How much of a mortgage should I consider going for?

super_furry

I'm in the preliminary stages of thinking about, considering thinking about buying somewhere. However as a single guy earning just over €44,000 a year, I don't think I'll have many options. What kind of loan should I be looking at taking out?

The_Conductor

Its a case of what can you afford to pay on your mortgage. Do you have other debt that you have to service? What are your outgoings at present (its all well and good assuming you will cut-back to pay your mortgage, it doesn't work in practice.....)

In practice, at the moment you could probably persuade a lending institution to give you up to 7 times your salary (possibly more if a parent is willing to go guarantor on the mortgage). So- you are probably looking at stamp duty threshold types of mortgage- i.e. around 317k

Shane

Supercell

super_furry wrote:

I'm in the preliminary stages of thinking about, considering thinking about buying somewhere. However as a single guy earning just over €44,000 a year, I don't think I'll have many options. What kind of loan should I be looking at taking out?

I'm earning about the same and am not thinking of buying anywhere - the Irish housing market is imploding right now, unless you can get a major reduction on price (circa 30-40%) wouldn't buy at all as prices look likely to fall pretty steeply in the next few years

godtabh

Longfield wrote:

I'm earning about the same and am not thinking of buying anywhere - the Irish housing market is imploding right now, unless you can get a major reduction on price (circa 30-40%) wouldn't buy at all as prices look likely to fall pretty steeply in the next few years

Do you have any facts to back this up?

super_furry wrote:

I'm in the preliminary stages of thinking about, considering thinking about buying somewhere. However as a single guy earning just over €44,000 a year, I don't think I'll have many options. What kind of loan should I be looking at taking out?

I applied for one last year on less than you were earning at the time and I got one and got one for €310k.

Didnt need that much in the end as it turned out and got one for €255k. Changed job lately and I got a raise so this well do able.

massplanck

kearnsr wrote:

Do you have any facts to back this up?

http://www.boards.ie/vbulletin/showthread.php?t=2055033806

ixoy

On the amounts mentioned here that you can secure with a mortgage, how is it that websites, such as TSBs, are giving an initial approval (via their website) of considerably less than the 300K people here seem to have gotten?

I'm on less than the OP but not considerably less and the only way I seem to get close to such a loan is totalling in my partner's salary and even then I seem to get an initial approval for less.

Or do the mortgage amounts vary more when they hear about your profession et al?

The_Conductor

ixoy wrote:

Or do the mortgage amounts vary more when they hear about your profession et al?

Yes, is the short and simple answer, they do. If you are a civil servant, a teacher or anyone else, on fulltime perrmanent pensionable employment with a salary scale showing progression then they do look a lot more favourably on you.

godtabh

massplanck wrote:

http://www.boards.ie/vbulletin/showthread.php?t=2055033806

Where are the facts?

smccarrick wrote:

Yes, is the short and simple answer, they do. If you are a civil servant, a teacher or anyone else, on fulltime perrmanent pensionable employment with a salary scale showing progression then they do look a lot more favourably on you.

THis would apply to alot of profsionals as well. It applied to me but I didnt see the point as I had a budget and want to keep with in that.

I think it also helps to have a large deposit at hand and not many out goigns. It gives you a lot more to bargain with

seamus

smccarrick wrote:

Yes, is the short and simple answer, they do. If you are a civil servant, a teacher or anyone else, on fulltime perrmanent pensionable employment with a salary scale showing progression then they do look a lot more favourably on you.

Pretty much. Traditionally, Gardai, Nurses and other servants have managed to secure mortgages higher than other professionals in their wage bracket.

Generally though they'll look favourably on anyone who is in a stable profession - i.e. a profession that's not going to collapse at the next recession. So you're talking about Solicitors, Accountants, etc.

ixoy

seamus wrote:

Generally though they'll look favourably on anyone who is in a stable profession - i.e. a profession that's not going to collapse at the next recession. So you're talking about Solicitors, Accountants, etc.

I imagine IT doesn't fall into the "stable" category, even if I'm with a well-respected IT consultancy firm... *mutters remarks about civil servants*

Jocksy

If mortgage lenders only gave out 3 times a person salary wouldnt the price of property in Ireland be much less?

