Do you think I´m mad????

Salmon

Hi Rick,

Just wondering what your annual salary is approx. What multiple of your sal would the mortgage be?

Paul

Sleepy

OP, some of the country's top economists are predicting market corrections of as much as 15% in the property market. Now, if you're going interest only for the first two years and that happens, you'll be looking at losses of over €75k (500 @ 15%), three times your SSIA!

Property can go down in value and has in other countries where such rapid price rises have occured in the past. Why should our economy be any different. Personally, when the World Bank and every economist in print are calling the market a bubble, I wouldn't touch it with a barge-pole.

Maybe look at some other form of investment? The forestry industry has been showing fantastic returns over the past 15 years.

Sponge Bob

Rick sounds like a 10x++ kind of guy . If the property drops 10% in price , to about €470k , thats 2 years takehome pay after evaporating on him .

Afuera

Sponge Bob wrote:

Rick sounds like a 10x++ kind of guy . If the property drops 10% in price , to about €470k , thats 2 years takehome pay after evaporating on him .

SpongeBob, it's worse than that. The property is only currently worth 480k, so a drop in 10% would make it worth 432k. He'd still have that mortgage of 520k though!

rick_fantastic

just as a matter of interest how many of you people posting here are actually homeowners?

Calina

Sponge Bob, check the figures again:

loan: 520K
house value purchase price whatever 480K

i.e. he's in negative equity already. For that reason alone, he's out of his mind.

OP - personally I think you are completely insane. Realise you're only 23 years old or so but frankly anyone who is going to be relying on co-tenants to fund a place of their own is not actually buying a place of their own, they're getting into a house share with all the headaches that entails along with not being able to foist problems onto the landlord because it's "theirs". Personally I wouldn't live with you anyway and most people I know who are tenants do their damndest to avoid owner occupied houses. When I buy my own house no way in hell will I want to be dependent on other people to fund it for me.

Plus yeah, I'd like to know what bank is doing this because I wouldn't like to have any money on deposit with them and hell I wouldn't like to have debt with them either.

Salmon

Or better still.... how many posters on here are buried to the neck in debt like rick is attempting to do!

Were just giving our opinions on what you are proposing to do. Have you secured a mortgage yet? I'd think that the bank might give you a reality check when you do! Unless your parents have built up so much equity that they can afford to take the hit. I'm guessing you cant afford to take it yourself!

Only trying to help mate!

mad m

My 2 cents,

Im a home owner with a very low mortage,will have it paid off in 5 years,its 3 miles from city centre and my wife and I were going to trade up to a tune of €250k mortage. Now a number of factors happened in the reasons I wont go into, but Im happy now I wont have a €250k mortage over my head when I would of been 59 by time it was paid off,now Ill be 39 even with the extension we are planning on getting instead of moving.

Rick thats some mortage you will have,but goodluck if you decide to go with it.

masterK

Have you factored in maintenance costs? Remember a lot of tenants wont give flying f**k about your property, this is of course on top of normal maintenance and wear and tear.

delly

rick_fantastic wrote:

just as a matter of interest how many of you people posting here are actually homeowners?

I am.

First house bought June 2002 which was a 3 bed terrace in Swords for €193,000. Sold this in December 2004 for €253,000.

Second house bought in December 2004 was a 4 bed detached just south of Drogheda for €298,000. Same houses are currently going for €480,000.

tbh I never bought to make money and was just lucky that I did which enabled me to trade up. I had contemplated keeping the first house as a rental when buying my second but I decided to put the money to the new house as well as getting some jobs done on it. The rest is sitting in a Rabodirect savings account.

DubDani

I think you are mad. IMO you will have trouble finding people to move in.

These days people are just not intrested in bigger houseshare, especially not if the owner lives in the same house. There are too many options out there. If the house i close to a university you might just about be lucky. But even then people who know each other will pool together, and rent their own place without the annoyance of the landlord living there.

I also think that no Bank in Ireland will give you the money for this venture, as it is far too risky.

Sponge Bob

rick_fantastic wrote:

I've worked out my figures and after taking into account for food, light and heat, mortgage protection insurance, car insurance, tax, gym, car repairs, petrol, health insurance i would be left with €320 euro a month for socialising.

You are left with €320 a month period. That includes paint, redecorating the place to your taste furniture, broken windows , insulation, begonias and impatien and window boxes for them , composht, buying tools for repairs you need to do .....and socialising . How could I forget socialising ??

