Advice Needed:: Upping mortgage to buy new house

decbuck

Hi,

I am looking for a bit of advice. Some of you might think I am mad, but here is my predicament.

Myself and my wife bought a house last year for 270,000. It is a 3 bed semi and 12 years old. It is nice inside. We paid over 10,000 in stamp duty with it.
My mortgage was for 248,000, about 240 left on it.

There are houses in the next town. New 4 bedroom houses that are fantastic looking. We fell in love with it straight away. But we are not even a year in our new house. Is it madness to think of selling now. The new houses are 340,000.

Our house is worth 280,000 now, so would have to up the mortgage to 305000. but I am paying over 25yrs now, maybe I could extend it to 30.

Would I have to pay stamp duty again?



What do you think? Am i mad to be thinking of this?

Sleipnir

So you've made €10,000.
You will have to pay stamp duty as you are owner-occupier and not an FTB.
7.5% on €340,000 comes to €25,500.
The equity you've built up would not even pay for half the stamp duty....?
Plus, you'd have to pay solicitors fees, estate agent fees etc.

You'd be crazy, in my opinion. Just because you love the new house
doesn't mean it's a good idea to buy it.
It sounds to me like you already know the answer.

decbuck

Well thanks for that. As I said I was only looking for opinions on it. I haven't looked into to it really.
But knowing what I do about stamp duty now, It is deff off the cards.


Will it ever be abolished?

Thanks for the advice.

Sleipnir

naw, there's money to be had.
you might want to check the rates yourself at http://www.oasis.gov.ie/housing/buying_a_house_or_flat/stamp_duty.html?search=stamp

decbuck

Just looked at the charts there. I would not pay teh 25,000 as the house is under 125 square metres. Just about. Must have been desigend especially.


No knowing this, how much would solicitor and agent fees be?

Maybe I could do a deal with the agent who is selling the new houses to sell my own.

magpie

Estate Agent will cost you between 1.25% and 1.5% of the sale value of your current house, plus advertising costs, plus VAT. On €280,000 I'd expect to pay about €4500 + VAT (depending on how much advertising you want to do).

Solicitors fees will probably cost you another €4000 including all the various stamping and registering of deeds. (unless you now someone who is a solicitor who will give you a special rate).

Having recently moved house I've got to say the amount of cash you flush down the toilet between fees and stamp duty is pretty galling.

Sleipnir

It depends, most like SherryFitz and the other big fella's will offer a "special rate" to everyone at about 1.5% of the selling price of your house. It's not difficult to get them down to 1.35% or 1.25%.
There are lots of other independant agents who might do it for 1% or even .75% but you wouldn't get on myhome.ie (which I would consider essential) and it would be tougher to get it sold.
You wouldn't get a huge discount above what I've already said if you sell and buy with the same agent.

Solicitors should be around 1% but again, it's different. Some solicitor's are offering conveyance at a flat rate too.

decbuck

So what would you do Sleipnir?

We plan to move within 5-10 years anyway. (ie) not going to be in this current house for ever

Sleipnir

Hmmm, not really sure I should say "move" or "don't move"
I wouldn't want you to come back in a year or two saying you lost your shirt
and it's all my fault!!!! Nobody knows what the hell is going to happen in the market.

Having said that, If I were you (and I must emphasise, I'm not!) I would not move yet.
You've only been there a year and so haven't built up the equity you really need to move house.
You'd basically be giving your estate agent and solicitor most of the equity instead of spending 'most' of your equity on a new house. Which is what most of it should go on when trading-up.

I know this couple who are only happy if they are moving or thinking about moving house.
They bought in mullingar about 4 years ago.
Left after a year to move closer to Dublin and most of their equity went to solicitor and estate agents.
After a year in that 3 bed semi they are moving quite literally down the road (you can see the other house) to a 4 bed (no kids btw) upping their mortgage again, paying more to state and basically not really trading up all that much.
That's just not smart.


I wouldn't mate, but someone else on boards (Victor springs to mind like a cheetah)
might offer some good reasons to move now.
If I were you I'd hang on for at least another year.

decbuck

Yeah I think your right. Just put down floor boards anyway so can enjoy them for a while.

If I do house up over next few years, will get a better re-sale price and also, as you say will give me more equity.

If house is worth 300 next year, would have been worth it.

Thanks for the help./

magpie

Sleipnir, are you an estate agent/auctioneer?

Sleipnir

No. Just interested in the property market.

magpie

So what do you think about house prices in the next 5 years? Gradual slow-down? Do you reckon there is any prospect of a crash?

