Money Maker - Best path forward/Sell Investment Property?

M

Mixupat

Frequent Poster
Messages
6
Personal details
Age: 46
Spouse's age: 46
Number and age of children: 13 & 5


Income and expenditure
Annual gross income: 128,000
Annual gross income: 100,000

Monthly take-home pay: 5,500
Monthly take-home pay: 4,400

Type of employment: Employee (both)
Employer type: Public Sector and Private company

In general are you: Using 3000 per month to clear short term debt currently

Summary of Assets and Liabilities
Family home value: 550,000
Mortgage on family home: 285,000
Net equity: 265,000

Cash: 0

Company shares : n/a

Family home mortgage information
Lender: AIB
Interest rate: 2.1% fixed.
Term remaining of the fixed rate: 2yrs

Remaining term: 22yrs
Monthly repayment: 1400

Other borrowings – car loans/personal loans etc
50k consolidated - clearing fast currently

Pension information
Value of pension fund me: Defined Benefit Scheme. Extra AVC for last 4 years at 500pm
Value of pension fund spouse: 403,000

Pension me: Defined Benefit Scheme. AVC for last 4 years at 500pm
Pension spouse: Employer 15%, Employee 10% - Not maxing out currently

Buy to let properties
Property 1
Value: 290,000
Mortgage: 100,000 (7 years left)
Rental income per year: 17400
Rough annual expenses other than mortgage interest: 2,500
Lender: AIB
Interest rate: 3.5%
Originally PPR


Other savings and investments:
No savings currently, diverting savings to clear personal loans asap.


What specific question do you have or what issues are of concern to you?
  • Should we be selling the rental apartment and paying off all debt and maximise pensions post this?
  • Rental Apartment could be used for college in 5 years
  • No major expenditure for house upcoming.
  • Car upgrade in next few years once loans are cleared
  • Childminding fees are low and will be gone next year.
  • Once Loans are cleared, what is best way to maximise wealth and move forward?
  • Tenants are moving out Jan 25 - Considering selling as we are in RPZ and can pay down Mortgage.
  • Anything else we should consider to move towards earlier retirement especially with DB Pension/AVC
Thanks for all advise in advance, much appreciated - great advise here.
 
On pensions, spouse is the private sector one? And when you say not maxing out, do you just mean not maxing out AVC or not maxing out employer contribution?
 
Mixupat said:
Property 1
Value: 290,000
Mortgage: 100,000 (7 years left)
Rental income per year: 17400
Rough annual expenses other than mortgage interest: 2,500
Lender: AIB
Interest rate: 3.5%
Click to expand...

First, what net income are you earning from this?

Rent €17,400
Interest €3,500
Expenses €2,500
Profit before tax €11,400
Profit after tax €6,000

Second, how much would you save by selling it and paying down your loans?
The net equity is €190k
While you have a cheap mortgage for another 2 years, after that, the interest rate will probably be around 3% , so you could sell the property and save about €6,000 mortgage interest.

If you are paying 10% on the €50,000 personal loan, then it would move the dial towards selling.
 
Mixupat said:
Rental Apartment could be used for college in 5 years
Click to expand...

This is an argument for keeping it.

But not sure whether you should be planning 5 years ahead.
Can the student not live with you while in College?
Will you still be allowed to terminate a tenancy in 5 years because you want to use it for your child?
Will the tenant move out or force you to spend 2 years trying to evict them?

On balance, I would tend to avail of the opportunity to sell it now while you still can.

Brendan
 
Mixupat said:
Paying about 8% on this loan and trying to pay it down over next 18 months currently
Click to expand...

OK, then you should stop making AVCs because you are in effect borrowing money at 8% to put it into a pension fund.

Clear this loan first and then you will be able to resume the AVCs.

You have a good enough fund and have plenty of time to catch up.

Brendan
 
conor_mc said:
On pensions, spouse is the private sector one? And when you say not maxing out, do you just mean not maxing out AVC or not maxing out employer contribution?
Click to expand...
Main earner is private sector pension. With us not maxing out AVC's, this could be greatly added to for both of us if we had more disposable. With Loan Cleared and Mortage/BTL payments greatly reduced we could max on pensions but not sure if this is best strategy for us.
 
Just in case you are missing the point here.

Some employers match their employees' pension contributions. I presume your spouse is maxing their contributions to get the maximum from their employer?

There is no urgency in making AVCs. You have 20 years left to make pension contributions. There is very little difference in putting in €10,000 now instead of putting in €10,000 next year. So you should not be putting it in this year while you have a loan at 8%.

When the loan is paid off, you can resume AVCs. With a mortgage at 2%, there is no need to clear that before making AVCs as the interest rate is low and the Loan to Value and Loan to Income are both very comfortable.

Brendan
 
Noted on this, will consider this now to clear higher debt first.
 
You must log in or register to reply here.
Menu
Log in
Register