Advice gratefully received!

[Martinicus]

My partner and I are both 32, and our gross incomes are around €80,000 and €75,000. I am currently a permanent employee, and my partner is a consultant.

I generally manage to save around €2000 a month while my partner struggles to save around €500 a month. We currently have no debts of any kind and pay off credit card bills before having to pay interest. We do not own our own property and are paying rent of around €1500 a month. We both have 5% contribution pensions which are backed by a 5% contribution by our employers.

We currently have a lump sum of around €125,000 sitting in a Rabo savings account and a further €50,000 in a wide range of Rabo funds. In addition to that we have about AUD $60,000 in high interest term deposits in Australia and a further AUD$20,000 in Australian funds.

We are currently debating a move back to Australia where we have permanent residency and need to spend two years by July 1st 2010 to get citizenship. House prices there are far cheaper there than here and we could afford to buy something really nice in a nice area and have a reasonably comfortable mortgage. We have been looking at houses which cost in or around €750,000 here, but it just doesn't make sense to get a mortgage of that size (we would cash in funds and use lump sums to reduce the borrowed amount to around €575,000, but that is still too high).

So I guess my questions and issues are these:

1. We are still debating a possible move to Australia, and are considering purchasing a house here before we go that we could rent out in our absence, hopefully the rent would more or less cover the mortgage. This would leave us a foot in the door of the Irish property market should we want to move back, and if we don't move to Australia at all then at least we would own our own property here. Is this 'toe in the irish property market' idea a valid concern?

2. How much of a mortgage can we realistically afford? Back of the envelope calculations suggest €1500 + €2000 + €500 = €4000.

3. Are we mad to be considering purchasing a house in Dublin at the moment?

4. Where is the best place to put our lump sum? Invest more of it or put it into higher interest accounts or what?

Any advice, thoughts or suggestions would be gratefully received.

 

[Lsquared]

Hi Martinicus. I cant give a comprehensive response to all of your questions but I would advise not encumbering yourself with an Irish rental property as you head out the door to Australia. You might find that the fact that you have a large mortgage on a property here has an impact on your future decisions and I would think that remaining as flexible as possible in your situation is the best course of action. I am thinking from your post that you are planning to return to Australia long enough to get citizenship and then you will consider your options? I think at that stage you will be in a better position to decide where you want to commit to living and you may be glad that you dont have a yoke around your neck which pulls you in a particular direction. Also, if media reports are correct, there are thousands of empty properties in Ireland these days. I just think that property is making very rational people act a bit irrationally these days. Good luck with your future plans!

 

[Martinicus]

Hi Lsquared,

Thanks for your advice - yeah, the plan would be to re-evaluate 'the plan' once we had citizenship and possibly stay there long term. I guess I am concious of the fact that once we are earning Australian dollars then houses etc in Ireland will look ever more unattainable and the possibility of getting on the property ladder here would recede ever further into the distance.

Of course, it's entirely possible that we won't ever want to return here and it might not become an issue, I guess we are trying to hedge our bets by having it both ways. Family pressure to buy buy buy is a factor as well, but I think you're right, if we put the decision off until after we are citizens, we would both give the property market here a chance to cool down and be clearer on what our future plans would be.

Thanks again.