Pay off mortgage and what next for investment

D

dave2015

Registered User
Messages
61
Personal details

Your age: 43
Your spouse's age: 45
Partner's age if not married:

Number and age of children: 8 & 11


Income and expenditure
Annual gross income from employment or profession: 200k (pvt sector)
Annual gross income of spouse/partner: 70k (public)



In general are you:
(a) spending more than you earn, or
(b) saving?
Saving approx 2k pm

Summary of Assets and Liabilities
Family home value: 900k
Mortgage on family home: 50k
Net equity: 850k

Cash: 30k
Investments:45k etf & uk trusts
Company shares :
Buy to Let Property value:
Buy to let Mortgage:



Family home mortgage information
Lender Avant
Interest rate 1.9
Type of interest rate: tracker, variable, fixed.
If fixed, what is the term remaining of the fixed rate? 2 years
If tracker, what is the margin e.g. ECB + 1%

Remaining term: 2 years(Original term is not relevant)
Monthly repayment: 2000

Other borrowings – car loans/personal loans etc none

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

Pension information

Value of pension fund: 700k maxing contributions already.
Spouse has small prsa set up couple of years ago to top up public sector. They calculated what she should put in but could maybe revisit. She’ll have generous public pension if continues although is short on years as took time off with children and now does short work week. Looked into buying years at one stage but seemed very expensive


Other savings and investments: as above


Other information which might be relevant

Life insurance: have life and serious illness


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

Very fortunate position overall I feel, have worked very hard to get to current situation but feel at inflection point financially. Due a lump sum of 100k after tax shortly. Inclined to pay off last of mortgage in absence of other need right now( cars fine for couple of years, no major home imp in offing, have done main energy upgrades). Have put bit into investment over last 2-3 years but no serious thought bar diversified funds/etf. Will have the balance of 50k and then 4K monthly saving without mortgage for as long as I stay in job which may not be long term as quite stressful and without the drive of paying down debt I could look to do something else. Main question is what to think about now with the excess cash flow, really children’s education is remaining big ticket on horizon, is it time to get professional advice now that simple strategy of paying down debt and maxing pension is off table or anything obvious to think about? Thanks
 
Not the worst position to be in, fair play!

I think you're right to clear your mortgage with your inheritance. Beyond that, I think you need to understand your next career step. You could increase your pension contributions if you went contracting under your own limited company, for example. You'd have some flexibility to choose lower-stress, lower-income gigs if you preferred in that case. Alternatively, you could go for another employed role but with less tress and lower salary so there may be an opportunity there to store up some cash now and AVC it into your pension over a few years.

But the other thing to consider is time with family - you've got a good opportunity to go create memories with the kids and the means to do it, so why not?
 
You’re doing great financially.

Agree that you should clear the remaining mortgage.

How is your pension invested? One option is to keep it 100% invested in global equities and then keep at least some of your after-tax savings in decent fixed-term deposits.

It might be worth posting some numbers on the notional service purchase option to get the views of others on value, etc.
 
For a slightly different view, you could put the 100k on deposit for two years, and get a similar rate of return to overpaying the mortgage. This gives you more flexibility. You can decide at that point, when your mortgage fix rate expires, whether to pay off the remaining mortgage, or do something else with the funds. That's what I'd do in your shoes.
 
dave2015 said:
Annual gross income of spouse/partner: 70k (public)
Click to expand...
dave2015 said:
Looked into buying years at one stage but seemed very expensive
Click to expand...

Did she get advice from Cornmarket? They push people into AVCs as it generates commission for them and business for their owner Irish Life.

She should look at this again and see if buying back years makes sense.

But she needs independent advice and not from a commission-based advisor.
 
Brendan Burgess said:
She should look at this again and see if buying back years makes sense.
Click to expand...

Doesn't it make sense to throw everything in to AVCs anyway for the tax relief and compounded growth? Then you've the option to use that fund down the line to buy back the years... or put it in to an ARF or both.
 
I could be wrong but I think they worked out what she effectively contributing and the top up is all she allowed based on % of salary for age? unless missing something cant just put unlimited funds into avc with tax relief?

will relook at buying years maybe, is there a recomended adviser for public service?

Thanks
 
Well I didn't mean literally put everything in to AVCs but certainly put the most you are allowed based on age and salary. You can actually front load contributions in one go then claim the full tax relief over a period of years until all possible relief is claimed. A theoretically benefit is that you could put a large amount in to a fund that can then compound for longer at a higher amount thus giving more returns.

In general it's better to buy back the years as close to retirement as possible: 1) You could die. 2) At least on the post 2013 Single Pension Scheme it gets cheaper to buy back the years the older you get.

If you're spouse is in no rush to retire I would have thought it makes sense to let an AVC fund pay for buying back the years, at retirement, as the value in that fund over time will be a lot more than what it cost you to build it making buying back the years cheaper.
 
Thats interesting, had no idea you could front load AVC’s and claim tax in subsequent years.
In general I find the public service setup a complete mystery but should invest time in figuring it out as is a huge part of our future finances
 
dave2015 said:
Thats interesting, had no idea you could front load AVC’s and claim tax in subsequent years.
Click to expand...
Just check the details on this, I think one of our resident brokers pointed out a couple of weeks ago that it only applies as long as you’re a member of the same scheme or some such, ie in the same employment. Makes it a little risky tbh, but depends on whether you’d contemplate changing jobs.
 
You must log in or register to reply here.
Back
Top