Saving up for a house

themole

The problem i see is that most irish people have it in their head that they need to own their home. All i'm saying is that more people should look at the other options and not think there is only one sensible option, which is to buy a house.
In my mind there is no point stretching your finances to buy a house because you don't want to throw money down a hole on rent as some people see it.

Sonnenblumen

themole wrote:

I hear ya. In ireland most people don't like to rent. Its a cultural thing.
In lots of other countries people have no problem with renting and in some cases can't understand why you would want to "own" your house.

I dont think its a cultural thing, more like silly science. I mean why would anyone believe that having a few pints whilst lining someone else's pocket is better than lining your own?

Poverty trapped countries aside, where personal spending power permits, most countries are in fact increasingly buying properties. The whole cultural thing is a myth.

I would agree that renting in other countries is much better and more stable than Ireland, here we're also catching up with tenant rights etc.

themole

Sonnenblumen wrote:

Poverty trapped countries aside, where personal spending power permits, most countries are in fact increasingly buying properties. The whole cultural thing is a myth.

Look at this.

Not everyone who does not own their home cannot afford to own it, while that is true in a lot of cases, there are also a lot of people who decide not to spend their money on owning their home.

humbert

Well I don't see myself buying a home any time soon, a) because I am not ready to settle down and, b) because I'd like to have money while I'm young.

I do think there is an attitude, both in terms of rushing straight into a career and buying a home early in life, here toward making the future secure(got absolutely no facts to back that up, just see a lot of people my age with that attitude).

jhegarty

themole wrote:

The same is true for interest rates.

Interest rate have less of an effect on you ever day that goes by.... stopping completly the day the house is paid off.... rental rate effect you every day until you stop renting (die/go to old folks home)....

themole

jhegarty wrote:

Interest rate have less of an effect on you ever day that goes by.... stopping completly the day the house is paid off.... rental rate effect you every day until you stop renting (die/go to old folks home)....

All i meant is that they can change, the same as rent.

A Random Walk

As someone else said here recently, I buy my food in the supermarket I don't grow it myself - is this dead money?

Currently for most places a renter should end up with more money in 25/30 years than the buyers, because of our not so little house price bubble. That's the reverse of the normal situation.

You may choose to buy because you prefer the stability etc, but you will take a financial loss - it's your choice or preference, but don't be fooled by those who trot out such cliches as "rent is dead money".

You could also take the advice of those people who believe that house price increases of 8/9% a year is "low" and will be "average" from now on. These financial numpties are going to be showed up this year.

Sonnenblumen

humbert wrote:

Well I don't see myself buying a home any time soon, a) because I am not ready to settle down and, b) because I'd like to have money while I'm young.

I do think there is an attitude, both in terms of rushing straight into a career and buying a home early in life, here toward making the future secure(got absolutely no facts to back that up, just see a lot of people my age with that attitude).

Buying a house isn't settling down! Anyways, having money when you're young is great but needing lots when you're older is most likely, irrespective of your status.

Just remember when your enjoying your pints on a nightout form rented accomodation, your landlord is enjoying better pints all thanks to your inputs.

Goodluck whatever you decide.:D

constitutionus

ah i love it when people try to defend the whole rent thing . fact is it is money down the drain and everyone knows it. ya wanna rent for life go ahead but tell me what your gonna do when your 65 retired and on the state pension? four words guys, "your on the street" because theres not a landlord in the country that'll take less than the going rate for his property and i very much doubt 200 a week will cover it (or whatever the equivilant amount will be in the future) . renting is strictly a short term solution in this country and hell what do you thinks gonna happen when you want a family? many landlords wont rent to families because the property then ranks as a family home and they cant evict you if you stop paying your rent, i know of at least 3 incidences of this so far. and as for someone who mentioned the nursing home. what do you thinks gonna pay for that? the government have gone to great lengths to get your house to pay for that recently, you think they'll give a toss about some homeless person?

wise up guys, irish people arent obsessed with buying property for nothing. its about security, loooooong term security, because we sure as hell know we cant depend on "the market" to look after us. you want to piss it all away now, fair enough, but just know you'll have nothing by the end of it. have fun

daveirl

This post has been deleted.

drdre

Gator wrote:

Never gona happen for me, too much drinking.

