Are you debt ridden and don’t know what to do? If so you are part of what makes headlines so often, however, recently there was an article in the Independent which cited the number of houses with no mortgage on them.
The research done be CB Richard Ellis showed that 34% of houses have no mortgage and are owned outright and only 40% have a mortgage, 10% are renting private accommodation’s, 9% are renting or buying their home from a local authority. The article didn’t say what the missing 7% are doing, maybe they are running around screaming ‘where have all the mortgages gone!’…. On a serious note I would imagine that it represents people living in local authority homes (perhaps).
Getting out of debt is not an issue for about 70% of households in Dublin City with no mortgage (the article states that mortgaged properties in the city centre are less than 30%), 45% of houses in Fingal are mortgage free, and about 60% in DunLaoghaire/Rathdown are mortgage free.
Now that you are salivating and envious about those people who are debt free or mortgage free (call it what you want), you should try to figure out a way to join them. Some simple steps are the next sensible thing to look at.
Don’t carry a balance on your credit card, if you happen to have a credit card with Egg you might get it revoked for not carrying a balance but with rates on credit cards upwards of 15% its insane to carry a balance unless you absolutely have to. The same goes for personal loans, sometimes a person has money to buy something and is then given ‘credit options’ which sound good buy what might not sound good is if you amortize the loan (amortizing is where you look at a loan decreasing as it gets paid off) and realise the kind of interest you will have paid.
If you truly want to get mortgage free then you need to break the comfort zone and make extra payments because once you borrow the money it has to be paid back, you could of course sell up and be mortgage free but in that case you will have to rent and you will need to look at the rental prices versus the mortgage price you are paying, for most people the preferred route (if you have already gone through the process of buying) will be to make some extra payments. In face paying an extra €100 per month on a €300,000 loan over 30 years would actually save you a big amount of money, you’d pay about €272,000 in interest over the life of the loan instead of €320,000 (this is at an interest rate of 5.6%). I’m sure everybody would rather not pay €48,000 in unnecessary interest, if you doubled that to €200 the difference bumps up to €82,000 with 8 years knocked off the time as well. Food for thought!
We currently live in a society where credit is on offer everywhere and we have gone from being credit averse to credit hungry the debt per household is above 100% of disposable income, that doesn’t mean you have to live on nothing it just means that you couldn’t pay your debts off if you threw a years salary at them in one go. On the bright side our wealth as a nation is passing the Trillion mark which is a big benchmark.
Getting debt free is a mission and journey in itself, and it should be part of a greater wealth building mission, most people spend more time per annum considering where to go on holidays than they do thinking about their financial situation even though your finances are what determines whether you actually get a holiday or not! And for that reason everybody, and I mean EVERYBODY should have a financial consultant, ideally that person is a qualified financial advisor, or a professional with appropriate qualifications such as an accountant or broker, but it can also be your dad or a cousin who is fairly savvy with money, just make sure that you have somebody around who knows more than you do about money, and then have some kind of plan, even a simple plan like ‘put an extra twenty euro in the credit union every week’ is better than no plan.
The objective is to get started and to learn as you go along and to make progressive changes as you learn, one fact is that the funds for state pensions may not be in the government coffers in the future so if you don’t have a pension then start one. In this day and age where no job is ‘permanent’ you had better get used to the attitude of taking care of yourself because there will likely come a day when that will be forced on us rather than chosen.
You can get a full financial review with an expert here in Irish Mortgage Brokers and they will look at more than just your mortgage, our advisors can help you with pensions, regular savings, investments and insurance. We’d be delighted to help if you call for a review, however, the important thing is to get a review somewhere and to make a plan, even if its not with us, because it sure beats the alternative of being on a journey with no map.