From your income (after tax) how much goes to your rent/mortgage?

The Mighty Quinn

ted1 wrote: »

For those over paying, are you maxing out your pension contributions?
Or just focusing on the mortgage? Surely it’s more beneficial to take the tax advantage of putting it into your mortgage.

I've maxed my pension contribution + set up an overpayment on mortgage, both as of this month's salary.

I think I can manage it for a while, so I'm going to try for a year of it at least. At some point with young family I know costs will dictate that I need to step back my payments.

However with that said, 10K towards my pension with 30 years til retirement will be worth a lot more to me in theory than putting that same 10K in with 20 years til retirement.

The longer your pension can work for you the better, so trying to pack it up now. I'm mid 30s and pension value at the moment about 35K. I'd like to get this up to 60-70K by the time I'm 40. Others will probably tell me that I should have 100K by then but... okay.


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Edited to add, I had received a pay cut due to Covid-19, whole company had, there's talk of reinstating it, it's only a few %, but I think I'll make plans for it to do something of value for me when I get it, overpay on loans or something, rather than have extra day-to-day money. I have no luxury money at the moment, don't buy clothes or takeaways or gadgets or anything. I'm focused at least short term on making a dent in what I owe as well as growing a pension. Short term 'pain' for longer term gain I hope.

KaneToad

2 incomes towards mortgage.
11% of net income.

Overpay too, brings it up to 22% of net income.

Buddy Bubs

I voted 26-40% but its actually under 25% of pay after tax, I based it on my take home pay after I pay tax (inc prsi and usc), pension and a work savings account I pay into.

23.7% to be exact! Manageable. Down to 2.25% interest on AIB Green Mortgage rate. Wouldn't dream of overpaying. Its fixed now anyway. Havent quite maxed my pension contributions but close. I'd do this before overpaying mortgage.

The Mighty Quinn

Smee_Again wrote: »

Every time these type of threads come up you have someone make that claim, it's bizarre and would make you wonder how many people also think it in the real world.

Going off topic a bit here Smee, but I think give it 20, 30 years, there are going to be a lot of people in real trouble in Ireland. People who for their own reasons have never purchased a property, rented all their life and who haven't paid into a private pension. Suddenly they're late 60s or beyond, no income other than 250 a week from state (or whatever it has dropped to by then as the workers:retired ratio morphs), unable to afford to rent where they've always lived.

banie01

Luckily I own my home outright.
Only costs are tax, insurance and maintenance.
Very lucky to be in this position and it's made being invalided out of work far easier to manage.

Was lucky enough to have some good fortune in work and business during the 2000-2015 period that allowed a purchase with a small mortgage and quick clearance.
It certainly helped offset my shítshow personal life :pac:

itsusuallyjazz

Currently renting and paying 26%, hoping to have keys to my new house on 1st April and Mortgage will be 23%. Single income

The Mighty Quinn

banie01 wrote: »

Luckily I own my home outright.
Only costs are tax, insurance and maintenance.
Very lucky to be in this position and it's made being invalided out of work far easier to manage.

Was lucky enough to have some good fortune in work and business during the 2000-2015 period that allowed a purchase with a small mortgage and quick clearance.
It certainly helped offset my shítshow personal life :pac:

Think my mortgage is due to finish up somewhere about 2052 :(:mad::eek:
But... I'll have it finished before then right.... :pac:

Interested Observer

Smee_Again wrote: »

Every time these type of threads come up you have someone make that claim, it's bizarre and would make you wonder how many people also think it in the real world.

I've just actually done the sums, for every 100eur I'd get in salary, 360eur goes into my pension, which will of course compound for the next few decades. I certainly know where the risk lies.





Back on topic, mentioned before I'm paying about 28% of my salary on the mortgage. I am on 3.2% for 5yrs which I really regret taking now given some of the offers available. When the fixed rate expires I'll probably try keep paying what we're paying, but shorten the term so we can get through the capital quicker. Very happy in our house but it could end up being too small in the medium term.

