Opinions on this 20 year plan... open to criticism/advice

[turbotoaster]

Hi everyone, thought your great brains on here might be able to give me some direction on my plan.

Firstly bare in mind im not a strong company director, nor do I have aspirations of living a millionaire lifestyle.

Im on £35k a year

I live in the Midlands in a 3 bed semi-detached which when we bought that Im happy to live in till I die.

Im 39 years old, had the house for 2 years and it will be paid off at 50yrs old.

House was £157k, £40k deposit, 14 year term, FTB

My goal is to retire at 60 years old, this is none-negotiable.


My initial plan was that once the mortgage was paid I would pay the equivalent of that payment into an ISA or something similar thats protected from 50 to 60, this payment would be adjusted based on inflation adjusted wages

At which point I would retire and use that money to last me from 60 to 68 where I would get my state pension plus my work pension.

That might sound tight financially to some but I honestly wont need alot to live on as im not an international jet setter, I just enjoy tinkering in my garage making things, I will be one of those grandads you visited who would build catapults and let you make something on a hobby lathe.



But the change at work means im going to Australia(to do exactly the same job im doing now with same company)

Im doing this because it will give my children an opportunity to experience a different way of life and for my wife to move to a new role with better financial prospects, plus my employer has said if I dont like it I can return at any time, 'you have a safety net to explore the opportunity' is their words.

This has changed my perspective on things financially of course.

We are going over on a 4 year temporary work visa with the option to go permanent after 2 years.

We are going to rent our UK house out(already have 2 people interested as they have viewed via estate agent) and the rental income from that will just pay the mortgage(not make a profit), the estate agent is getting a cut each month so they will do a fully managed service.

For the purpose of this post any figures I quote will need to be inflation adjusted, so if im discussing £1 now that figure will be different in 20years.


The issue im having is deciding how im best maintaining that 60 year retirement goal.


I have a few choices, by the time I will have permanent residency I will be likely 42

1st option

If I decide to sell the house in the UK and be in a position to buy a house in Austraila I will be 43.

Im expecting the equity we will get from the house will be £100,000

The equivalent house I would want to own in Australia will be £450,000-£500,000

This would leave £350-400,000 to pay within 17yrs, assuming an interest rate of 4%, thats £2700 a month

With a take home pay of around £4100 per month, thats pretty tight for likely quite a fair bit of the mortgage term.


2nd option.

Dont sell the UK house

Continue to rent in Australia from 40 to 60 years old, this would be circa £1600 a month
When the UK house is paid at 50, have that rental income go into an ISA or other savings account.

Leave Australia at 60 years old to come back to the UK, bringing back with £120,000 from my pension as you can take it all if you leave the country(minus 30% of course)

This will mean I arrive back to a mortgage free house with circa £250,000 of savings to last me until I get my state pension at 68.

If someone asked me would I be fine living on the current state pension(assuming no mortgage) today I would be fine and happy to do so.



So initially the 2nd option sounded the more appealing as I have no problems with living in the UK nor do I want to leave the UK, so I would be fine returning.


But the bit that is sticking in the back of my mind is that im paying rent for 20 years, which we will be fine doing, but from a financial point of view that money is just paying someone elses mortgage(just like what would be happening to our house in the UK) rather than working for us.

There is no way we would be able to raise the deposit money ourselves to buy over there within a reasonable time scale and if we are just saving every penny while over there it kind of defeats the point in going if we arnt free to enjoy ourselves.


I just wondered what peoples opinions might be under the circumstances.

Either way im stopping work at 60 and I dont mind which country I end up staying in.

Happy to answer any questions or provide any further info

Edited by turbotoaster on Sunday 26th November 01:26

Edited by turbotoaster on Sunday 26th November 01:27

[wisbech]

Option 3. Decide after your first few years in Australia if it is where you want to live (PR) If so, sell UK house, buy there. If not, don't sell UK house, take employer's offer to move to UK

[Marc p]

Big point you’re forgetting is that if you stay in Aus til your 60, your kids will be settled there with there own careers and likely would not be moving back, my guess is that when push comes to shove, you’ll want to stay close to your kids and remain in Aus.

