Which best option re Mortgages?

A

aido71

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Hi All.....just looking for a bit of advice from those who possibly wiser than me!...Over weekend been looking at our finances and thinking about future etc.
Story: Both working secure (as can be) jobs pretty well paid:
PPR...2 years left on mortgage (overpaying since started)about 35K...worth who knows but substantial property good location
Investment Property;....invested 80k...outstanding mortgage 150K...worth about same maybe little more....payments 1050pm rent now 650pm...good tenant same since 2008....
savings about 25-30k

Ok so no major dilema....doing ok only sacrifices really luxuries like foreign holidays or changing cars...so doing great compared to most;

options....1. continue as is....weather storm hope next few years bring improvement
2. Cut losses now sell property 2....take hit for 80K investment and rent top up over 5 years...put it down to experience but be rid of it NPPR/tax etc
3. Perhaps odd choice but sell PPR pay off all mortgages move into investment property and have savings in bank......

Option 3 looks good written like that but love own home....exactly as we want 2 boys happy great site etc....but other house in town not too far so no school change etc...smaller but still 4 bed semi....decent estate/location...older so lot of established owners etc.

As i said we not in financial difficulties but at same time trying to look forward do whats best for family etc.

My wife content to stay as is...weather it out and look longterm (she kinda wise.....!)
Any other input appreciated...Thanks for your time.
A
 
Firstly, well done on getting to where you are, that's a great achievement.
I think this does not actually come down to a decision based on money or Return on Investment. It really comes down to a question of lifestyle and what you want from life.
You are in a strong financial position; i.e. low mortgages, two jobs, savings, good tenants, well able to pay your bills etc.
Thus any decision you make will only improve your financial position from an already very high base.

Therefore you need to think of this from a lifestyle choice, i.e. what will life be like for you, your partner and children in each scenario. Try to imagine this and then pick the one that suits you best. Evidently you need to consider where your children will be happiest but also in which house would you and your partner prefer to grow old.

Don't worry too much about this, you've done well, enjoy it and make sure your wealth works for you and not the other way round.
 
What is your long term goal on the investment property. How do the figures stack up on this, tax etc? Is it costing you more than 400 a month. How long is left on the morgage?

If your wife and kids are happy and you can afford it don't move.
 
At the moment paying €400 pm towards mortgage on investment property getting rent €650 ( down from €850).... 80k invested originally.... As I mentioned owe €155 worth about same.... Original plan was keep in long term ....initially was getting 850 rent....Now don't see the point of throwing good money after bad but to jump now would see us having achieved nothing and risk losing good tenant not selling and possibly having trouble getting another tenant! We not financially strapped but just see this millstone getting heavier and heavier.... Am I being overly gloomy (jan/feb blues!) ? Worth hanging tough play long term game? At least in 18 yrs have an asset to pass on to kids... We young enough (40) to carry it and not suffer in retirement... I hope!
 
Hi Aido71
My first thought would be that there are two years remaining on your PPR. That's not a long time and will leave you with some extra disposable income. You can then spend a bit more or put some extra off the investment property. Or half n' half.
And we'll all be two years closer to the next boom by then too!
Sit tight!?
 
aido71 said:
Now don't see the point of throwing good money after bad

We not financially strapped but just see this millstone getting heavier and heavier.... Am I being overly gloomy !
Click to expand...


Yes you are, where is the financial burden? If you don't like and cannot cope with being a landlord then that is another issue.

There is no need for you to overpay your mortgage anymore. You should save instead. There is no need to overpay the investment as that is not in negative equity, is giving some kind of return, you will eventually owe it so long term what is the issue? Rents go up and down, as do property values, that is why it is a long term plan.

You live in a lovely home that all of you are happy with. You both have a good salary, for goodness sake how lucky are you? Also you have an investment property, can afford to subsidise that investment, and even if it went pear shaped you owe little or nothing on your home and the investment will just about clear itself.

Are you looking too closely at the paper losses, plus the 80K invested and gone and the long stretch of 18 years?

Maybe instead of overpaying you should spend some money on a nice family holiday or car. Think about all the positives, you don't seem to have any money worries that I can see only one's that you are looking for. Everybody including myself can go doom and gloom and say why didn't I sell in the biggest bubble Ireland ever had but hey we're still here, still working and getting on with it.

Don't be making plans to give property to your kids, make plans to have enough for your retirement, if you educate them they should be able to make their own way in life, and if there is anything over for them it's a bonus.
 
Thanks Bronte......i reread this morning what i wrote and agreed that i seem to be making issues where none exist. In fact my posts look really whingey!
I think that although we in good employment as with everyone in a little over 12 months have seen net monthly income drop by about €1200 between us so for first time having to make some financial choices albeit nothing like so many out there.
Thanks for the reality check!...I was doing too much of the what ifs...

The one question i would still ask is why would you reckon i would be better off saving excess on mortgage as opposed to clearing early....Currently on 4.3% vrb and overpaying by €750 pm. Not sure if deposit rates would net much more (after dirt etc). I kinda like the idea of being mortgage fee (ppr) in less than 3yrs....that would then free up about€1300 pm. But in current climate is it perhaps better increasing savings and keeping some debt or do opposite?
Thanks for input.....
 
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