Harpon

Interested Observer wrote: »

I don't know why I'm engaging with someone so nuts but:

6% of my gross pay goes into my pension, my employer puts in another 7%. I don't pay any tax on the 6%, so I lose ~3 or 4% of my net pay but gain 13% of my gross pay into my pension. And in a country where the average life expectancy is in the 80s and rising, you think the BIG RISK(!!!) for me is forgoing that 3% for the time being, and not the prospect of going 20+ years after retirement with my pension available? Yeah good one.

Think you are the one who is nuts as you are making up things I never said. Take a deep breath you angry person and read what I actually said rather than what you think I said. At no point did I say people should not have a pension or should not contribute what you are contributing.

People should have a pension pot that takes advantage of the tax free 200k lump sum and 300k at the 20% tax rate, after that pensions are taxed the same as any other investment only they have a lot more restrictions on when and how you can access that money.

theteal

Interested Observer wrote: »

Back on topic, mentioned before I'm paying about 28% of my salary on the mortgage. I am on 3.2% for 5yrs which I really regret taking now given some of the offers available. When the fixed rate expires I'll probably try keep paying what we're paying, but shorten the term so we can get through the capital quicker. Very happy in our house but it could end up being too small in the medium term.

I think the current wisdom is to not shorten the term but leave as is and continue to overpay. This gives you breathing room should any unexpected hurdles appear but as you're overpaying, you'll still be technically reducing the term anyway. If there are penalties for overpaying so much, leave the extra in a savings account and use it to pay off lumps when option arises.

bluesteel86

2 incomes, 13% of our combined monthly net goes towards the mortgage

Bubbletea21

We are renting (both working full time) and the ratio of rent is shockingly high compared to others who have commented here so far...

AndyBoBandy

Mortgage payments are only 10.3% of my net monthly income, but we overpay, so I actually pay 28% of my net monthly income off the mortgage.... for OH it'd be roughly the same, around 27% of net monthly income paid off the mortgage.

The result of the overpayments mean we reduce the mortgage term from 20 to 9 years, and save around €50k in interest...

We only needed to borrow €165k, and have around €44k left to pay, which will be paid off in 2 years and 1 month.
*I should also mention that I was a single income applicant, and it's solely in my name.


and I know people will say we could better invest the overpayment money, and a mortgage is the cheapest loan you'll ever get etc etc... but we just want to be debt free. We bought a brand new electric car about a year ago for just under €50k, so the way we look at it, by overpaying and saving €50k in mortgage interest, the car has effectively cost us nothing... (pigeon maths I know, but that's the way we see it).


For anyone thinking about overpaying, the CCPC overpayment calculator is a great tool to show how much you'll save in interest, as well as shorten the term of the mortgage, however small the overpayments are... well worth a look.

CCPC Mortgage Overpayment Calculator

theteal

AndyBoBandy wrote: »

Mortgage payments are only 10.3% of my net monthly income, but we overpay, so I actually pay 28% of my net monthly income off the mortgage.... for OH it'd be roughly the same, around 27% of net monthly income paid off the mortgage.

The result of the overpayments mean we reduce the mortgage term from 20 to 9 years, and save around €50k in interest...

We only needed to borrow €165k, and have around €44k left to pay, which will be paid off in 2 years and 1 month.
*I should also mention that I was a single income applicant, and it's solely in my name.


and I know people will say we could better invest the overpayment money, and a mortgage is the cheapest loan you'll ever get etc etc... but we just want to be debt free. We bought a brand new electric car about a year ago for just under €50k, so the way we look at it, by overpaying and saving €50k in mortgage interest, the car has effectively cost us nothing... (pigeon maths I know, but that's the way we see it).


For anyone thinking about overpaying, the CCPC overpayment calculator is a great tool to show how much you'll save in interest, as well as shorten the term of the mortgage, however small the overpayments are... well worth a look.

CCPC Mortgage Overpayment Calculator

With the end in sight, nah screw it, overpay and be done with it, fair play.