Sleipnir

Well, seeing as most of the most prominent economists in the country have got it wrong in the past 2-3 years I don't really know.
At this stage,it's more of what you believe will happen rather than what the most likely outcome will be.
If the rest of the economy is fairly buoyant then it should keep the property market on it's legs.
A 'crash' within the next 5 years? Naw, I don't think so. What you buy now for 300,000 will not be worth only 150,000 in 2009. Again, that's just what I think, I could easily be wrong.

Victor

There are two camps on house prices.

(a) House prices and percentage of income spent on housing is too high and people are over exposed. Primarily coming from international economists.

(b) Incomes will continue to rise and growth can continue for a number of years. Primarily coming from Irish banks and estate agents.

Now, who has a vested itnerest?

decbuck wrote:

It is a 3 bed semi and 12 years old.

12 years old means any problems it has are likely to have been sorted out, buying a new house has it's only problems.

There are houses in the next town. New 4 bedroom houses that are fantastic looking. We fell in love with it straight away.

So what will next year's fashion be? Do you *need* 4 bedrooms?

but I am paying over 25yrs now, maybe I could extend it to 30.

Which sounds like you are over-extending yourself.

Captain Trips

decbuck wrote:

Hi,

I am looking for a bit of advice. Some of you might think I am mad, but here is my predicament.

Put it this way. You sell your current house for the new one. And in a year from now you see beautiful new houses which you just have to have. What do you do? ANd so on....

Same with cars. So many people keep changing a car because it's say 2 years old. Absolute crap, IMHO. Put extra money into your current house and you'll make it amazing; the new one looks nicer because it's got the latest Neff kitchen and all the latest fittings. You can do that too, hell put in underfloor heating if you like.

Be happy with what you have - buying again unless it's to rent out as an investment is a bad idea, like changing your car after the 3 year car loan is up just to get anothe 3 year car loan on a newer car.

That's my pragmatic view anyway. If you really wanted, take the 10,000 equity and put it into your current house. You're still you no matter where you are so I would say learn to be happy as there is always something better and newer and you might spend a fortune realising this again in another year

madramor

Captain Trips wrote:

buying again unless it's to rent out as an investment is a bad idea

people who are buying of plans now to rent out are making a big mistake

Captain Trips wrote:

If you really wanted, take the 10,000 equity and put it into your current house.

if you are planning to live in the house you want to buy for a long period10+
then buy it,
if you spend 10,000 on a new kitchen, it will not add 10,000 value to your house

if you can afford it and it is your home don't worry about the price buy what you
want as early as you can
ps rates will be increasing by .25 next spring acording to the german big boys

Captain Trips

madramor wrote:

people who are buying of plans now to rent out are making a big mistake


if you are planning to live in the house you want to buy for a long period10+
then buy it,
if you spend 10,000 on a new kitchen, it will not add 10,000 value to your house

if you can afford it and it is your home don't worry about the price buy what you
want as early as you can
ps rates will be increasing by .25 next spring acording to the german big boys

Yeah that's all true and the rates rise is pretty much a given, I just read the original post as more like dissatisfaction as before the newer houses were built the current house was grand.

What I meant was based on this comparative dissatisfaction, throw some cash and make the current house nicer. Won't add 10k to the value - but they are obviously not happy purely because something nicer has opened up.

RE: buy to rent: still not a bad idea unless you think buying a 4 bed 13 miles from Dublin will be an easy let! I mean, put 300k towards e.g., an IFSC one bed and it will pull in 1000-1200/month. There are some good developments as usual they are city based and are apartments. I wouldn't for a moment suggest to buy from plans (although Hanover Quay and Longboat don't seem too bad).

Personally, it's pissing money away to change that fast with so little equity. It will cost you quite a bit and will it:
a) really make you that much happier? Until something even better comes along?
b) will the new place gain enough equity in a reasonable time (<10 years) to offset the 30-40k you are going to have to come up with - more ideally as it's a larger loan with longer term.

MG

I was in a similar situation a month or two ago. Here is what I learned from the situation in one sentance:

If you see yourself living in this dream home for the next 30 years then do the maths and if you can afford it go for it. The fact that you have paid legal, auctioneers fees etc last year doesn't matter. You can write this off over 25/30 years so to speak and you will have to pay these fees anyway if you move in 5 years or so. Do look at value for money but don't worry overly about a fall in price - over 25/30 years the price is very likely to rise above what you paid for it (although the return might compare unfavourably with other investments - though a home is more than an investment). Because you intend to stay in it for a long time you can take a long term view. Your only real concern should be whether you can afford the repayments. Take a very hard look at this!

If you view this house as a short term option (say 5 years) or as a "stepping stone" then I would be very hesitant. My opinion is that for (the majority of) people in our situation, the first home is about getting on the ladder, the second is for life. Any other in between houses is only throwing money away on solicitors, auctioneers fees and tax.

BTW, we decided not to go for it because we didn't see ourselves in that house for the rest of our lives.