34 - Pay off mortgage, renovate and buy property in Spain, is this possible in 5 years?

M

matrixworld

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17
Age: 34
Spouse’s/Partner's age: n/a

Annual gross income from employment or profession: 99k

Income from rent-a-room: 14k

Monthly take-home pay:
From employment: 4,790e (200e to ESSP, 150e AVC)
From rental: 1,100e

Type of employment: e.g. Civil Servant, self-employed: Private

In general are you:
saving: 2.5k
1,330e towards extra mortgage payment
1,250e investments

Rough estimate of value of home: 345k

Amount outstanding on your mortgage: 133k

What interest rate are you paying: 2.1%

Other borrowings – car loans/personal loans etc: No

Do you pay off your full credit card balance each month? No credit cards

Savings and investments: 68k (potentially 168k)

Company stock: 15k (100k yet to vest)
cash: 5.5k
Crypto: 30k
Stocks: 18k (mix of SP500, commodities etc)

Do you have a pension scheme: Yes, Zurich, 79k so far

Do you own any investment or other property?
No but this ties into my question, not sure whether to invest in Ireland or abroad

Ages of children: 34

Life insurance: Mortgage protection

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

I've decided i want to pay off my mortgage asap, then renovate the property (est 100k). My role is fully remote so after the above i intend to purchase a property in Spain (at least 15% down).

My question is am i going about this in the right order?

1. I plan to eliminate the mortgage using savings (will need to up to 2k pm).
2. Renovate the property (est 100k) to make it a forever home using some investment money, specifically sales of company stock when they vest.
3. Purchase a property in Spain for estimate 200-300k (at least 15% down), the deposit will be funded by either additional savings or sales of investments. As my job is fully remote i intend to live in Spain for a good portion of the year and rent out the property May- Sept.

If it helps, re my mortgage i come out of my term (2.1%) next August so i am ramping up the savings to pay off a decent amount by then.

Would greatly appreciate advice from the wise sages here on if i am executing this plan in the right order.

Cheers
 
matrixworld said:
Savings and investments: 68k (potentially 168k)

Company stock: 15k (100k yet to vest)
cash: 5.5k
Crypto: 30k
Stocks: 18k (mix of SP500, commodities etc)
Click to expand...

matrixworld said:
Amount outstanding on your mortgage: 133k
Click to expand...

You are in a very good financial position.

This really is about what you want to do and letting the finances fit in with that.

So if you want to buy a house in Spain, go ahead and buy it now. There is no need for you to clear your mortgage first. You are a good saver, so you will be able to clear both mortgages in a few years.

Buying a house in Spain and doing up your home are two big projects. Maybe do just one at a time. Digest it and then do the other.

But the key point is that you do not need to clear your mortgage before doing these projects.

Brendan
 
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As you have a mortgage while you own crypto, you are effectively borrowing to invest in crypto. That is not a good idea.

You should sell your crypto and probably pay down your mortgage or invest in something less volatile.

The other investments are fine. Normally it is not a good idea to borrow to invest or to invest while you have borrowings, but in your case it's probably ok. The interest rate on the borrowings is low and you will need the cash in due course either to buy a property or do up your property.

Brendan
 
The more I think of it the more I am sure you should not be paying off your mortgage.

The mortgage on your home is likely to be the cheapest source of finance. So if you pay it off and then have to borrow to buy in Spain, you will probably be paying a far higher rate on a holiday home. I am not sure about this and it's possible that the Spanish mortgage might be cheaper than an Irish mortgage. But if that is the case when you go to buy the Spanish home, then pay off the Irish mortgage at that stage.
 
Financially, the best thing for you to do is to max your pension contributions.

But I don't think that maxing your finances is your objective. You are going to be wealthy enough in retirement anyway.

So decide what you want to do and let the finances fit in with that.

Brendan
 
Brendan Burgess said:
The more I think of it the more I am sure you should not be paying off your mortgage.