By my reckoning a 1% increase in the mortgage interest rate on a €520k repayment mortgage over 30 years costs PRECISELY..................€320 a month.

You do know , don't you Rick , that we have had emergency low interest rates for the past 5 years and that a mortgage rate of about 6% is a perfectly reasonable assumption when doing the sums, and thats averaged out for about the next 30 years like.

But I agree with your initial statement, you are mad.

rick_fantastic

DubDani wrote:

I also think that no Bank in Ireland will give you the money for this venture, as it is far too risky.

well you would be wrong there. getting the money is not an issue as i have stated before

rick_fantastic

Sponge Bob wrote:

You are left with €320 a month period. That includes paint, redecorating the place to your taste furniture, broken windows , insulation, begonias and impatien and window boxes for them , composht, buying tools for repairs you need to do .....and socialising . How could I forget socialising ??

By my reckoning a 1% increase in the mortgage interest rate on a €520k repayment mortgage over 30 years costs PRECISELY..................€320 a month.

You do know , don't you Rick , that we have had emergency low interest rates for the past 5 years and that a mortgage rate of about 6% is a perfectly reasonable assumption when doing the sums, and thats averaged out for about the next 30 years like.

But I agree with your initial statement, you are mad.

that 320 a month is just for socialising. i have taken into account all of above.

rick_fantastic

i have been doing the maintainence on 4 houses for the last 5 years so i do understand the costs involved in keeping a house and what can go wrong with them.

mad m

Just another thing for you Rick,I recently painted a house for a young couple in August,they built a house beside the old house they bought and moved into it,I was then asked to paint the old house(Which I did),done this about 2months or more and they still have the sign *To let* outside their house.

And this house is fairly central to everything.Kimmage area.

The_Conductor

Rick- you are looking at roughly a 109% mortgage.
The only reason you are getting this is because your parents are agreeing to underwrite the loan. This is not a regular commercial transaction. I am not aware of any financial institutions that would be willing to offer a loan in the circumstances you are describing at present- other than with parents acting as guarantors until such time as you got the mortgage within 5.5 times of your annual income. As for the creative accounting you are suggesting to minimise your tax exposure- I am guessing that you are officially not resident in the property in order to maximise your tax deductable costs from your rental income. Be very very careful, the Revenue Commissioners do random audits- it does not pay to use creative accounting techniques.

chump

Rick you are the product of a country and more specifically a parental mindwash that has programmed you to think in terms of -ladder- -dead money- -shrewd- -always go up- -dead money- -ladder- -get on- -up ya boyo-

Your not alone. I recently was asked by a similar individual, who seriously questioned why I was renting a place in the city for a competitive price when I could attain (with some parental backing)a ridiculous IO mortgage for a ridiculous period of time and buy a ridiculous place in the middle of nomans land and commute 3 odd hours a day. They too, shared a similar mentality to yours.

Life is for living, and money doesn't always grow on trees, as all the shrewdies will soon find out.

wyndham

A 5 bed house in Dundrum for 480k? Has she got a roof?

stepbar

Is there such a thing as a 5 Bed in Dundrum for 480k? My advice - get a job in the bank! and get staff rate because I would'nt like to have that sort of a mortgage hanging over me

Ogie16

what effect does a parent have on increasing your mortgage limit?

Is it their own earnings are taken into account as well as your own or what way does it work?

The_Conductor

Ogie16 wrote:

what effect does a parent have on increasing your mortgage limit?

Is it their own earnings are taken into account as well as your own or what way does it work?

The effect is that it effectively removes:

1. A link with your salary (as there is now a sound financial guarantee that can be called on in the event of you defaulting on the mortgage, other than the property itself- which is why a lot of parents are loathe to offer this guarantee)

2. It also removes the Loan-To-Value ratios- for the exact same reason- namely the property being purchased is not now the sole asset/guarantee on which the bank has call.

Their earnings do not necessarily need to be taken into account at all- the exact nature of their relationship with the bank will often be sufficient for the bank. In some cases it could mean the parents underwriting the mortgage with other property- in other cases the bank may not request or require this.

cik

Rick

You have already got lots of advice, somewhere in your mind something is telling you that what you are thinking of doing is very dangerous (or else you wouldnt have posted here),
if I was you Id read this

www.iamfacingforeclosure.com

and then read it again and then decide. What you are propsing isnt as extreme as what he did but it is a cautionary tale in debt and greed.

