Hi all,
Looking for some outside perspective on a plan we’re considering, and would love some honest feedback.
My wife (37) and I (38) currently own our home in Dublin. It’s worth about €620k with a mortgage of ~€260k remaining. We’re both working full-time, with a combined gross income of €120k, and we have two young kids.
We’re thinking of:
-Selling our current house -Buying a slightly cheaper home locally (around €495k) -Taking a new mortgage of about €420k (which would be €1,800/month at current rates) -Investing the remaining equity instead of keeping it tied up in the house
After selling, paying off the mortgage, buying the new place and costs, we’d still be left with roughly €300k+ in cash to invest (outside of pensions).
The idea is to:
- Invest that lump sum in a long-term diversified portfolio (through an Irish tax-efficient structure rather than ETFs directly)
- Let it compound over the next 15–20 years
- Use growth later to either massively accelerate the mortgage, fund kids’ college, or build an early-retirement buffer
We’d still have a good family home, a comfortable mortgage, and much more liquid wealth working for us rather than sitting in bricks.
I’m trying to look at this more from a balance-sheet, cash flow, and compounding perspective rather than emotionally.
Has anyone here done something similar—or seen any major flaws or risks I’m missing?
Genuinely open to being told this is a bad idea if it is.
Cheers!
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Terrible idea IMO
Why not stay in better house as it will increase in value more over the time period, more than the cheap house would… then when the time comes sell it and downsize.
You house sale will always be tax free where as your investments come with tax liability.
So in short you’ll probably come out with the same money but live in a worse house for 15-20 years
In the meantime just maximise your pension contributions and you’ll be sorted for retirement/future.
Ageee with this. Done borrow again. Pay off mortgage and then start investing.
Investing outside of pension and primary residence are not tax efficient. Max those first.
This is a strong sell signal.
😂 I had literally the same thought.
By my maths your equity is 275k after costs , and you are borrowing an extra 160k so true equity is actually 115k not 300k. Can you stay ahead of inflation, additional interest costs and the Dublin house market ? Sounds interesting but it’s not without risk. Plus your kids will get bigger and when they are teenagers will the new house be big enough?
The house is cheaper, not smaller. It just happens that our current home is a relatively new build. The idea would be this would be our forever home.
That’s interesting. Is the new build A rated? It’s cheaper to run ? Anyway the risk here is actually that you are part borrowing to invest and the equity you have in your current home has come from a very buoyant housing market. Couldn’t you also top up your mortgage and effectively do something similar with the money?
So say after 10 years, your house gains by 3% a year and is worth 833k (213k gain, 0 tax liability).
Investing in index 8% gain p.a gives you 647k on 300k invested (347k gain, 229k net of 33% tax), adding the appreciation on new house under 3% gain, (170k tax free), 400k gain in this option.
This doesn’t include interest of course, while will be higher under 2nd option. Do you have the amount in interest you’d pay under each scenario to hand?
So you’re essentially re levering and if you can out earn the increased interest costs through investing (net of CGT) seems to make sense.
So given the debt delta, roughly looking at 50k extra in interest over the 10 years @4%, so looking in ball park better off by ~200k
Biggest risk is of course markets not performing inline, or rate increases on mortgage if you’re not fixed but no one can really say where either will go over that timeframe.
Selling your house for a cheaper one just to buy stocks is not a good idea. If you want to move to a smaller house anyway, then it's a different story.
I assume the question is "how much to put in equity" and "how much to put into stocks", right? Not "should I sell my house for stocks?"
As I'm sure you know, the higher deposit you put into the house, the better rates you can get. So a 40% deposit would get you a better rate, leave you would more free money and would be less risky then your 15% deposit.
Suddenly going from 0 equity to 300k is excessive anyway. You have to take into account risks (recessions, low returns, etc).
I think the 40% deposit would still leave you with over 150k to invest. And then you can put all your savings afterwards into these investments.
You mean an investment trust like JAM?
Investments through Zurich are treated similar to EFTs, they just hide the tax from you.
Also, I assume you are already maxing out your pensions and have them in a passive 100% equity fund?
Appreciate the detailed reply, just to clarify, I’m not “selling my house to buy stocks” in isolation. We’re planning to move anyway and this would be our long-term family home.
The decision point is really about how much equity to leave tied up in the house versus how much to keep liquid and invested long term.
I completely agree that putting more into the deposit reduces risk and improves rates. The trade-off I’m weighing up is:
• Lower mortgage and lower interest costs vs • Having a meaningful liquid portfolio compounding outside of pensions for 15–25 years
On the Zurich / life-bond side, my understanding is that they are not treated the same as holding ETFs directly. There’s no deemed disposal, no annual CGT events, and tax is deferred until withdrawal/encashment, which materially changes the compounding curve over long periods.
Pensions are already being prioritised separately – this would be intended as a liquid “outside pension” portfolio for flexibility (kids, early mortgage reduction, etc.).
Totally agree there’s risk, I’m just trying to balance concentration risk in property against diversification and liquidity over the long term.
I understand where you are coming from. I'm actually on the opposite side, going from a large portfolio and trying to figure out how much to put into the mortgage.