Keith C

kearnsr wrote:

Do you have any facts to back this up?

www.irishpropertywatch.com

Zambia

I think Kearnser is agast at the 30%- 40% fall , I think thats a little steep 10-20 in the next few years

eirmail

Average asking prices down by up to 10 percent since october.

http://www.unison.ie/breakingnews/index.php3?ca=9&si=107786

Who will buy an average priced house when there is this much property for sale. Surely people would buy the cheapest ones

http://daftwatch.atspace.com/

There is a town in America with 100 years of supply on the market. In that town why would you care about the average asking price?? surely only the cheapest count.

Supply in ireland is up 3 fold since this time last year and there is only 1/3 the amount of buyers The amount of time it takes to move property is therefore up 9 fold. Last year places were selling in 2-3 months , so that is 18-27 months now. Or about two years worth of property on the market. Not exactly the 100 years as the one town I mention in America , but definitely a lot of property.

tHE vAGGABOND

super_furry: go to a broker, and ask for the max available amount..

Thats how it worked for me when I got the amount in principal before I started looking..

Kinetic^

tHE vAGGABOND wrote:

super_furry: go to a broker, and ask for the max available amount..

Defo the way to go. They don't charge you anything......they charge the bank a commission.

godtabh

Kenny 5 wrote:

Defo the way to go. They don't charge you anything......they charge the bank a commission.

My understanding was that the bank pays the commission rather than the broker charging it? Much the same though.

As for the house price crash when I bought my place nearly a year a go to the day I was told that a crash was weeks away. There is a lot of hearsay on both sides of the divide. No one knows for certainty whats going to happen. If I was an investor I'd be worried but as a home owner I'm not.

Kinetic^

kearnsr wrote:

My understanding was that the bank pays the commission rather than the broker charging it? Much the same though.

You say tomato, I say potato!!!

I agree with you on the PPR ownership, if you own nothing else then it shouldn't be a major issue to you.

ronbyrne2005

kearnsr wrote:

My understanding was that the bank pays the commission rather than the broker charging it? Much the same though.

As for the house price crash when I bought my place nearly a year a go to the day I was told that a crash was weeks away. There is a lot of hearsay on both sides of the divide. No one knows for certainty whats going to happen. If I was an investor I'd be worried but as a home owner I'm not.

Its not hearsay , prices are dropping across the country in most places for new and second hand properties, and supply on the market is triple what it was last year according to even the estate agents. If prices are falling why buy when they will be lower in near future?

tHE vAGGABOND

If I was an investor I'd be worried but as a home owner I'm not.

Agree 100%

godtabh

ronbyrne2005 wrote:

Its not hearsay , prices are dropping across the country in most places for new and second hand properties, and supply on the market is triple what it was last year according to even the estate agents. If prices are falling why buy when they will be lower in near future?

My house has aparment has gone up €20k in a year. My sisters house has gone up nearly €80k in a year.

For every house you show me the price went down I reckon I can show you another that the price went up.

Its like the stock market. It all comes in swings and roundabout.

The_Conductor

kearnsr wrote:

My house has aparment has gone up €20k in a year. My sisters house has gone up nearly €80k in a year.

For every house you show me the price went down I reckon I can show you another that the price went up.

Its like the stock market. It all comes in swings and roundabout.

Errr- no, its not. Stocks and shares are liquid assets that can be quickly sold in the market place. Houses are classified as illiquid assets. When companies issue shares to raise capital, it is actually the most expensive possible source of funding for companies. When the stock market dives there thus exists a buyer of last resort in the market place- the companies themselves in which the stocks and shares are denominated (who in turn will replace this form with another form (loans of one sort or another normally). When the housing market takes a dive there is not a buyer of last resort present (though people would have you believe that the government should fulfill this role). Thus when an illiquid market asset becomes over supplied- it creates an overhang of availability in the market along with an expectation on the part of market participants that the price associated with buying into the market is excessive- so buyers sit on the sidelines awaiting the inevitable. Sellers smell smoke and the overhang increases- those who blink first *may* succeed in exiting the market relatively intact, those who don't get burnt......

It is not logical to compare the housing market to the stock market (or indeed that historic example of tulip bulbs......)

S.