The mortgage on your home is likely to be the cheapest source of finance. So if you pay it off and then have to borrow to buy in Spain, you will probably be paying a far higher rate on a holiday home. I am not sure about this and it's possible that the Spanish mortgage might be cheaper than an Irish mortgage. But if that is the case when you go to buy the Spanish home, then pay off the Irish mortgage at that stage.
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Yep, this has crossed my mind a few times. If i was locked into 2.1% for longer i would not focus so much on it but the fact is i will be out of that term in 14 months so lord knows what rates will be on offer at that stage.

Appreciate your prompt informative replies, this site is fantastic.
 
matrixworld said:
i will be out of that term in 14 months so lord knows what rates will be on offer at that stage.
Click to expand...

Wait until then to decide.

Mortgage rates generally will probably fall. And while you are unlikely get 2.1% again, it might not be a lot higher.

Thanks for your kind comments.

Brendan
 
Are you sure you can work in Spain for that long each year ? A lot of companies have restrictions on this and remote means remote in Ireland.
 
Hi slightly off topic but still something valid. If you spend more then 6 months in Spain year Spain would want to tax you on income. Might good or bad for you.

Also since you want rent your Spanish property from may to step for extra income. Maybe you should rent for few few years in the winter time your self in Spain. To get ideas of locations /schools etc before pulling the trigger

A work colleague mum lived in Spain 15 years , in good area. But she had to come home for health reasons for the last 6 months. They just out a couple weeks ago a Spanish family are how claiming squatters rights on her Spanish home. It's going to cost her small fortune to flight to get it back. So be careful and have your eyes wide open.
 
misemoi said:
Are you sure you can work in Spain for that long each year ? A lot of companies have restrictions on this and remote means remote in Ireland.
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There's an EU framework agreement that allows EU citizens to Telework for up to 6 months a year in another EU country. Ireland has signed up to it. Info here.
 
1. Thanks to @Purple for the accolade.
2. Let's simplify this and read my lips:- Why spend €200K/€300K to buy a Spanish property when you can rent a 2 bedroom well place property there for around €850 per month during the off seasons (inclusive of internet, electricity use, water consumption. refuse charges, local taxes etc)? You can rent much cheaper too depending on where you want to live and quality of location etc.
3. But, I get the impression that you are going to buy property in Spain no matter what I say - and fair enough! You're not the first and won't be the last.
4. . . . and I'm not all doom and gloom. See the situation first hand and rent for six months and then decide if you still wish to buy; if this site were Paddy Power's I'd be betting you won't buy then and you''' have saved yourself a fortune and still got a suntan.
5. You may be thinking there's a chance of a profit from renting out the place when you are not using it. This is 95% fallacy. I know only two Irish people resident in Ireland who rent out their premises and gain a profit. Their stories would be deleted here.

Please read all my posts on the subject; they'll answer all of your questions and the questions of your wife.

For the record you can spend no more than 180 days in Spain without a residentia in any rolling year (Note:- Not Calendar Year) and the days do not have to be consecutive.
 
Leper said:
1. Thanks to @Purple for the accolade.
2. Let's simplify this and read my lips:- Why spend €200K/€300K to buy a Spanish property when you can rent a 2 bedroom well place property there for around €850 per month during the off seasons (inclusive of internet, electricity use, water consumption. refuse charges, local taxes etc)? You can rent much cheaper too depending on where you want to live and quality of location etc.
3. But, I get the impression that you are going to buy property in Spain no matter what I say - and fair enough! You're not the first and won't be the last.
4. . . . and I'm not all doom and gloom. See the situation first hand and rent for six months and then decide if you still wish to buy; if this site were Paddy Power's I'd be betting you won't buy then and you''' have saved yourself a fortune and still got a suntan.
5. You may be thinking there's a chance of a profit from renting out the place when you are not using it. This is 95% fallacy. I know only two Irish people resident in Ireland who rent out their premises and gain a profit. Their stories would be deleted here.

Please read all my posts on the subject; they'll answer all of your questions and the questions of your wife.

For the record you can spend no more than 180 days in Spain without a residentia in any rolling year (Note:- Not Calendar Year) and the days do not have to be consecutive.
Click to expand...

Great advice to be saluted! We plan to rent in many locations for a few years before pulling the trigger. TY!
 
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