Thinking of buying my first house.

Sparky

Well the first thing that gets to me is thats its a scary feeling experience.
Firstly my parents think that i should get buying in the next year, bear in mind im 20.
Its going to be more than an investment as id rather rent it out to the likes of students, or whoever can be got etc.
But do you feel im too young, as i do id rather wait till 23 or so.
But my parents especially my dad says i should get into the market now as prices always go up.
I done the math and with a 30 mortgage id be looking at paying €1000 to €1700 per month, depending on which property i choose.
Then i was informed that if i do things right, my tennants will be paying for it not me.

What do yous think, to young, too mad or just wait.

Dub13

I bought my House when I was 20/21,it was the best thing I ever did as my mortgage is for 160k and the house is worth around 350k.I was like and unsure but just went with it.It was hard at the start and I did not rent out any rooms.If you can afford it go for it.

Sparky

well house is 370k, i would buy down the country, far less and bigger, but getting people to rent it is harder

madramor

Do you want to show the figures involved and
someone will work out a costing for the next ten years,
when you see a 10 year plan its very helpful.

1: Price of House (370)??
2: How much deposit you are willing to use
3: How much is the average rent in the area is
4: What type of mortgage interest only\standard

also
are you buying the house because you will one day live in it
or as a good investment

CCOVICH

Do you think that you will be able to get rent of between €1,000-€1,700 'down the country'? Also, if renting to students, may have trouble covering the mortgage during the summer months.

Prices may well indeed go up (nothing is guaranteed), but unlikely to go up anything like that achieved by Dub13.

Sparky

Ii will more stay in Dublin, and its more as an investment property, im still looking around, looking on myhome.ie etc etc.
Looking aswell on areas that are close to bus routes and local shops etc.
Anyways the price region im trying to keep below is 400 grand.

madramor

House Cost 400,000

One Off Costs
deposit 32,000
stamp duty 30,000
Survey 500
Solicitors 2,000
Furniture 3,000

Total 67,500

Mortgage
92% = 368,000
at 4%
monthly = 1753.96

Running Costs yearly
insurance & repairs 2,000

Costs per year 23,000

Rent say 1,200 per month
say 11 months per year

Total rent = 13,200

Tax at 20% or 42% on net rent

Selling House
Estate Agent 5,000
Solicitor 2,000
Tax at 20% on profit

Sparky

do i not qualify for no stamp duty, and 100% mortgage as im a first time buyer?

madramor

Sparky_S wrote:

do i not qualify for no stamp duty, and 100% mortgage as im a first time buyer?

you're not a first time buyer your an investor
no stamp duty only applies to second hand houses under 317k
and new builds under a certain size

i doubt very much a 20 year old would get a 400k 100% mortgage

FreeAnd..

You have very little chance of getting 400k on a 100%. There are a number of criteria - Have to be working at least 3 Years - P60's needed. Need a current salary cert and for 400k you would need to be on around 80k a year which being 20 I wouldnt imagine you have achieved yet (but I could be wrong).

As for stamp duty you would definitely be paying that cant remember how much it is I know its 3% after 317,500 so taking that you are looking at 12k stamp duty + solicitors fees around 2-2.5k so even if you got a 100% mortgage you would still need around 15k up front but I dont think you have much chance unless you meet the criteria above.

madramor

FreeAnd.. wrote:

As for stamp duty you would definitely be paying that cant remember how much it is I know its 3% after 317,500 s

that 3% after 317K is only for first time buyers not investors

on 400K its 7.5% which is 30K
http://www.oasis.gov.ie/housing/buying_a_house_or_flat/stamp_duty.html

FreeAnd..

Why would Sparky_S not qualify as a FTB? He would not qualify as an owner /occupier but unless I missed something he would still be a FTB. As an owner/occupier he would be exempt from stamp duty on all new house under 1000 sq ft (i think could be a bt higher) but in relation to getting a mortgage he would still be seen as a FTB. The fact that he would not be occupying the house would cause more concern to the lending institution though. They like to see people with regular savings over a few years plus and regular rent payments over a few years help to show that repaying the mortgage will be no problem. If the property was to be used fully for investment and Sparky_S needed to rent somewhere else where would that extra capital come from? Also you would be doing well to finance a 400k house with students. Maybe a house worth 400k that was bought for 150k years ago could effectively be financed by student residents (as has been the case with many houses) but I doubt a house that bought for 400k could do the same.

madramor

FreeAnd.. wrote:

Why would Sparky_S not qualify as a FTB?

read the link i posted

First-time buyers

A first-time buyer is defined as a person (or where there is more than one buyer, each person):

* Who has not on any previous occasion, either individually or jointly, purchased or built on his/her own behalf a house in Ireland or abroad;
* Where the property purchased is occupied by the purchaser or a person on his/her behalf as his/her only or principal place of residence and
* Where no rent is derived from the property for five years after completion of the current purchase.*

*If the first-time buyer rents the house within five years Revenue will claim back or 'clawback' the difference between the higher stamp duty rates and the duty actually paid. The only exception to this is the 'Rent a Room' scheme where part of the house is rented out. If the house is sold within five years there is no clawback.

