Couple in late 30's with 2 kids

[Brendan Burgess]

What interest rate are you paying? 2.65% KBC -

Have you a current account with KBC?

Is it worth breaking and refixing at a lower rate with KBC?

1) Pay off the 10% and pay no break fee
2) Pay down €130k and pay the break fee on that.
3) Break €300k @ 2.65% and pay €3,600
4) Fix again with KBC current account rate at 3 years at 2.25%
5) Saving €300k @.4% = €1,200 per year - not worth it.

OK - you must break now and switch to Avant.

When your fixed rate is up, you will have to switch anyway, as your mortgage will then be owned by Bank of Ireland who has the highest rates for existing customers.

So the revised calculations are

Break cost: €3,600 (€300k @1.2%)
Cost of switching: ignore as you will face it anyway when the fixed rate is up
Saving €300k @ .7% (2.65% - 1.95%) or €2,100 per year.

So you will have recovered your break fee in under two years.

Go for it!

Brendan

 

[Steven Barrett]

You have a mortgage of €475k on an income of €120k
That is still way too high.
You need to pay the full inheritance off the mortgage.
This will reduce your repayments and the interest you pay, so you will be able to afford education fees when the time comes.

I also suspect that as you like new cars and 4 month holidays, that having a fund will burn a hole in your pocket.

Is this necessary Brendan? a bit cynical?

OP, you need to draw up a firm plan. There is no point in looking at just one thing as life doesn't work like that, you have to spin a number of plates at the same time.

Put a chunk of that money into your mortgage to reduce the balance, but yes, keep the term on it. You can always overpay instead of having to make higher payments as you would do with a shorter term.

Education also needs to be looked at and the earlier you start saving for it, the less it will cost you. Where are you located? Can you kids go to college and live at home or will you have to pay for accommodation as well? There is a big difference in costs. You can put aside some of the lump sum now and get it working for you immediately.

Use some of the remainder as an emergency fund.

Increasing pension funding can be a gradual thing too, increasing it bit by bit each year, especially when child care costs go away.



Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

 

[Brendan Burgess]

Education also needs to be looked at and the earlier you start saving for it, the less it will cost you.

Yes, but the best way to save for it is to pay down the mortgage and get a tax-free risk-free return.

With two or three years to go to College, by all means put the money aside rather than pay down the mortgage.

But as his eldest is 4 years old, he has 14 years to go before he needs the money.


Brendan