Worth checking out as it could save you roughly €3k a year


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## terrestrial (29 Apr 2008)

Apologies for digging up this ancient thread, but I thought I had thanked Brendan and ACA for their comments, looks like I didn't - oops! 

Thanks guys! Much Appreciated! ACA, that life insurance sum is per annum. I have since switched and the new is around €362 per annum. Is the €50 something you mentioned per annum too? If so I am being ripped off alright! Thanks Brendan, you are right, health is the primary concern and I was thinking about too much too early.

Now, things have moved on since the last year. 

Gf is now fiancée. We think we saved a few quid by buying engagement ring in Dubai (sapphire on platinum ring).  Getting married later this year, and since we are getting married overseas (and reception here) the budget is approx 10k from me and about 15k from her (with some help from her father).

I believe we have cut down on spendings, main being canceling a gym membership that we never used = savings of approx 95 per month.

Meanwhile, I am at the final stage of moving my mortgage from FirstActive to NIB with a bit of top-up (LTV <80%, 4.79%, *30 yrs,* 280k which is 80% of new low market value of the house - which is just 350k, down from 420k peak). FA did try to entice me with some hassle free top-up but they didn't budge on rate, and their customer support / communication remained terrible till they day they got a request for redemption figure from NIB solicitors. The monthly payments have gone up to approx 1400, and the rent from the room might stop soon, which could start hurting badly, but I am hopeful that I will get a new tenant for the room sooner or later.

Her house needs a bit of time and effort to get the right sort of tenants, and keep them in check, but its more or less pays for itself. She is still waiting for the final consultation with neurosurgeon to decide to go ahead with the surgery or not.

Red Flag item is that we are jointly investing 100k on an overseas land purchase deal - which sounds like a mad thing to do considering how the global property market is at the moment, however, we are hoping that the property boom there not fueled by just cheap credit, but some real local demand. The land can be more than an investment if we decide to move there - we could build a house on it as in a nice spot (close to future work, airport, water etc).

Thanks a lot for all the support and suggestions so far!


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## ecstatic (7 May 2008)

Right im going to look at this from a different perspective one thats a little more agressive. This only works based on one condition you find a suitable low maintenance property that gives a 10% yield.

Firstly mortgage as much as you can from both properties im guessing thats circa 200K.

Second find and purchase a property (i wouldnt suggest ireland id recommend belgium) for 10% yield with local bank approval. This should give you enough clout to purchase a 600K property that generates 60K a year revenue.

Of this 60K a year revenue 24K goes to the bank overseas you purchased the property from (400K mortgage).

The rest of the 60K 12K goes to financing the 200K you remortgaged from the irish properties.

So where are we:

2 Places in ireland circa 90% LTV.
1 Place abroad 80% LTV.

Abroad revenue:                     60K
Abroad Mortgage expenses:      24K (400K loan)
Remortgage expenses from IRL: 12K (200K loan)

Leftover from purchase:           24K

Obviously im disregarding expenses etc for the maintenance etc of new property and tax as is needed, however this generates you extra 15-20K after expenses for yourself and you have grown your long term asset base.

Dont pick a market with any subprime and overvaluation england ireland poland rule out.

Id suggest brussels.

Recently i was in a not so insimiliar situation as yourself probably worse i was negative on my property but had good LTV. I remortgaged etc bit the bullet and wouldnt look back.

A good book i recommend is "the coming economic collapse" fantastic.

I can only imagine what the conservatives think of this post and im sure ill have some interesting responses however this is what id do you have no time to waste in life sieze the moment


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## ClubMan (7 May 2008)

At the time the posters quoted above posted the 5 year rule was in place. Budget 2008 changed this to 2 years.


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