[Shawtec]

Having done something fairly similar - you may want to look into what the Capital Gains Tax might be if you sold your property after being non-resident for a period of time and also what the rules are for that money if/when you take it to Australia.
Your state pension may also be less if you don’t pay NI for the full period.
On balance I’m sure you will be better off financially and richer in life experience though.

Edited after. ISAs are only for UK residents (I’m pretty sure)

[NorthDave]

Personally I would avoid selling the UK place. There are lots of tales of people moving abroad and then not being able to afford to move back. This might happen if the Aus housing market is out of sync with the UK one.

If house prices are more in Aus then presumably your wage will also be higher? It should all be relative.

Could you remortgage the UK property to get enough deposit to buy in Aus? That would give you too houses with one being paid in the UK by renters and you paying the capital off in Aus. Throw in two lots is capital appreciation and you might be in a very good position come retirement?

[Kerniki]

Only advice, definitely keep your foot in the uk with a property. it is useful on so many levels, keep this at the top of your list whatever else you decide to do.

With you on oz, we’ve lived abroad for 15 years now, oz is most likely our next step, noosa heads or port Macquarie

[okgo]

I've yet to know anyone that have moved from the UK to Aus and shown ANY intention to move back.

[mike9009]

okgo said:

I've yet to know anyone that have moved from the UK to Aus and shown ANY intention to move back.

My mate moved to Perth with his family for almost two years. (Orthopaedic surgeon) They did not particularly enjoy it and moved back to the UK.

[ARHarh]

okgo said:

I've yet to know anyone that have moved from the UK to Aus and shown ANY intention to move back.

I have, known more who have moved there and after 4 or 5 years wanted to move back to the UK. This has mostly been due to missing family. Its a pretty close run thing though, 3 how stayed and 4 who came back.

[PM3]

mike9009 said:

okgo said:

I've yet to know anyone that have moved from the UK to Aus and shown ANY intention to move back.

My mate moved to Perth with his family for almost two years. (Orthopaedic surgeon) They did not particularly enjoy it and moved back to the UK.

Moved to WA 12 years ago, but changed my mind and moved back to uk after 3 years ( I kept house in UK while there) I was on a superb deal there with a major American multinational ...but place was a bit meh for me. Wife found it very backward ( she was initially keenest on move to Aus) and children's education was definitely suffering ( private there ) ...but rescued by good Uk private setup

Each to their own, but my advice is keep options open until you have properly sampled your options . By the way, you need a strong cash nest egg to launch your new life there properly.

[BlindedByTheLights]

For a view on buying a house vs renting and investing:

https://youtu.be/vOvLFT4v4LQ?feature=shared

[RD-1]

Keeping the UK house gives you more options.

Is the visa tied to your employer? Where are you planning on moving to?

Are they giving you a pay rise by the way, as you’ll need it to make some of those numbers work.

[Kickstart]

In your position I would keep the house in the UK until I had decided whether I wanted to stay in Aus long term or not
however, as far as I know (not an accountant) your rental income (subject to some deductions for mortgage interest - you will have to look up the detail) will be subject to income tax so it might not pay to aggressively pay down your mortgage in the UK

Also remember your agents in the UK looking after your house are not maintaining it like you would, merely responding to and fixing problems so after say 5 years of renting I would budget for a refurbishment

Food for thought

Is your firm offering any free financial advice about moving, as if so I would definitely recommend taking that up

[turbotoaster]

wisbech said:

Option 3. Decide after your first few years in Australia if it is where you want to live (PR) If so, sell UK house, buy there. If not, don't sell UK house, take employer's offer to move to UK

that doesnt answer anything, your option 3 is just saying choose option 1 or 2

Marc p said:

Big point you’re forgetting is that if you stay in Aus til your 60, your kids will be settled there with there own careers and likely would not be moving back, my guess is that when push comes to shove, you’ll want to stay close to your kids and remain in Aus.

