Advice on using cash savings plus buy/rent property

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Geronim02019

Registered User
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Dear all

I would be very grateful for advice as my circumstances have changed so much in the last 2 years, personal and work-related, and I am wondering where to get started on putting things in order.

I was abroad for many years and after a divorce I am back home, as my parents are quite elderly and not in good health
After splitting things up with my wife I am left with a lot of liquidity

Age - 48
No children

Overview of current position:

Salary - 45k.
My employment status is not sustainable in the long run. I work on a freelance basis for a consultancy in a specialised area. I am sticking with it for the next while as it is convenient. But simply put I don't see a long term future in it but I am working on upskilling right now. Even thinking of biting the bullet and changing career completely. So my future career and earnings are not clear.

Cash in various foreign bank accounts - 150k

Home: Owner occupier - Valued at 270k. No mortgage

So my 2 broad issues are
1. I might have to move next year for various reasons and I would be like to buy. I would need to use at least 50-80k on top of the value of the property I currently live in. Meaning for arguments sake to buy a property worth about 320-350k in total. I hope I am right in saying that it would be a waste to rent if I could buy. What are your thoughts on that.
So there are 2 scenarios
- 1.a. Renting out the current property at say 1,400k a month and allowing that to service a mortgage on the new property of 350k. Would I be wise to use some or most of my liquidity to reduce the size of the mortgage?
- 1b. Selling the current property and putting all of the sale price into the new property. Therefore no mortgage would be needed. But my liquidity e.g. 70K

Which of those scenarios would you say are the most beneficial.

2. Depending on my decisions in issue 1 obviously I would want to invest in the short to medium term with any remaining liquidity. Tracker investments for example. Wondering if I should also take out a pension.

Thank you
 
Hi OP,

Firstly I'm not qualified to give financial advise at all but it sounds like you have a lot of change going on at the minute with future uncertainty thrown in for good measure. So, if it were me, I think I would just hold tough for now and focus on skilling up. If you do decide to move next year you have enough cash to rent for a long time before committing to buy. And if you do decide to buy, I would probably sell the place you have and remain mortgage free to be honest.

Firefly.
 
Do you have any pension plan in place as of yet?

If it was me I'd sell and buy the new place mortgage free with cash. I'd leave the remaining money in bank to cover any future nexpected costs. I'd then focus on pension...setup a pension plan and contribute the max amount, 25% of salary I believe
 
Sell current property and use funds to buy another. Nothing like being debt free,
 
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Geronim02019 said:
1. I might have to move next year for various reasons and I would be like to buy.
Click to expand...

This really is the key - uncertainty.

You do not know whether you will have to move or not.
So don't worry too much about whether or not to sell until your plans become clearer.

When things are uncertain, what you need most is flexibility. So under no circumstances should you be contributing to a pension until you know where you stand. Liquid assets are king and you should make sure that you have access to your cash at all times.

You should be able to get a mortgage of around €160k which added to your cash will bring you quite close to being able to get enough of a mortgage to buy what you want. You don't want to have stashed a lump of that cash in a pension fund which you cannot access.

Where to put the cash in the meantime?
This is very difficult. If you were definitely moving and buying a house in 2020, then you should definitely stay in a deposit account. And when your plans harden and you know you will be buying a house, then you definitely move any investment to cash.

But with low cost tracker funds, I think you can invest for a short period. If you do buy in the next year, the fund may have increased in value or it may have reduced in value. Either way you can handle a loss. And you may find yourself invested for the long term anyway.

Revisit this issue next year when you know what is happening
If you are living in Leitrim and will be moving to Carlow for work, you probably should rent first. When you settle into the area and the job you can decide if you are there for the medium to long term. At that stage you can buy.

When you do buy...
If the current mortgage deals remain available...
Take out a KBC mortgage and get the €3,000 cash back.
Sell your own house and clear the mortgage.

But as I say, don't worry about any of this until you face that decision.

Brendan
 
To emphasise what was just said,
Don't sell until ready to buy
The property you have keeps you index linked to the property market
 
Thanks everyone.
I will take the advice to remain flexible a while longer until I am sure about the future

You all seem to advise that if I have to move and buy another property, then I should fund that by selling my current property in order to remain debt free. That makes sense.

The only question about that strategy was whether a second property (albeit with debt) would not be a better pension scheme, than remaining debt free and contributing to a pension plan.

Would be glad to hear your final thoughts on that. Thanks.
 
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