Can we afford to move?

[Amelie2024]

Personal details

Your age : 46
Your spouse's age (husband): 46

Number and age of children: 2 – ages 9 and 11


Income and expenditure
Annual gross income from employment or profession: €105k

Annual gross income of husband 123k
Annual gross income of husband €36k (from DB Pension)
Bonus: Approx 18k

Monthly take-home pay: €11k approx

Type of employment –Public Sector (wife),
Retired from PS with DB pension now permanent - private sector (husband)


In general are you:
(a) spending more than you earn, or
(b) saving


Summary of Assets and Liabilities
Family home value: 620k
Mortgage on family home: €190k
Net equity: €430k

Total investments : 220k
50k - long term managed fund
Trade republic - 100k
AIB deposit account - 70k

Also ACV - 60k


Buy to Let Property value: n/a
Buy to let Mortgage: na/


Family home mortgage information
–tracker .75 over ECB

Other borrowings – car loans/personal loans etc
- PCP car - 240 per month 2.9%

Do you pay off your full credit card balance each month? No CC
If not, what is the balance on your credit card?

Pension information
Wife - DB pension (pre-2001)
Husband - DB pension 35k p/a
Husband - DC pension 8% employer contribution and matched with 9% contribution from husband

Buy to let properties
- None

Other savings and investments:
- None



What specific question do you have or what issues are of concern to you?
Financially, our situation has changed/improved somewhat in the last number of months.
While we at the time were holding cash with the view of some house improvement and as an emergency fund we now feel that our money would be best spent trading up to a larger house in the same area. Our current home is just too small and has no scope to extend.

We would need to spend anywhere between 800k and 900k to purchase the type of property that will meet our needs and ensure that it’s our ‘forever home’.

I suppose my concern is taking on a bigger mortgage given that we have two dependents and are both mid 40s.We are saving at least 4k per month and aim to have 200k out aside for a move.

Is a mortgage of 250k/300k too much at our age or should we keep saving for another couple of years and aim to borrow less?

 

[Dr Strangelove]

Annual gross income of husband 123k
Annual gross income of husband €36k (from DB

A 46-year old with a €36k DB pension for life?! With that and two six-figure incomes you can afford a million-euro house for sure.

Unless you need the cash for something specific you don’t need a car loan. Clear that ASAP.

 

[Brendan Burgess]

Summary of Assets and Liabilities
Family home value: 620k
Mortgage on family home: €190k
Net equity: €430k

Cash: 220k
50k - long term managed fund
Trade republic - 100k
AIB deposit account - 70k

Other borrowings – car loans/personal loans etc
- PCP car - 240 per month 2.9%

We would need to spend anywhere between 800k and 900k to purchase the type of property that will meet our needs and ensure that it’s our ‘forever home’.

So, you have €650k equity after selling your home.

To buy a house for €900k, you would need a mortgage of €250k

You seem to have an income of €270k, so this would be a very comfortable mortgage.

Your repayments over 20 years would be about €1,500 a month.

You are paying close to that anyway now!

We are saving at least 4k per month

€250,000 over 5 years at 4% would cost about €4,500 a month.

So borrow the €250k over 20 years, but pay it off quicker.

 

[Brendan Burgess]

The question is can you and should you buy the new house first and then sell your old house.

House value : €900k
Less cash: €220
Mortgage required: €700k
+ existing mortgage: €190k
Total borrowings : €900k

Total income: €270k
Loan to income : 3.3 times.

I think you should be able to trade up first and then sell your existing home.

1) Get mortgage approval for an additional €700k
2) Go house hunting
3) As soon as you go purchase agreed on the new house, put your own house on the market.
4) Try to get both contracts signed at around the same time with the closing date for the sale of your house about 1 month after the closing date for the purchase of your new house.

Then you can move from one house into the other with very little hassle.

 

[Setforlife]

You can relatively easily afford a mortage of that much, ending for you both at 65. Our mortage is still significantly more at older ages and less income and it’s comfortable. Your issue is probably going to be finding a house needing no work to suit your needs. I’m in an area with a lot of people in what sounds like similar smaller houses and massive competition for the bigger ones that come up. Prices can go crazy for them.

 

[bish123]

Yes, you can and you should buy a bigger family home. Not only it will provide more living space to family but also increase your overall assets and wealth at the time of retirement.