I would hope at 28 and 30 they will have their own lives and families, at which point we will come home and potentially visit once a year during the australian holidays

Shawtec said:

Having done something fairly similar - you may want to look into what the Capital Gains Tax might be if you sold your property after being non-resident for a period of time and also what the rules are for that money if/when you take it to Australia.
Your state pension may also be less if you don’t pay NI for the full period.
On balance I’m sure you will be better off financially and richer in life experience though.

Edited after. ISAs are only for UK residents (I’m pretty sure)

Part of me doesnt really want to sell this home, I managed to get it just before the prices went to crazy but fixed with a 5yr mortgage at 1.24%(3yrs left on that rate) so I want try and keep that advantage for when I retire

Ive got 13 years left to pay in on the NI, so currently going to receive 75%, though ive read you can currently pay in up to 6yrs back in so that would likely take me to im guessing 85%

NorthDave said:

Personally I would avoid selling the UK place. There are lots of tales of people moving abroad and then not being able to afford to move back. This might happen if the Aus housing market is out of sync with the UK one.

If house prices are more in Aus then presumably your wage will also be higher? It should all be relative.

Could you remortgage the UK property to get enough deposit to buy in Aus? That would give you too houses with one being paid in the UK by renters and you paying the capital off in Aus. Throw in two lots is capital appreciation and you might be in a very good position come retirement?

I am heavily jaded by living in one of the cheaper areas of the UK for housing and moving to one of the more expensive areas in Australia, so from that perspective its not all sunshine and rainbows.

While my wage will go from £35,000 to £70,000 for the same job, the house prices will be triple, hence I dont want to really take on that level of mortgage as the only way I will be able to take it on would be to sell the much cheaper house in the UK.

To buy a house over there I would need £100,000, while I could probably save £36,000 in the 3yrs, it would mean I have to pull £64,000 out of the UK house, taking my UK mortgage at the time up to £144,000, which on a circa £180,000 property isnt horrendous but leaves me more exposed as I put myself in a position as a leveraged landlord.

Im pretty risk adverse but it might be something to contemplate

Kerniki said:

Only advice, definitely keep your foot in the uk with a property. it is useful on so many levels, keep this at the top of your list whatever else you decide to do.

With you on oz, we’ve lived abroad for 15 years now, oz is most likely our next step, noosa heads or port Macquarie

My work will be based on the Sydney area but im moving 90mins north of that in the central coast to try and keep rent reasonable(so not to far away from you), it will still be £1600 a month verses my £765 a month mortgage so I will still feel the pain of it

PM3 said:

Moved to WA 12 years ago, but changed my mind and moved back to uk after 3 years ( I kept house in UK while there) I was on a superb deal there with a major American multinational ...but place was a bit meh for me. Wife found it very backward ( she was initially keenest on move to Aus) and children's education was definitely suffering ( private there ) ...but rescued by good Uk private setup

Each to their own, but my advice is keep options open until you have properly sampled your options . By the way, you need a strong cash nest egg to launch your new life there properly.

Ive been saving every penny I can for the last 7 months, building engines in the evening, selling parts and have managed to get to get £18,000 with the target of leaving in January with £20,000, my plan for this money was to have it ready for when we are due to remortgage in 3years but now its going to getting us setup.

Work are paying for visas, flights, first month accommodation, I get work car, phone, laptop, fuel card, tools etc, so most of the costs will be rent, food and utilities

RD-1 said:

Keeping the UK house gives you more options.

Is the visa tied to your employer? Where are you planning on moving to?

Are they giving you a pay rise by the way, as you’ll need it to make some of those numbers work.