Anyone in the same predicament as me want to share details for plans to rob a bank:D

I will help you out, we might get caught robbing a bank but i have other ways to make afew million

robinph

constitutionus wrote:

you want to piss it all away now, fair enough, but just know you'll have nothing by the end of it. have fun

That is exactly my plan. I expect to have killed myself in some spectacular way before I'm 65 and need to worry about retirement, and anyway it will more than likely have risen to 75 by then so I'm not too worried about it and will just have fun in the mean time.

luckat

Buying a house doesn't have to mean 'settling down' - if you want, you can sell it at any point!

The ludicrous price rises of Irish houses mean that what middle-aged people are now paying on a fairly old mortgage in Dublin is about what people pay for an average Dublin bedsit. And when they have it paid off, they'll have a house 'worth' almost a million. Nonsense, to be honest.

If Irish houses were priced realistically, these houses would sell for four times the average wage; or, if they're in an area convenient to the city, schools, etc, perhaps four times the slightly-higher-than-average wage.

So the '€1m' house would be worth, say, €200,000.

I'm convinced that the current government is in the pockets of certain building and building supplies interests, and the bubble is an artificial one, created to keep the building industry going into more and more extreme levels of profit.

In Japan last year I was talking to people about house and flat prices, and unless you're in the centre of Tokyo, they seemed to be more or less level with Irish ones.

But anyway, yes, I think there's probably good sense in saving as much as you can - if possible, the whole price of the house - go and work in Dubai for four years and come back with your money saved - and if not, as much as you can to cut the mortgage.

humbert

humbert wrote:

Yea, renting is basically flushing money down the toilet.

A bank of ireland ad had details of repayments of a 100k mortgage over whatever specified time. I got a calculator and worked out that I'd be paying back 147k, approx.
No thanks. I'm not giving half the price of a house (not that there are too many 100k houses ) to a bank. You might have that money to spare.

And if this little site is correct:
http://quoteme.ie/mortgage-rates-calculator/index.html
a mortgage of 250k over 20 years pays back...
398,400.

jhegarty

How much do you think 20 years of rent adds up to ?

themole

jhegarty wrote:

How much do you think 20 years of rent adds up to ?

about 1/2 or max 2/3 of the equivalent morgage to buy the same house.

humbert

assuming rent stays fixed?

themole

humbert wrote:

assuming rent stays fixed?

In Ireland now rent is at those levels and there is no sign of it increaseing to any great degree. If house prices increase even more, which i don't think they will, rent will not increase at the same level.

So, right now and into the forceiable future rent will always be 1/2 to max 2/3 of the mortgage value, assuming a 100% mortgage on the house.

chump

humbert wrote:

If you're unclear go look it up and who said anything about an interest only mortgage.

hah, NICE response - are you an economics expert?

If you were capable of responding to my query the significance of the "interest only' mortgage would become apparent. It was the first step in my argument to dismiss the diarrhea you spout.
It is clear that you possess such a simplistic and unsophisticated understanding of economics that your input is akin to that of my grandmothers.

humbert

chump wrote:

hah, NICE response - are you an economics expert?

If you were capable of responding to my query the significance of the "interest only' mortgage would become apparent. It was the first step in my argument to dismiss the diarrhoea you spout.
It is clear that you possess such a simplistic and unsophisticated understanding of economics that your input is akin to that of my grandmothers.

That sort of charm and confidence will be a big hit with the ladies when puberty finally arrives

You talk to your grandmother about economics? You should get out more.

shane86

Ive always wondered though, what the hell incentive does a bank have in giving you a 30 year mortgage? As in what benefit is it for a bank exec to keep the bank making a profit when he has retired/died?

tbh I dont know why everyone just doesnt apply for an affordable house, theyre often in roughly the same condition as the ones down the road but for 120,000 less. And besides, if everyone applied for affordable and refused to buy off private sellers theyd have no option but to bring the price to a reasonable level.

themole

chump wrote:

It is clear that you possess such a simplistic and unsophisticated understanding of economics that your input is akin to that of my grandmothers.

Biff

humbert wrote:

You talk to your grandmother about economics? You should get out more.