 

[Clamball]

You can easily afford it.

House Equity	€430K
Cash & Savings	€440K
House Purchase Price	€1000K
Overall Mortgage (purchase - assets)	€130K

If you paid off mortgage at €4K per month (your current savings) you would have it paid off in 3 years.

But don’t actually do it this way. Follow Brendan’s advice.

Get loan approval for €800K+ over 20 years
Buy your €1 mil house with your savings and mortgage.
Sell your current house, and use the cash to pay down your new mortgage. Maintain the term of the loan at 20 years, while having a reduced monthly payment. Check the terms of your new mortgage very carefully, as some have rules around paying off lump sums in the first 1-3 years.

And pay off your pcp loan, there is no need to have a car loan with your level of income.

And the talk to an independent financial planner about growing your income into future wealth, you will still have a lot of potential after the house purchase.

Best of luck, you are both in a great financial position to enjoy a new roomy house while having a very reasonable debt.

 

[Brendan Burgess]

And the talk to an independent financial planner about growing your income into future wealth, you will still have a lot of potential after the house purchase.

No need to do that at all. Just pay down your mortgage with any excess income you have.

 

[Amelie2024]

Thanks everyone for your advice and reassurance. We're going to push ahead and get mortgage approval for the maximum amount possible. We were nervous about taking on additional debt but we have the capacity to repay so just need to overcome that psychological barrier.

The question is can you and should you buy the new house first and then sell your old house.

House value : €900k
Less cash: €220
Mortgage required: €700k
+ existing mortgage: €190k
Total borrowings : €900k

Total income: €270k
Loan to income : 3.3 times.

I think you should be able to trade up first and then sell your existing home.

1) Get mortgage approval for an additional €700k
2) Go house hunting
3) As soon as you go purchase agreed on the new house, put your own house on the market.
4) Try to get both contracts signed at around the same time with the closing date for the sale of your house about 1 month after the closing date for the purchase of your new house.

Then you can move from one house into the other with very little hassle.

My understanding is that bonus is not reckonable for mortgage purposes, is that correct or does it depend on the lender?

 

[Amelie2024]

You can easily afford it.

House Equity	€430K
Cash & Savings	€440K
House Purchase Price	€1000K
Overall Mortgage (purchase - assets)	€130K

If you paid off mortgage at €4K per month (your current savings) you would have it paid off in 3 years.

But don’t actually do it this way. Follow Brendan’s advice.

Get loan approval for €800K+ over 20 years
Buy your €1 mil house with your savings and mortgage.
Sell your current house, and use the cash to pay down your new mortgage. Maintain the term of the loan at 20 years, while having a reduced monthly payment. Check the terms of your new mortgage very carefully, as some have rules around paying off lump sums in the first 1-3 years.

And pay off your pcp loan, there is no need to have a car loan with your level of income.

And the talk to an independent financial planner about growing your income into future wealth, you will still have a lot of potential after the house purchase.

Best of luck, you are both in a great financial position to enjoy a new roomy house while having a very reasonable debt.

You can easily afford it.

House Equity	€430K
Cash & Savings	€440K
House Purchase Price	€1000K
Overall Mortgage (purchase - assets)	€130K

If you paid off mortgage at €4K per month (your current savings) you would have it paid off in 3 years.

But don’t actually do it this way. Follow Brendan’s advice.

Get loan approval for €800K+ over 20 years
Buy your €1 mil house with your savings and mortgage.
Sell your current house, and use the cash to pay down your new mortgage. Maintain the term of the loan at 20 years, while having a reduced monthly payment. Check the terms of your new mortgage very carefully, as some have rules around paying off lump sums in the first 1-3 years.

And pay off your pcp loan, there is no need to have a car loan with your level of income.

And the talk to an independent financial planner about growing your income into future wealth, you will still have a lot of potential after the house purchase.

Best of luck, you are both in a great financial position to enjoy a new roomy house while having a very reasonable debt.

Sorry, I think my original posting wasn't clear, we have savings of 220k total not 440k

 

[Clamball]

Sorry, I think my original posting wasn't clear, we have savings of 220k total not 440k

Ah, I thought you had both cash and specific savings. Sorry about that.