Investment property / Pension / Paying off the mortgage /

The interest €726.74 suggests a capital amount
€105,707.63

However perhaps if they calculate the interest daily they could arrive at this slightly higher figure?
 
bbari1 said:
1 - re investment property: ... generates gross profit of €12K p.a. and all of the net proceeds are being used in full to pay off the capital.
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Any reason bbari1 shouldn't pay the net proceeds off the PPR mortgage instead of the investment mortgage considering the difference in rates?
 
Perhaps you misread... profit from the rental income is used to pay mortgage on that property. Sure i can't not pay the mortgage?
 
bbari1 said:
Perhaps you misread... profit from the rental income is used to pay mortgage on that property. Sure i can't not pay the mortgage?
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I read net proceeds/profit as the amount after the mortgage and tax. And that this was used to make extra payments off the capital. Yea, you do have to pay the mortgage
 
The OP here for an update and mostly importantly a quick note of appreciation for all who pointed me in the right direction to achieve this milestone.

I confess that I acted against the advise that I should hold onto the investment property. The reason it was advised to rent the investment property because i was €2K p/a better off if I'd rented it. However, I put it up for sale to test the water and got €35K/€40K more than what I'd hoped. I put the property for sale 3 months ago, got sale agreed 3 weeks later and sale closed last week. After paying the mortgage of the investment property, the surplus/equity amount will be used to clear the PPR mortgage in full. Hopefully by the end of this/next week I'll be completely debt free!

I am very thankful to all of you and can't appreciate enough for the guidance received.

Please see the updated op below,
 
Age: 43
Spouse’s/Partner's age: 36

Annual gross income from employment or profession: €100K
Annual gross income of spouse: 0

Monthly take-home pay: €5,000

Type of employment: Private health sector, secure job, 10 years in the same company

In general are you:
(a) spending more than you earn, or No
(b) saving? €2,700 to €3,000 per month

Rough estimate of value of home: €450K - €470K
Amount outstanding on your mortgage: €0

Other borrowings – car loans/personal loans etc: 0

Do you pay off your full credit card balance each month?: Yes
If not, what is the balance on your credit card?: 0

Savings and investments: €60K in current a/c

Do you have a pension scheme? Yes - started in Jan.2020

Do you own any investment or other property? No

Ages of children: 4, 10 and 12

Life insurance: Yes

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

1 - re pension: I joined pension in Jan (thank you @RedOnion and others). I contribute 10% and take max benefit of the Employer contribution. I got statement from Zurich a few weeks ago. 100%of the funds are invested in Plasma Max. Should i keep it there or move the scheme to a different fund? The fee is 1.50%.

2 - I am hoping to cancel both mortgage protection insurances as the mortgages are now paid and planning on getting Term Assurance. is that the right thing to do? There is DIS in place in work.

3 - I've a question re what to expect or do after paying off the PPR mortgage. Perhaps I'll ask in a separate post in Banking/Mortgage forum

TIA - bbari1
 
I think you made a good choice. You have low expenses, are on a good income and are now debt free without the hassle of a rental.

1. You should maximise your AVC to make the most of the tax breaks - which for your age bracket is 25%. The 1.5% fee seems high for a company scheme
2. Yes no need for these, your death in service covers you, maybe you could add a personal family policy
3. you have excess after tax cash now - see point 1 first step, build back up an emergency fund (3 months salary) then spent a little.
4. do you have income protection insurance? as the sole earner, you should look at this

50+o
 
information in my post on the 18th Oct still applies.

in Jan 20, I started contributing 10% into the pension with a max of ER contribution.

As I don't have mortgage anymore, should I increase my contribution to 20%? It will decrease my net by €500pm and I'll still manage to save €2,200 to 2,500 per month.

Will the reduction in my net salary have an impact on my ability to borrow (€100K-€200K) if I want to upgrade my house at some stage? Will the banks consider the gross salary or taxable salary (after pension) for the 3.5 multiple? of course I can stop the contribution at anytime I need to.
 
Gross salary is what bank look at for lending multiples but they also look at your ability to repay but IMO you'll be fine at that level.

If I was you, I would up your contribution to the 20%, unless your plan to borrow to upgrade the house is a more-definite plan than just a possibility.
 
Why wouldn't you if the plan was definite?
 
If your plan to move is imminent, i.e. in 2021, then you should maintain the minimum matching employer contribution while moving house. It gives you more cash in hand short term and when the dust settles, you can retrospectively use up your 2021 tax relief in 2022 by backdating a lump sum payment to your pension.

You end up in the same place but it can just help cash flow a bit this year
 
Thanks for that.

If cashflow isn't an issue then I can up the % now and reduction in the net salary will not be a disadvantage from the borrowing point of view?
 
It all very much depends on your plans for managing the move.

As an example, if €650k is your ideal house then you need a 20% deposit of €130k. Your 2 options are to:
  1. Sell current PPR and buy new PPR (part of a chain)
  2. buy new PPR and then sell current PPR
Option 1 would probably work best for you, you would be comfortably within lending limits and your €60k cash can be used for any ad hoc expense during the move. The downside is trying to time and align everything when trying to close and sign contracts. Or even selling, renting and then buying so that you are not in a chain but the renting part could be difficult with a family of 5

Option 2 is more convenient from a family perspective but a lot harder to manage financially. You would need to add more than €70k to your existing savings just to reach the 20% deposit (why you might limit pension contributions this year). And then you would need to borrow well in excess of lending limits to purchase the new PPR and you would need an exception to the LTI from your lender. If it all went smoothly, proceeds from selling your current PPR would then go straight against the mortgage and you are back to a comfortable level but it is possibly a bit of a headache and I would imagine that it could be difficult for you to get an exception to borrow 5.2 LTI.

If option 1 is your preferred route, then paying the max to your pension now sounds reasonable because you have a cash buffer. If you think you can manage option 2, then you need as much cash on hand as possible so it would be better to delay contributions

bbari1 said:
2 - I am hoping to cancel both mortgage protection insurances as the mortgages are now paid and planning on getting Term Assurance. is that the right thing to do? There is DIS in place in work
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Another point, if you have not already done so, you should really have Life insurance and Income protection in place in addition to your DIS. As the sole earner with a young family, your DIS may not go very far if your spouse does not have any income. Similarly if anything was to happen to you preventing you from working, your household income needs to be protected
 
_OkGo_ said:
It all very much depends on your plans for managing the move.
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Thanks a lot for taking your time in responding.

it will be Option-1 if i make any move.

I have life insurance in place as i didn't cancel one of the two policies. DIS is also in place. I don't have Income Protection though but I'll certainly look into that.

Thank you again, sincerely appreciated.
 
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