If it all goes belly up at least your folks will be able to help you out (if they arent too leveraged into property)

godtabh

cik wrote:

www.iamfacingforeclosure.com

and then read it again and then decide. What you are propsing isnt as extreme as what he did but it is a cautionary tale in debt and greed.

Just quickly looking at the site it seems what your man did is different to what the OP wanted to do. Plus its American so maybe not the same situation.

If I was the OP I'd just buy a flat or apratment for half the price and use that as a stepping stone. Thats what I'm hoping to do.

jackal

Hi Rick,
It seems that you are looking at this venture with extremely rose tinted glasses. You were quick enough to post up the best-case scenario, which left you with 320 euro disposable income, which is not a huge amount to have spare each month. When you are examining something as huge and risky and long-term as this, its only prudent to also see how a moderate-case and worst-case scenario works out. I cannot beleive that any accountant would seriously recommend that you go ahead with this based on the figures and assumptions i have seen. The banks seem to be willing to throw the money at you largely because of your parents, I would not see this as an endorsement of your plan.

I understand you want to have a nice house in a nice area, would love one myself, but as a FTB, compromises have to be made. It seems to me that you are making a huge, huge compromise. You are going to have virtually no spending money for the forseeable. You are going to be completely at the mercy of interest rates and tenents filling your house. You will live in what is effectively a big b&b, with you having to run round sorting everything out, paying bills, getting rent, repairs, resolving rows etc. Sounds like a complete nightmare of a life to me. And for what? "Owning" a house that you cannot afford the repayments on as an individual, and have to share with a load of paying punters?

As one of the other posters pointed out, I would be turned right off, regardless of whether the house is in dundrum, or fecking shrewsbury road, at the thoughts of forking out 400 quid for a room in a house with 5 other people, one of whom is the landlord. No thanks! There are plenty of choices out there of rooms for the same money in just as good, or better a location. Nobody can predict what will happen with interest rates etc, but you can see what the response to such a living arrangement might be by posting up an ad on daft describing the living arrangements and seeing how many people are seriously interested.

misty floyd

Finish your masters and go on a holiday. Thats what I'd do. I really do think your mad but good luck anyway.

Moonbeam

Buy a house you can better afford and are not depending on other people and your parents so much.

If you can afford to pay out that money every month you obviously have a nice income so go get mortgage approval and start house hunting!

Then only get your parents to gurantee it if the property you find is a little over the mortgage that you can get.

Relying on tenants to pay your mortgage really isn't a good way to go and remember you will still need money for unexpected events and bills every month.

I think they say no more then a 1/3 of you monthly salary should be paid out on your mortgage and I think they ahve a good point!

FreeAnd..

Hey Rick, Personally I think you are crazy and not only will you, but your parents will spend the next few years regretting it. It sounds like they are already heavily invested in property and this would be another noose around their heads. You cannot judge the next few years on the "best case scenario" - just because the last few years have been "out of this world case scenario" it is no indicator to the future.

I do think that you know it is crazy and how much you will be gambling. I think that you came here to recieve some validation for the decision you are going to make. Unfortunately the "dead money" etc crowd are few and far between on forums these days as most people are now informed of the impact of rates, price deflation etc but you'll only have to look around find those people still believing every positive report released by the vested interests. People like your parents, your friends, my friends, my parents - as you said if everything goes belly up the whole country is f*cked but do you want to be draged down with it?

For some interesting reading check out these sites:

http://thepropertypin.com/forum/index.php

http://irishhousepricesfalling.blogspot.com/

http://irish-property-bubble.blogspot.com/

http://forum.globalhousepricecrash.com

Sponge Bob

FreeAnd.. wrote:

Unfortunately the "dead money" etc crowd are few and far between on forums these days

LOL :D:D . We really must get back to basics so.

Repeat after me .

Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder

and happy new year.

FreeAnd..

Originally Posted by SpongeBob

Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder
Renting is Dead Money
I must get on the Housing Ladder..........

i'm trying spongebob but no matter how many times i say it, it doesnt seem to be coming through....Oh wait maybe thats because interest on a mortgage is dead money - at least rent only rises once a year and has remained flat over the last few years. Imagine the uproar if a landlord tried to raise rents 6 times in a year with further raises for the following year?

By the way Rick, how much would it cost to rent this house?