Possible redundancy and money makeover

Gaillimhgirl

New Member
Messages
1
Age:42
Spouse’s/Partner's age:40

Annual gross income from employment or profession: €46k
Annual gross income of spouse: €30k

Monthly take-home pay €5k

Type of employment: private sector , spouse self employed

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

Rough estimate of value of home €250k
Amount outstanding on your mortgage: restructured at present €263k, €135k warehoused @ 0% & bal of €128k repaying at 4.25%
What interest rate are you paying? KBC variable rate 4.25%

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? €1500

Savings and investments: childrens allowance invested value €38k €420 p/m saved into it. also save €300 into holiday/xmas savings acc in CU

Do you have a pension scheme? Yes private DB pension... spouse none at present due to previous ill health and recently becoming self employed

Do you own any investment or other property? none

Ages of children: 5,8,10

Life insurance: yes self has Life Assurance, serious illness, & Mort protection policies... spouse no life cover due to health issues.


What specific question do you have or what issues are of concern to you?
The Mortgage is with KBC and currently under investigation with P Kissane's office due to the Tracker Mortgage redress scheme. We have been told we are not impacted but are in the infamous Flyer category.

There is an offer of redundancy and I have wanted a different job for a while. I would receive around €95k. I was thinking of taking the redundancy and paying it off the warehoused portion of our Mortgage. Then getting another job so we would have a second income into the household.
Or would it be better to continue in my job and restructure the Mortgage arrears to pay it off as normal.


Thanks.

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Clamball

Frequent Poster
Messages
137
How easy will it be for you to get a new job and what will your salary be? If you could walk into an equivalent or better job, go for it. If you have no idea start looking for one to get a sense of what is out there.

On the mortgage you are saving €720 pm. Why are you not using this money to pay off your full mortgage? How long do you have left in your mortgage? I would seriously consider doing this but you need stable good employment to keep making the payments. You must have had some issues with your mortgage in the past to have a split like this. So surely stable employment is Important especially when your spouse just recently became self employed?
Your current suggestion of using your lump sum redundancy to pay a lump sum off mortgage seems like a very short term solution given you need a job to keep paying the rest of the mortgage. I would worry you have not considered all the pros and cons.
 

Archer1

Registered User
Messages
18
The redundancy is attractive. However as someone who lost her job at 40 ( educated professional) due to the last recession, believe me it can be difficult for women in their 40s to return to the workplace as in my experience it is ageist. Redundancy is a great buffer that quickly dwindled without sufficient regular income. My spouse is also self employed. With children and a mortgage it is crucial one of you ( and that seems to be you) has a guaranteed regular income. I would get another job sorted before leaving the current one. Old saying is true, easier get a job when you're in a job. Best of luck!
 

New2This

Registered User
Messages
22
First things first, as other posters have suggested take a look at the jobs market for your experience and job type. Can you see suitable positions advertised? Then start testing the water on how hard/easy it would be to get another job, send out CVs etc. I would imagine that it's a pretty difficult jobs market at the moment.

The redundancy option is just over 2 years of gross salary for you so while I'd imagine you would be able to find something in that time it might take some time. If you do take the redundancy I would not use it to pay anything off the mortgage until you have passed the probationary period in a new job. You can't eat a house or easily use the equity in it to pay bills.

Even after that if I were you there is no way I would be looking to use the redundancy to pay off a chunk of the warehoused interest free portion of the mortgage. This might have implications and cause the remaining balance to be included in the total that is at that very high rate of interest.

Based on the above it seems that you had issues and switching is not an option. However, before doing anything with the mortgage I'd want to know of knock on impacts. If you can pay a lump sum off without it causing a restructure or review, you should pay it off the portion that is being charged interest.

Assuming you have 20 years left on the mortgage and that your repayments are only going toward the 128k (i.e. nothing for the warehoused portion) you need €795 a month to service your mortgage. If you are able to pay off the 95k (38k invested children's allowance can be your emergency fund), this would reduce your repayments to €205, leaving you €590 to start trying to reduce the warehoused amount.
 
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