We've 27 years left on ours, current overpayment will shave a handful off that and tbh, when maternity leave ends (there will be no more!) I want to do the maths to see how much more we can overpay but I'm not going to break my back on it. There is a lot of life to be lived in that time.

bidiots

Interested Observer wrote: »

I've just actually done the sums, for every 100eur I'd get in salary, 360eur goes into my pension, which will of course compound for the next few decades. I certainly know where the risk lies.





Back on topic, mentioned before I'm paying about 28% of my salary on the mortgage. I am on 3.2% for 5yrs which I really regret taking now given some of the offers available. When the fixed rate expires I'll probably try keep paying what we're paying, but shorten the term so we can get through the capital quicker. Very happy in our house but it could end up being too small in the medium term.

Look for the breakage fee and do the math, might be worth paying it to lower the rate.

I'm at 50%, higher than most here but I'm hammering the overpayment as much as possible to get rid of mortgage, less than 10 years to go!

Bigmac1euro

21% of combined take home on mortgage.
This was recently a lot more but partner started new job.

Interested Observer

bidiots wrote: »

Look for the breakage fee and do the math, might be worth paying it to lower the rate.

I'm at 50%, higher than most here but I'm hammering the overpayment as much as possible to get rid of mortgage, less than 10 years to go!

Breakage fee is over 8k at the moment. Even if the maths worked out, I don't have 8k spare.

BigPineapple

Single income paying consistently about 71% (net pay) which is inclusive of overpayment. (Initial half year was lower in percentage [circa 50%] due to getting basic furniture etc).

Of which that net pay already separately account for 5% pension (from gross) and employer match the same percentage. Also have 400 per month AVC included too (also from gross).

2.5 years in so far from a 30 years mortgage and should be able to knock it off in another 3 to 3.5 years at the current projected rate of overpayment (3 years if throwing all savings in at the last few months to clear it).

Personally I hate to be in debt. The initial thought process for overpayment to that high percentage is to aim to reduce the basic monthly repayment to a level that in the event that I lose my job (due to any potential unforeseen reason). The social welfare support would be sufficient to be redirected to pay it without causing hardship (The "make hay while the sun shines" philosophy I call it). Luckily I don't spend much generally anyway and I watch what I buy closely, always asking myself "do I really need it" which helps a lot. It is tough I have to say initially but at this stage my mindset has gotten used to it and the light at the end of the tunnel is what keeps me committed to continue overpayment at this level.

Single income renting, 16% of net for a two bedroom place. I live in a cheap rental area and am hoping to buy elsewhere in the next 6-12 months - if I max out the available mortgage figure the repayments would be circa 24% of net income per month.

stampydmonkey

Double income, 18% of net renting but hope to get a place this year and could stretch to 30% of net on a 30 year mortgage given the cost of houses where we are looking. If it works out we'll likely overpay 10%. Our rent is actually fine and we've saved a lot but 2 young kids in 2 bed apartment and trying to work as well.... FML!!

bilbot79

AndyBoBandy wrote: »

Mortgage payments are only 10.3% of my net monthly income, but we overpay, so I actually pay 28% of my net monthly income off the mortgage.... for OH it'd be roughly the same, around 27% of net monthly income paid off the mortgage.

The result of the overpayments mean we reduce the mortgage term from 20 to 9 years, and save around €50k in interest...

We only needed to borrow €165k, and have around €44k left to pay, which will be paid off in 2 years and 1 month.
*I should also mention that I was a single income applicant, and it's solely in my name.


and I know people will say we could better invest the overpayment money, and a mortgage is the cheapest loan you'll ever get etc etc... but we just want to be debt free. We bought a brand new electric car about a year ago for just under €50k, so the way we look at it, by overpaying and saving €50k in mortgage interest, the car has effectively cost us nothing... (pigeon maths I know, but that's the way we see it).