FreeAnd..

Yeah I read the link but that is only in relation to Stamp Duty. As I said he would be exempt from stamp duty if he was an owner/occupier which he does not intend to be. I think we are basically staing the same thing in two different ways. Its irrelevant anyway as he does not intend to occupy the house. The only adive that I would give is to get a cheaper house that you will live in. Rent out a room/rooms and then you will get the benefits of being a FTB i.e. no stamp duty etc.

dunkamania

I am 22 and I bought my first house 7 months ago.
Best decision I ever made.
I am renting it out at the moment.
Dont underestimate the amount of effort involved in being
a landlord.You will find you have to call out there alot more than
you thought,and if you cant make the necessary repairs,
it will cost you an arm and a leg.If you are going through an
agency,make sure you vet the tenants before they move in.

Good luck:)

Sparky

yeah looks like i will have to be paying stamp duty alright, im looking at a load of houses at the moment and i prefere the ones outside of dublin like trim, rush etc, they are cheaper and have more space.

jank

Sparky_S wrote:

Well the first thing that gets to me is thats its a scary feeling experience.
Firstly my parents think that i should get buying in the next year, bear in mind im 20.
Its going to be more than an investment as id rather rent it out to the likes of students, or whoever can be got etc.
But do you feel im too young, as i do id rather wait till 23 or so.
But my parents especially my dad says i should get into the market now as prices always go up.
I done the math and with a 30 mortgage id be looking at paying €1000 to €1700 per month, depending on which property i choose.
Then i was informed that if i do things right, my tennants will be paying for it not me.

What do yous think, to young, too mad or just wait.

Sorry but by your inital post you have yet to know what buying a house really means.
Sure house prices are going up but they are going to stabalise. Dont forget that interest rates are at a record low at the moment they will go up eventually. Thats going to **** things up almighty.

Also house prices are about 20% over valued. That figure off one of the best know property developers in the country, Barry o'Callaghan.

Sure do you what you want but 400k for a 20 year old is a bit much IMO.
What are you earning? Do you have a stable job?

Sparky

yeah stable job, partner in a family company.
I do feel 400k is huge, but ive noticed some outside of the city valued at 250k.

RainyDay

Sparky_S wrote:

But my parents especially my dad says i should get into the market now as prices always go up.

Wrong - Prices can and do fall. Check out irish house price indices over the 70's. Just because we've had fairly spectacular property growth over the past 15 years or so doesn't mean the growth will continue for ever.

Have you checked out the tax issues? Income tax? Capital gains tax when you sell? You'd really need to do an awful lot more research before you make the decision - Check out the numbers posted by Madramor and customise them for your own purposes.

CCOVICH

Sparky_S wrote:

yeah looks like i will have to be paying stamp duty alright, im looking at a load of houses at the moment and i prefere the ones outside of dublin like trim, rush etc, they are cheaper and have more space.

Do you know what the rental market is like in the likes of Trim, Rush etc.?

The houses there are cheaper for a reason-demand.

Sparky

Ah tbh ill wait a couple of years, my parents seem to be pushing me to buy, but tbh ive told them to fook off

jank

Your better off

Sparky

jank wrote:

Your better off

less to worry about tbh

madramor

Sparky_S wrote:

but tbh ive told them to fook off

i bet they sent you to your room for that

Sparky

madramor wrote:

i bet they sent you to your room for that

lol , no they just told me its my loss.

samb

House prices are going to collapse badly. I think you should not buy now, you will get a chance to buy in a few years time when this unnatural boom is gone. Unless you will live in it and have an income >50k then you would be mad to buy now. Look how many properties are being built 70K. We are living on cheap money but interest rates will rise (its out of our control, ECB). The construction industry is also a huge contributor to jobs and economy to all the cards will fall at once. It will happen within two years I would say. Sorry to be depressing but it will be for the best overall because young people will not have the debt levels people buying now will have. More money for everything else. It is all the euros fault, although i am a europhile generally.
good Luck, if your thinking long-term at your age, as you clearly are, I think you will do well financially in the long run.

dunkamania

I dont think its all that gloomy.
Dublins population is going to almost double over the next 15-20 years
which suggests 70,000 new houses a year is not excessive.
Property in good locations(central,amenities transport etc) usually holds its value well.Interest rates will more than likely go up next year,but probably not that much.They are being kept low two stimulate growth in the too largest EU economies,which will require significant investment over the next few years.Most experts arent predicting a crash,but a decrease in the rate of growth in house prices,possibly below the inflation rate,rather than a large decrease in house values.

Sparky

im keeping note of all this, thanks

nesf

dunkamania wrote:

Most experts arent predicting a crash,but a decrease in the rate of growth in house prices,possibly below the inflation rate,rather than a large decrease in house values.

That is what most people mean when they say the bubble will burst. Not necessarily a decrease in the nominal value of houses but their real value. If house price growth is less than the rate of inflation then in essense your house is becoming less valuable. A lot of people forget this.

jank

Looks like the interest rates are going up by 1/2 a % in the next few months. This could be the start of it.