Yes its a 4 year 482 temporary visa that I have to commit to 2 years with them else pay back the relocation funds

Moving mid January

Double the money, so £35k to £70k for same role

[jrb43]

ARHarh said:

okgo said:

I've yet to know anyone that have moved from the UK to Aus and shown ANY intention to move back.

I have, known more who have moved there and after 4 or 5 years wanted to move back to the UK. This has mostly been due to missing family. Its a pretty close run thing though, 3 how stayed and 4 who came back.

As you've admitted you're not a powerfully built company director, it's very difficult to advise. All I can say is, have you thought about buying a Civic Type R?

Most medics I know have come back after 2yrs having found it difficult to crack into Australian social circles. My brother came back from secondment with HSBC because he felt isolated at work. On the other hand, my retired father enjoyed 10yrs out there with a good social network.

Double the salary sounds attractive but I can't see you've accounted for the increased cost of living. And you absolutely won't be buying property anywhere near Sydney which I believe is around 2 million Aud$ entry. And are there possibilities for career progression out there (my impression is Australia normally prioritises looking after their own) vs career progression here?

Clearly you're settled on going over there and why not? It'll be an experience and you should be excited about it. But I'm with everyone who's said don't cut your ties with the UK until you're absolutely sure that all that glistens is indeed gold. And that would include selling UK property. We're currently on goodness knows which bit of the economic rollercoaster and you could find yourself priced out of the market in 5yrs.

[Pit Pony]

When you say the rent will just cover the mortgage, but you won't make a profit.

Do you actually mean the rent minus letting agent fees will be quite a bit more than the interest, and we will therefore make a profit, and have to pay tax, and then we will also have to pay the equity part of the mortgage which will be more or less the net profit. However, once we pay for repairs the cash flow will be negative, but it's not a problem because eventually someone else will have paid the mortgage off for us ?

Don't confuse cash flow with profit.

[turbotoaster]

jrb43 said:

As you've admitted you're not a powerfully built company director, it's very difficult to advise. All I can say is, have you thought about buying a Civic Type R?

Most medics I know have come back after 2yrs having found it difficult to crack into Australian social circles. My brother came back from secondment with HSBC because he felt isolated at work. On the other hand, my retired father enjoyed 10yrs out there with a good social network.

Double the salary sounds attractive but I can't see you've accounted for the increased cost of living. And you absolutely won't be buying property anywhere near Sydney which I believe is around 2 million Aud$ entry. And are there possibilities for career progression out there (my impression is Australia normally prioritises looking after their own) vs career progression here?

Clearly you're settled on going over there and why not? It'll be an experience and you should be excited about it. But I'm with everyone who's said don't cut your ties with the UK until you're absolutely sure that all that glistens is indeed gold. And that would include selling UK property. We're currently on goodness knows which bit of the economic rollercoaster and you could find yourself priced out of the market in 5yrs.

While I havent posted all the details of the cost of living differences I have done all the research into the costs of utilities, food, drink etc, from what I can work out its about 50-60% more overall, im not going there to earn a fortune, from what I can calculate I will roughly be in the same financial situation going over when taking into cost of living.

I wont be living in Sydney, not interested in living in the city at all, im going to be living 90mins north and drive around the city doing work, the type of house I like the look of is about $800k.

I dont want career progression, im happy doing my current job being field based, doing my own hours and having a decent work/life balance.

I suppose the thought of renting long term while im there was what was on my mind and wondered if I was doing something daft that plenty of people would tell me I should have been doing something different due to lack of knowledge on my part.

[turbotoaster]

Pit Pony said:

When you say the rent will just cover the mortgage, but you won't make a profit.

Do you actually mean the rent minus letting agent fees will be quite a bit more than the interest, and we will therefore make a profit, and have to pay tax, and then we will also have to pay the equity part of the mortgage which will be more or less the net profit. However, once we pay for repairs the cash flow will be negative, but it's not a problem because eventually someone else will have paid the mortgage off for us ?

Don't confuse cash flow with profit.

mortgage is £765
Rent will be £920 minus the 10% for the estate agent managed fee.

