Does this plan have major financial pitfalls?

[turbotoaster]

I did make a post at the start of the year but i feel my thoughts, circumstances and financial goals are different enough that its not valid so hopefully I can get a new input.

In January we moved to Australia on a 4 year Temporary visa, undecided on 100% if we will stay permanently(but the lovely weather and beaches are nice) so we are given that option.

Im 40 next month, wife is 41, kids 9 and 11

Have a house in UK.

Currently worth £200,000
Mortgage £96,000
Currently have 1.25% rate until 30/11/2026
Have £18,200 in savings account, only earning 2.4% but im ok leaving it there.

The mortgage payment is covered by the rental charge on the property, managed by an Estate Agent

When fixed term ends I will owe £75,000 and have 9 years left assuming I continue on the same time scale.


One of the reasons for the move was not just an adventure but also better wages.
I have doubled my wage from £35,000 to £70,000 doing exactly the same job for the same company.
The wife starts a job in 2 weeks which also doubles her wage from £14,000 to £28,000 doing again the same job.

Im now looking at what to do long term and what would we like our scenario to be if we decided to come home, currently I dont see that we want to but i want to put myself in a good position if that were the case.

For me that would be if we came home I would like to be mortgage free, and if so have the house paid when its due to come off the fixed term.
Being mortgage free at 43 for me is happy feeling and make me feel beyond the adventure itself, it was a good financial move to try this.

So £75,000 - £19000 = £56000

So based on 33 months I would need to get together £1700 a month(assuming a savings account in Oz didnt create any interest)

With our combined income thats certainly doable, on my first paycheck in February put aside £1600 and could probably up that to £2000 without massive issue, bare in mind we dont need to pay for cars, fuel, broadband, phones etc over in OZ(all covered by company)
While the rent here is £1600, my gas, water, electric and swimming pool seems only to cost £70 a month combined.


Purely from a maths point of view this looks fairly simple.


I suppose the other question and whats picking at my mind is what if do want to stay until retirement at 60, this I suppose is where im looking for your thoughts as this was my initial plan from the start.

Currently the plan is for myself and wife to come back to the UK when im 60, live on our OZ pensions, buy a motorhome and spend the winter months driving around Europe and generally beholden to nobody, just need to buy food and fuel.

But while paying the house off in under 3 years is great, getting £800 a month in rental payments from this house after that until we retire isnt going to set the world on fire while living in OZ, as while that will increase slowly per month over time, since rent is twice that in OZ, one will never catch up with the other and will only grow apart over time.

So do I pay the house off, have a little happy dance that no matter what, I have my own house that no one can take that away from me and its my safety net.

Or do I look at the numbers and say, well if you ignore the UK house, over the next 20 years your going to be paying £384,000 in rent in OZ(assuming it never rises which of course is unlikely) and have nothing to show for it in OZ.

If thats the case would it be better to save for 3 years at £2000 a month + UK savings and have £114,000 deposit to put on a house over here which would be circa £450,000, and pay that off in 17 years....the £2500 a month for the mortgage would sting a bit, but that way when you do move back to the UK, you can sell that house and you have a nice chunk of money for retirement and the UK house will be paid off anyway by the time your 52 assuming you always have tenants, so after that you will have 8 years of 'mortgage assistance' from the rental money to offset your Oz Mortgage.

As im typing this out the second option seems financially the better option but can anyone pick holes in my ideas, im hoping there are some big ones that I can learn from.

Thanks in advance and im happy to provide any further information to assist

[BAMoFo]

I think I'd be inclined to continue renting in Oz until you are more certain that you are likely to be able to live out there until you are 60. After that period Option 2 seems to be the better of the two. In the meanwhile, look into paying Class 2 National Insurance contributions for you and your wife so that you continue to accrue qualifying years for a UK pension. I am surprised that this facility is still in place, and it is a bug bear of mine, but you may as well take advantage whilst it is.