Buying a Property/Getting a Mortgage
How do banks calculate self employed income?
Most use a 3 year’s accounts averages out.
Are Rebuilding Ireland and Help to Buy for first time buyers only ?
Yes they are but the shared equity scheme may include certain second time buyers.
Can I get a Mortgage if I am an independent contractor?
Yes, You need a minimum of 2 years accounts.
If you plan to upsize a house within 5 years, is it worth overpaying the mortgage rather than saving in a bank?
Keep your cash. Building up cash gives you more opportunities.
How do mortgage brokers earn money?
Some charge an upfront fee but all get paid (typically 1% of the property value) from the bank the mortgage is placed with.
How much do I need to allow for solicitors + extra costs when deciding a budget for buying a house?
General rule of thumb is use 5% of the purchase price. So €12,500 on €250,000.
Should I pay off a lump sum to reduce mortgage term – Yes or No?
It depends – Are you taking advantage of limits on pension/ cleared off loans and funded appropriately for children’s education funds? If so might be an option for some of a lump sum.
If you are looking to buy a property for €350,000 how much should you save per month?
A Mortgage for €350,000 will cost typically €1,500 per month. Banks generally stress test by 20% so realistically €1,800 p.m. is a good amount to save.
If I qualify for the full HTB (help to buy), what do I need to do ?
The key thing to remember is you need to prove you can repay the mortgage. Having a savings record and capacity from your income is really important.
Saving & Investing
What is the most important consideration when investing?
You need to always consider risk. I would suggest using the risk table. Scale goes from 1-7. 1 is cash – 7 is high risk. Make sure you invest the appropriate amount in the right category for you for the appropriate term (typically 5 years plus).
What is a good place to put my savings?
It depends on your timeframe. < 3 year’s you need to stay with the banks. > 3 years the insurance companies offer really good options but watch for fees and shop around. Use an independent broker.
What is the best option for Children’s education funds?
Zurich life child saver is excellent and has an option to put in trust for your child to avail of “gift tax”. Returns over 5 years plus are much better than the banks.
How much can grandparents give our children?
Generally €3,000 per year per grandparent to a grandchild is tax free. Also there is a total lifetime limit of €30,150 outside of this.
What is the best thing to invest €10,000 into? Or €100,000?
Really depends. Pensions are one option/paying off loans. If over 5 years then definitely consider a diversified portfolio. Looking at tax efficient options makes sense.
Should I invest in ESG (Environmentally friendly funds)?
As part of your portfolio yes but you need to access the risks and exposures as part of your overall portfolio.
What geographical area should I invest in?
Diversified approach is always the best but bear in mind the US represents circa 60% of the world.
How does a pension work?
Just think of it as a savings plan with great tax benefits. If you earn over €36,800 you get 40% back on your payment and if you less than this 20%. Your growth is tax free.
When does it make financial sense to retire early?
When the time you can afford to come together with the moment that you want to.
Are AVC’s a good idea?
Generally yes if you can afford to make them.
What is the most efficient way to build wealth in Ireland?
To spend less than you earn.
When is a good time to start a pension? When is it too late to start?
You should have a pension when you earn over €36,800 per year. You can start a pension at any time up to 80 years of age.
What happens to my pension if I leave my job in a year or 2?
If you leave the pension scheme within 2 years of joining then it Is likely you will get your pension payments paid back to you and your employer will take back their contributions.
When can I draw my pension?
Generally 60 but options to get access to some pensions at 60 years of age.
When should I draw my income?
When your income falls enough preferably so you will not pay income at the higher rate.
Should I leave my ex-company pension where it is or move it? What are my options?
Generally 3 options – leave the pension, move to a new company pension or transfer it to a standalone pension (called a buy out bond). Generally we prefer the 3rd options as more flexibility and early drawdown facility as long as the fees are low.
How much of my salary should I contribute to my pension?
A good general rule of thumb is 10% gross of your salary but you get 40% of a rebate on this.
Is an allocation fee only paid upon entering the investment or every year?
Allocation rare is a charge every time you put money in?
What fees should I pay on a savings plan?
Important to check 3 fees. 1. Allocation rate. 2. Management charge. 3. Policy or other fees. Recommend 100% allocation /1%-1.35% management fee and no policy fee.
Is there BIK on Cars?
This is BIK of 6-30% of the original value of the car depending on the amount of KMs covered (more KMs less %). There is NO BIK on an electric car of value of €50k or less.
Should I sell my work shares yearly?
Yes. It makes sense to reduce exposure and to avail of annual capital gains tax allowance of €1,270 which is the amount you can earn each year tax free. If you don’t use it you lose it.