I said that at the end of each year I could roughly break even I would be happy with that.

Took a 14 year mortgage with 5yrs fixed at 1.24% to try and maximise the opportunity to pay a decent bit off the mortgage as I knew rates wouldnt stay low forever.

I will have 2.5years hopefully of rental payments when im due for renewal(9yrs/£78k) so I can look at the interest rates and make a decision on how long the mortgage should remain, again trying to ensure if possible that im not needing to pay anything torwards keeping the UK house going

[Pit Pony]

turbotoaster said:

Pit Pony said:

When you say the rent will just cover the mortgage, but you won't make a profit.

Do you actually mean the rent minus letting agent fees will be quite a bit more than the interest, and we will therefore make a profit, and have to pay tax, and then we will also have to pay the equity part of the mortgage which will be more or less the net profit. However, once we pay for repairs the cash flow will be negative, but it's not a problem because eventually someone else will have paid the mortgage off for us ?

Don't confuse cash flow with profit.

mortgage is £765
Rent will be £920 minus the 10% for the estate agent managed fee.

I said that at the end of each year I could roughly break even I would be happy with that.

Took a 14 year mortgage with 5yrs fixed at 1.24% to try and maximise the opportunity to pay a decent bit off the mortgage as I knew rates wouldnt stay low forever.

I will have 2.5years hopefully of rental payments when im due for renewal(9yrs/£78k) so I can look at the interest rates and make a decision on how long the mortgage should remain, again trying to ensure if possible that im not needing to pay anything torwards keeping the UK house going

You don't seem to get my point.

You are going to make a profit, and pay tax on the profit, and in the short term you will have negative cash flow. (But you will get much of it back when you equally own all of the house or sell it)

Mortgage is £765, of which interest is what ?
Let's say £200....I'm making a guess.
Therefore if rent after estate agent deductions and insurance is approx £800, profit is £600. That is £7200 profit a year. Income tax of 20% so £1200 tax.
Net income after tax per month is therefore closer to £500, minus £200 interest, minus £92 letting agent and say £30 insurance, call it £180.
Now on my guess, your mortgage minus the interest is £565. You therefore have a negative cash flow of close to £300 a month. Not a problem, because that £565 comes off the loan amount and when you eventually sell you get most of it back, minus the capital gains tax for the period you didn't live there.

You need a spreadsheet, and to take a bit of tax advice, so you understand the implications.

[anonymous-user]

okgo said:

I've yet to know anyone that have moved from the UK to Aus and shown ANY intention to move back.

I lived there for three years and moved back to the UK and my Australian girlfriend came back with me. She is currently in Melbourne visiting family and says how boring it is there and misses London.

You mention moving 90 minutes away from Sydney, is that a 90 minute commute every day? Sydney traffic is a nightmare, easily as bad as London traffic so bare that in mind if you are driving.

As for Pension (or Super as they call it in Australia), your company have to contribute a minimum of 11% of your salary to your super fund.

As others have stated, your visa is tied to your job, so if for whatever reason you lose that job due to redundancy etc. you will lose your visa as well.

You say you are going to double your salary, but a lot of things in Australia are really expensive. A glass of wine and a double gin and tonic is $50 (£26) for example. You will be shocked how expensive Mobile phones and broadband are compared to the UK. Also second hand cars are REALLY expensive, if you think UK Covid prices were expensive then you are in for a shock.

Also it is very much a nanny state, fireworks, air guns and sun beds are all banned. They are INCREDIBLY strict when it comes to speeding and the limit on most roads is 100KM an hour with big fines for even being a couple of KM over.

Just trying to give you an idea of some of the realities of Australia, it isn't all shrimps on the Barbie and evenings spent on the beach.

Personally I would rent your UK house out and give it a couple of years to see if you like it there or not. As others have said Sydney house prices are insane so you probably have little chance of being able to afford to buy there.

But definitely a great opportunity and you should definitely go to see what you think.