CharlieMac
New Member
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- 1
Hello,
First post on askaboutmoney. Lots of information incoming, apologies, I didn't know how to make it more concise.
My situation:
I have an investment property...
Bought in 2006 (yes, I was one of those unfortunates).
Bought for €450k, €250k balance remaining, currently worth approx €320k (only exited negative equity around 2021/2022)
The mortgage is €1800/month.
It is let out for €1600/month gross.
It is in a rent pressure zone, the rent is not covering the mortgage, I estimate it won't until a few yrs after the mortgage is cleared in 17 yrs time.
It's a tracker currently 4.9% (ECB + 1.25%). Even when ECB was 0% the shortfall between rent and the mortgage was about €440/month after costs and taxes are paid on the rental income.
I'm 48 and have only been paying in to a HSE pension for 2 years. I don't have any other pension.
I will only have 24yrs of HSE service if I work until I'm 70. At the moment I hope to keep working until that age, out of necessity.
I have quite a bit of savings (> 100K) set aside over the past several years as a rainy day fund to prop up that investment property, if any emergency arose.
I really should have been investing it or putting in to an AVC but instead it has just been accumulating in my current account.
I'm not 100% sure about the fees and limits with AVCs, or how much I would need to put in to top up my HSE pension.
My question:
Should I plow all my savings in to an AVC and max out the tax benefits of that "going in" or put it all in to the mortgage?
Who I have spoken to so far:
Aside from worrying about this for the last 18 yrs of my life...
I spoke to a financial adviser, but the focus was on getting me to sign up for an AVC and to talk to a colleague in the mortgage dept without any interest in doing a deep dive of my situation.
I see no reason to change the mortgage. I called up the bank and worked out that if I put €135k in to the mortgage that would bring down the repayments to a sum that would be covered by the rent. I use rent generated by that property for that property only but I can only spare about €850/month from the gross rent even then, at least in recent years when ECB was 0% I still ended up with an annual tax bill of a few thousand. Altho, now that I am paying €100s more each month in interest I got a refund on my latest tax return.
What I am thinking of doing:
Put €135k in to the mortgage which would then be around €850/month and then at least the rent would cover it. But then continue to overpay about €40k more in to it over the next two years.
I estimate that would bring the monthly mortgage down to about €500/month which would finally give me peace of mind with affordability. After that I could comfortably manage that mortgage (as well as my own) any time it is temporarily unoccupied by tenants. I would then put everything I can in to an AVC until I retire.
The dilemma:
I am torn between doing the above vs selling it vs finding some way to hold on to it as things are currently and at the same time put all my savings and everything I can going forward in to an AVC. Selling would be hard emotionally but I want to make the right decisions now. I'm worried about having enough of a pension. I have left this very late but my assumption was that the property would be a pension... It might be worth around 500k by the time I reach 70. But then having a property costs money and would an AVC/pension (or another investment?) be a more cost efficient and financially gainful choice?
What I really need:
Is a nuanced analysis of the opportunity cost to me of choosing one option from a range of options. It was this thread that brought me to post this question on these forums. I'd really like to talk to people with the depth of knowledge that Brendan Burgess and Duke of Marmalade demonstrated in that thread.
Any advice from anyone much appreciated. Also, if someone knows a really good financial adviser I could meet in the real world I am happy to pay them for the service I need to make the best choice.
Charlie
First post on askaboutmoney. Lots of information incoming, apologies, I didn't know how to make it more concise.
My situation:
I have an investment property...
Bought in 2006 (yes, I was one of those unfortunates).
Bought for €450k, €250k balance remaining, currently worth approx €320k (only exited negative equity around 2021/2022)
The mortgage is €1800/month.
It is let out for €1600/month gross.
It is in a rent pressure zone, the rent is not covering the mortgage, I estimate it won't until a few yrs after the mortgage is cleared in 17 yrs time.
It's a tracker currently 4.9% (ECB + 1.25%). Even when ECB was 0% the shortfall between rent and the mortgage was about €440/month after costs and taxes are paid on the rental income.
I'm 48 and have only been paying in to a HSE pension for 2 years. I don't have any other pension.
I will only have 24yrs of HSE service if I work until I'm 70. At the moment I hope to keep working until that age, out of necessity.
I have quite a bit of savings (> 100K) set aside over the past several years as a rainy day fund to prop up that investment property, if any emergency arose.
I really should have been investing it or putting in to an AVC but instead it has just been accumulating in my current account.
I'm not 100% sure about the fees and limits with AVCs, or how much I would need to put in to top up my HSE pension.
My question:
Should I plow all my savings in to an AVC and max out the tax benefits of that "going in" or put it all in to the mortgage?
Who I have spoken to so far:
Aside from worrying about this for the last 18 yrs of my life...
I spoke to a financial adviser, but the focus was on getting me to sign up for an AVC and to talk to a colleague in the mortgage dept without any interest in doing a deep dive of my situation.
I see no reason to change the mortgage. I called up the bank and worked out that if I put €135k in to the mortgage that would bring down the repayments to a sum that would be covered by the rent. I use rent generated by that property for that property only but I can only spare about €850/month from the gross rent even then, at least in recent years when ECB was 0% I still ended up with an annual tax bill of a few thousand. Altho, now that I am paying €100s more each month in interest I got a refund on my latest tax return.
What I am thinking of doing:
Put €135k in to the mortgage which would then be around €850/month and then at least the rent would cover it. But then continue to overpay about €40k more in to it over the next two years.
I estimate that would bring the monthly mortgage down to about €500/month which would finally give me peace of mind with affordability. After that I could comfortably manage that mortgage (as well as my own) any time it is temporarily unoccupied by tenants. I would then put everything I can in to an AVC until I retire.
The dilemma:
I am torn between doing the above vs selling it vs finding some way to hold on to it as things are currently and at the same time put all my savings and everything I can going forward in to an AVC. Selling would be hard emotionally but I want to make the right decisions now. I'm worried about having enough of a pension. I have left this very late but my assumption was that the property would be a pension... It might be worth around 500k by the time I reach 70. But then having a property costs money and would an AVC/pension (or another investment?) be a more cost efficient and financially gainful choice?
What I really need:
Is a nuanced analysis of the opportunity cost to me of choosing one option from a range of options. It was this thread that brought me to post this question on these forums. I'd really like to talk to people with the depth of knowledge that Brendan Burgess and Duke of Marmalade demonstrated in that thread.
Any advice from anyone much appreciated. Also, if someone knows a really good financial adviser I could meet in the real world I am happy to pay them for the service I need to make the best choice.
Charlie