For anyone thinking about overpaying, the CCPC overpayment calculator is a great tool to show how much you'll save in interest, as well as shorten the term of the mortgage, however small the overpayments are... well worth a look.

CCPC Mortgage Overpayment Calculator

Overpaying is great but not before maxing out your pension for tax benefits, have you done that?

Avant Money have an interesting 1.95% 7 year fixed rate.

AngryLips

Question for the over-payers: why are you not going into a cheaper fixed rate, using your over-payments as a means to save towards a lump sum, which you can then use to pay off the capital portion of the mortgage in one go at the end of the fixed rate 3 or 5 year period?

Interested Observer

AngryLips wrote: »

Question for the over-payers: why are you not going into a cheaper fixed rate, using your over-payments as a means to save towards a lump sum, which you can then use to pay off the capital portion of the mortgage in one go at the end of the fixed rate 3 or 5 year period?

Overpayments come straight off the capital.

AngryLips

Interested Observer wrote: »

Overpayments come straight off the capital.

I think monthly repayments just go against the overall balance and an overpayment against capital would be something you need to specifically instruct your bank to do, including an instruction on whether you want to shorten the term of the mortgage or reduce the monthly payments.

Kander

AngryLips wrote: »

I think monthly repayments just go against the overall balance and an overpayment against capital would be something you need to specifically instruct your bank to do, including an instruction on whether you want to shorten the term of the mortgage or reduce the monthly payments.

I actually had called UlsterBank last week to clarify this as I wanted to start overpaying myself. For Ulsterbank the default is that 100% of the overpayment goes against the principle. This will then change the monthly ratio of what is being paid for interest versus priniciple on the regular payments.

It's the safer option if something happens in the future and you need to reduce payments / restructure.

I don't know what the others are like.

JimmyVik

When we bought our first house, instead of over payments we put what we were going to overpay into ETFs.
There is now enough in those ETFs to cash in, pay the tax, and pay off the whole mortgage - 6 years ahead of when the overpayments alone would have paid it off.
So this year its decision time when covid is over (we dont live together anymore). Cash and pay off the mortgage or keep it in ETFs for longer.

Kerry25x

Around 8% of our joint income. Looking at upsizing at the moment which will bring it up to 20% of combined income which feels like a big jump but its also not worth moving for anything else...

theteal

AngryLips wrote: »

Question for the over-payers: why are you not going into a cheaper fixed rate, using your over-payments as a means to save towards a lump sum, which you can then use to pay off the capital portion of the mortgage in one go at the end of the fixed rate 3 or 5 year period?

We are on a fixed rate. We can overpay up to 10% penalty free.

Funnily enough, in my naivety I originally thought that was 10% of our principal payments (e.g. if 700 of payment was going against the principal per month, I could add 70) and was sticking to this for about a year until I realised it was 10% of the actual mortgage amount so we quickly increased payments.

YuHania

I rent a room for 20% of my net income (I think it's crazy). Also I save another 40-60% of my income to buy something.

AndyBoBandy

AngryLips wrote: »

Question for the over-payers: why are you not going into a cheaper fixed rate, using your over-payments as a means to save towards a lump sum, which you can then use to pay off the capital portion of the mortgage in one go at the end of the fixed rate 3 or 5 year period?

There are cheaper fixed rates available alright, but we will be mortgage free in 2 years and 1 month (25 monthly payments left.....) and don't want the hassle of switching for such little savings at this stage..

Every overpayment we make goes off the capitol amount, same as every monthly standard payment we make also goes off teh capitol amount. The bank just calculates interest every 3 months and applies back it onto the capitol amount..

so we see the capitol amount reduce every month based on the standard & overpayment being made to the mortgage account, and then every 3 months, the bank puts that months interest back onto the capitol.

I've actually made an Excel sheet that I fill in every month, with a graph showing the amount reducing each month, and it's a great motivator when you see a visual representation of the capitol amount reducing so fast!!

By staying variable, I make the payment off the capitol every month, thus reducing the overall amount of interest I pay (albeit at a slightly higher rate).