However, going from 100% mortgage and 0% EFTs to 20% mortgage and 80% EFTs is extreme jump. It feels like a knee jerk reaction to feeling like all your money is stuck in your mortgage.
A 50/50 or even a 40/60 would be sufficient in regards to long term liquidity. Just combine that further investing into your portfolio.
150k + 1k/month at 78% after 8 years would be around 417k pre-tax. If you sold then (this saves me from figuring out the deemed disposal) you would have 311k or so.
It's true that your plan would make you more money but it's also more risky. It's called leveraged investing.
Your wrong I'm afraid.
It still happens, they just automatically take it out of your portfolio and handle the paperwork.
Bad idea, should get more expensive house or just stay.
You don't pay GGT on primary residence so makes sense to have more expensive houses than required in this country.
If you sell it later would you have to pay CGT?
No CGT on primary home no matter how much it goes up, problem is the house can be sold but you have to buy another one as you have to live somewhere
I think they should buy a house they would like to live in.
Buying more a expensive house because it is more expensive, and going into more debt isn't good either.
I also said could just stay...
Would I have to pay CGT on equity from our primary family home?
No but you're moving it to a vehicle where you do. Makes no sense.
But any CGT would be on the gains and not on the equity?
You pay zero cgt on your primary home
All other CGT is purely on the gains only
The debt you take from the new mortgage is completely tax free aswell
But you have to live in your home so unless you are planning on living in a tent in the future it's not an investment, your primary home is a liability
Except it's not really.
It 100% is a liability as you always need somewhere to live.
You dont pay CGT but will pay a huge amount of interest on a loan which will cost 3 to 4%
In addition the up keep of a bigger house will add additional cost to the individual
I understand you may think buy a big house, then down size when you retire but the smaller house will also gain percentage value at the same amount as the big house so with inflation it's nearly impossible someone can make a good return in comparison to commodities, funds, stocks, property commercial property, businesses
I'd say it's a low risk strategy that works if you have a very low risk tolerance other then that it is definitely not the best return on paper
The equity is tax free.
All debt is tax free
This is bad advise. You only pay cgt on the gains from your investment. So your initial investment will be untouched, it is a solid plan. Especially if you can get a comfortable living space in the smaller house.
Your initial investment could easily be worth double in 10-15 years. But make sure you do your on investment research.
You'd end up with more money on a day to day basis and a solid retirement plan, you would hopefully end up in a position to pay off your mortgage early too
It really depends what you value.
Do you value security knowing you own your own home.
Or
Do you look at the numbers and want to earn the most amount of money possible and are not to worried about having debt.
Some people prefer the former and others the latter.
Personally I'm the latter but it doesnt make it right.
It's a personal preference thing
I took an additional 100k out of equity to invest and have well exceeded 4.1% I have paid for it over the last 2 years and will be lowering that interest rate in the next week or so due to falling rates
I'm at a stage where I want to ensure my money works for me. Currently, it's tied up in bricks, and I'd like to use that money to benefit our family. As I see it, we pay 1350 a month on a mortgage and save around €800-€ 1000 a month. It would take us a significant amount of time to save up what we have in equity. Plus, that equity could be working for us at a rate of anywhere from 4-7%.
4 - 7% minus CGT. You really need to research the tax situation on investments before investing.
Of course, I plan on sitting down with a financial planner.
If one of your goals is your kids college fund, investing the €800-€ 1000 p/m for the next 18 years should compound to €500k before tax (assumes 10% return).
Could you use cash savings to pay lump sum off the current monthly mortgage repayments and invest the excess cash? That would avoid you exposing yourself to making a large sum deposit into the market. I think putting €300k into the markets over a short period would cause me too much stress.
Everyone bangs on about primary residence being CGT, but ultimately that's worth diddly squat to you, your financial freedom or your children's education until you either sell it or die. And unless inheritance thresholds increase, your kids will have a heavy tax burden.
My own opinion is that your proposal seems drastic when your current monthly mortgage repayments are manageable and it sounds like you have plenty of time to invest/compound for your kids education and retirement.
The problem you have in ireland is the ETF rules are obscene.
My personal advice is maximise pension contributions as they will be tax free for both yourself and your partner.
If you are in the top tax bracket you basically double your money immediately taking it tax free.
Generally people would invest in an index fund which takes very little work, experience or research but with deemed disposable and 38% gains tax on ETFs it makes it very hard in Ireland to make money
I personally have spent the last 10 years researching other investment vehicles but wouldn't advise anyone to get into them if they havent done the work and I've done thousands of hours so in happy with my own personal decisions but wouldn't be giving direct advice in investing in high risk assets
Just on the repayments - 420k would be less than €1800/month. We just got a 445k mortgage with Bank of Ireland at 3.2% and the monthly repayments are €1700/month
I would be looking at less of a term.
Personally I wouldn't invest into the market until the AI bubble bursts. IMF has said it will have similarities to the dot com bubble. EFTs and other investment funds are currently heavily weighted towards AI due to the top companies all being heavily tied to AI. Post burst will be a better time to invest.