Blog – McCarthy & Associates – Galway Talks, 20/11/2014

euroandhouseQuestion: What affect do you think the recent Central Bank measures in relation to mortgages will have on house prices next year?
Answer: It looks as if the Central Bank’s announcement, unless there are some surprising changes between now and January, will have a considerable effect on the market.
A large number of first-time buyers will no longer have the financial ability to buy and this will have knock on effects throughout the market.
Whilst I do not believe there will be a downturn in prices, there certainly will be stagnation in activity. Let us hope that the Government sees some sense and introduce a counter measure to help matters.

Question: My son owns a house which he is renting, that is worth less than 50% of the mortgage. He is struggling to meet the repayments and I am wondering should he sell the house now and deal with the bank on the mortgage or continue as he is?
Answer: If your house is in a location where prices are particularly depressed and there is very likelihood of a recovery in value, then I think the time has come for you to make a hard decision and enter negotiations with the bank to sell the property. Obviously they will be looking for you to repay the balance and I am assuming, from your question, that you will not be able to do this. As it is not your family home there is no point in you continuing as you are. The repayments you are making are having little impact on improving the situation.
In respect of the balance that will be due to the bank, you may have no alternative but to opt for the insolvency route.

Question: I have some money on deposit and my bank is constantly discussing with me the option of moving it to an investment that they have. Do you think this is a good idea?
Answer: Always be aware of a bank making an approach to you selling any of their products. They have a limited range to offer so, you should shop around and look at the alternatives as their is a wide variety of product providers that operate in this market.

Question: I am in my 40’s and I am a member of a pension scheme at work. Do you think it is a good idea for me to start making contributions to an Additional Voluntary Contribution scheme?
Answer: If you have the ability to do so, commencing an AVC is a good idea. Obviously you need to look at a level of contribution which is comfortable for your monthly finances. The longer you contribute to an AVC, the more beneficial it will be to you at retirement.
Remember that the most attractive tax relief available is for pension contributions.