what to do

Age: 35
Spouse’s/Partner's age: 36

Annual gross income from employment or profession: 72K
Annual gross income of spouse:35K

Type of employment: Private sector, IT Manager

In general are you:
at the moment, saving a little

Rough estimate of value of home 380K
Amount outstanding on your mortgage: 295K
What interest rate are you paying? 3.65 variable PTSB

Other borrowings – just cleared my car loan, wifes is 2 years remaining at 170 PM
Do you pay off your full credit card balance each month? yes
If not, what is the balance on your credit card?

Savings and investments: approx 10K in credit union, 5K in personal accounts, about 5K in shares from work

Do you have a pension scheme? yes, spouse and I both have pension schemes at work. I pay 4% and employer pays 6%, I pay an additional 10% AVC. wife payse 4% and employer pays 4%.

Do you own any investment or other property? no

Ages of children: 5 and 2

Life insurance: paying about 600 per annum plus have 3X final salary from work (same with spouse)


What specific question do you have or what issues are of concern to you?
with the above salaries, I net 3300 PM and wife 2200. I think we are claiming all TFA we are entitled to, but not sure. now want to convert attic in house, got quotes ranging from 24K to 11K last year but didnt go ahead. Now want to move on it and will hope for a good price. Took out a 35 year mortgage when buying our home in non 07, but want to reduce this to 25 or maybe 20. Should i reduce AVC to put more into the mortgage at this stage? Am talking to AIB about moving to their 2.7% var rate as well. Didnt claim any TRS last year so expecting a couple of K refund shortly (was on 4.75 fixed for 2008)
Should I take a CU loan to cover the attic conversion? could pay cash, but be left with zero reserves. Also keep thinking I may be paying too much in AVC

Any thoughts appreciated

JC

I'm not a financial expert but someone who general manages my money well.
It look like you are doing well.

The proposed attic conversion seems to be driving this financial reflection.
What are you using this for?
Are you planning to stay in this house forever?

Reason I ask, is that the construction professionals in my family claim you never recoup your money on attic conversions when selling.

One of the reasons is when selling they can often not be called a bedroom as the ceiling height doesn't meet the regulations. This is the case even when it is the best room in the house as was the case in a previous house of ours.

So a "proper" extension might be better long term investment if you might sell in the future.

It is always good to put as much as is allowed in your only tax free savings vehicle...your pension.

But you need to weigh this up against the cost of borrowing to fund other projects. With the present low interest rates and with out actually doing the tot I suspect you are better to pay into AVC and continue paying your mortgage. The cost of your mortage is actually the interest rate minus the TRS. and you protect your pre tax earnings from tax by putting them in the AVC

This current climate is pretty volatile and you never know whats going to happen. We are financially conservative and stable and have ridden a few shocks delivered by the recession, however we have recently discovered a surprise massive threat on the horizon which is not of our doing.
So you need to be financially nimble in this climate.

In this context I would be loath to reduce the term of your mortgage and instead save as much as you can. Up to what your, reduced term mortgage might cost perhaps. When the economic situation clears, you should be able to use this lump sum to pay off a chunk of your mortgage, without penalty.

I would try and get the lowest interest rate for the loan for the attic.
But if the credit union is the only lender...so be it.

Oh and about the qoutes...remember cheapest isn't always best.
Make sure you get references and recent ones.
WE went with the cheapest quote for our extension and it worked out very well, but we understand the process.
Most builders will present you with a bill for extras at the end of the period.
With a good builder he will have agreed a price based on the drawings, but often the owner changes this and that during the actual build and this drives the extras....he should warn you about the cost of changing things mid build and you should be prepared....but many people are SHOCKED.

Good luck with it all.