Ps- An asset cannot be said to be worth a particular value until such time as you go to sell it and find the price the market place is willing to accept. Just because a house three doors up sold for 500k 6 months ago should not imply an expectation that your house is worth 500k. As the old philosopher Publius Sirus put it: "Everything is worth what its purchaser is willing to pay"........

ronbyrne2005

kearnsr wrote:

My house has aparment has gone up €20k in a year. My sisters house has gone up nearly €80k in a year.

For every house you show me the price went down I reckon I can show you another that the price went up.

Its like the stock market. It all comes in swings and roundabout.

Property X rose 20k/80k in a year , so what, what are they selling for now versus 6 months ago? DAFT has published data showing very few areas have risen and most fallen over last 6 months. Also the property market is'nt like a stock market where some shares rise and some fall independent of each other, the homes in a property market in a particular region tends to move together so in North east Dublin for examples houses all tend to rise/fall by similar percentages. The overall trend in market is down down down im afraid.

faceman

From kearnsr perspective i presume he's buying to live in it so no point in the doomsayers givin the speel, theres plenty of threads for that already.

kearnsr its currently a buyers market so buy wisely. Prices are flucuated dramatically and mcdowell hasnt helped recently. Make sure when you buy something you're happy that you could live there for a great number of years. The value of your house is only relevent for when you go to sell it or re-mortgage. If your house does on paper fall in value, its not like you need to sell it as a result of that.

Borrow what you can afford. And consider what effect interest rate increases could have.

Consider carefully: Location; infrastructure (particularly future plans e.g. if the proposed metro is in the area then it will add value to your property); is it in an area in demand etc.

Given existing market conditions, i would avoid getting into a bidding war on a property.

Also as its a buyer's market, start your bidding 10-20% below asking price. Some agents may laugh but its worked for some friends of mine.

Best of luck.

Supercell

Sound advice there faceman.
Only thing I'd add to that would be if you get a house that you would consider a proper long term home (10+ years) and you can afford it, then might be worth going into now.

However if you are buying with the thought of upgrading in about 5 years, I'd really take a long hard look at whether this is a wise thing to do right now.

Kinetic^

Longfield wrote:

Only thing I'd add to that would be if you get a house that you would consider a proper long term home (10+ years) and you can afford it, then might be worth going into now.

This is the only reason I'm selling and re-buying at the moment.

godtabh

When I compared it to the stock market I meant that values can go up and down. Thats all

I've all ready bought and I intend living there for the next 7-10 years

Villain

Interesting thread, I am on less than the OP and I have could only secure a mortgage of 240k on my own for a property so I have decided to buy a site and sit on it for a few years until builders are looking for work rather than people looking for builders and then build a home. I have a bid of 100k on a 1 acre site because while house prices may fall one off rural sites within 5 miles of a large town will only increase in value imo.

Also its all about location, in Carlow house prices have continued to rise this year as strong as the last 2 years because demand is still stronger than supply, my brother recently sold his house and as a result of a bidding war he got 20k more than the asking price. However I know areas around Dublin have seen decreases but when you compare that you can buy a 3 Bed SemiD in Carlow for about 260k to the prices in Dublin people will continue to leave the city to live in more affordable housing down the country.

babytooth

Some one asked for proof that is not dropping...

I say: Prove its not!

Thats the bull*hit problem in Ireland, no one in control will release accurate data or info and this only helps muddy the waters, be that in a good way or not.

Thing is, you have to ask yourself....are you a betting man, because the big money is one a drop coupled with Interest rate rises and falling employment.

They could be right and you will end up owning a house that you have a mortage on more than its value.

They could be wrong and you could be laughing all the way home to your nice cheap house.

To say it doesn't matter if its your PPR is somewhat naive and simplisitc, it has to paid for at the end of the day...and takes about 30 years to do so!.


Me, I currently won't take the risk in buying, I could be sorely wrong, but i could be right...Personally its too much of a gamble with all this negative sentiment and rising costs to gamble on at the moment...

But, fortuness have been made of the roll of a dice!;)

whizzbang

I have to agree with baby_tooth on the whole "its my PPR thing". If I can wait it out and buy a house for 100k less than buying it now thats about 200k I'm saving myself in the long run (with intertest).

So long as rent payments are less than mortgage payments plus the depreciation in a falling market it makes sense to hold off! Just the same way as it made sense to pay more for your mortgage than the equivalent rent when prices were on the up!