Pow

Holy trading of insults batman!
Look in your utility belt robin, there is always a tool for the job there:D

themole

shane86 wrote:

Ive always wondered though, what the hell incentive does a bank have in giving you a 30 year mortgage? As in what benefit is it for a bank exec to keep the bank making a profit when he has retired/died?

Its in the banks interest, and acting in the banks interest is the bank exec's job.

shane86 wrote:

tbh I dont know why everyone just doesnt apply for an affordable house, theyre often in roughly the same condition as the ones down the road but for 120,000 less. And besides, if everyone applied for affordable and refused to buy off private sellers theyd have no option but to bring the price to a reasonable level.

Affordable houses are not easy to get. But, yes if people stop buying houses then the price will stabalise.

The reason some people will not wait is because they see their neighbours making money and feel that the longer they wait the more profit they are loosing out on. This is a true situation at the start of a boom, but towards the end, where i believe the market in ireland now is, this is no longer the case and future increases are by no means guaranteed.

A Random Walk

shane86 wrote:

Ive always wondered though, what the hell incentive does a bank have in giving you a 30 year mortgage? As in what benefit is it for a bank exec to keep the bank making a profit when he has retired/died?

It's not about the length of the mortgage, for them it's about getting you to take out the maximum amount you can pay per month so that they make a profit. 20/30/40 years it doesn't matter, as long as you are handing over the maximum amount to them per month. The naivety of people who say they have "bought" a house when all they've done is become mortgaged to the hilt never ceases to amuse me.

shane86

themole wrote:

Its in the banks interest, and acting in the banks interest is the bank exec's job.

Affordable houses are not easy to get. But, yes if people stop buying houses then the price will stabalise.

Is it a lottery or a waiting list? I know a single guy, no kids, early 20s who got one in a town on the outskirts of Dublin/Meath (shant say where) after a very short time on the list (6 odd months). He now rents the house out.

Some people really just seem to land on their feet everything they do :mad:

themole

shane86 wrote:

Is it a lottery or a waiting list? I know a single guy, no kids, early 20s who got one in a town on the outskirts of Dublin/Meath (shant say where) after a very short time on the list (6 odd months). He now rents the house out.

Some people really just seem to land on their feet everything they do :mad:

Info here. One point to note is that it requires that

you are in need of housing

If you rent out the house then this is hardly the case.

WhatsGoingOn

themole wrote:

about 1/2 or max 2/3 of the equivalent morgage to buy the same house.

Once you have your mortgage paid off in 20 (or 30) years that is it, no more payments. Whereas if you are renting, you have to rent for the rest of your life

So if you are a 25 year old who will live until 85, you are paying rent for 60 years, whereas if you are a 25 year old with a 30 year mortgage, the last 30 years of your life will be 'rent free', leaving you with better things in life to spend your money on.

themole

WhatsGoingOn wrote:

Once you have your mortgage paid off in 20 (or 30) years that is it, no more payments. Whereas if you are renting, you have to rent for the rest of your life

So if you are a 25 year old who will live until 85, you are paying rent for 60 years, whereas if you are a 25 year old with a 30 year mortgage, the last 30 years of your life will be 'rent free', leaving you with better things in life to spend your money on.

That reasoning does not always stack up. It did when houses were cheap and the amount of money spent on rent was enough to pay a mortgage. In the past the only people in ireland who did not buy a house were those who could not get credit and they ended up loosing out as they paid more in rent say over 30 years than it would have cost to pay a mortgage and buy the house.

That is no longer the situation and owning your house is not always the financially best option.
What if i rent for 30 years and invest the money i would have otherwise spent on a mortgage. That invested money could well end up being more than the value of the house.

There is nothing at all stopping you from then buying a house for cash.

Conar

themole wrote:

That reasoning does not always stack up. It did when houses were cheap and the amount of money spent on rent was enough to pay a mortgage. In the past the only people in ireland who did not buy a house were those who could not get credit and they ended up loosing out as they paid more in rent say over 30 years than it would have cost to pay a mortgage and buy the house.

That is no longer the situation and owning your house is not always the financially best option.
What if i rent for 30 years and invest the money i would have otherwise spent on a mortgage. That invested money could well end up being more than the value of the house.

There is nothing at all stopping you from then buying a house for cash.

This does make sense, but this all depends on you having the neccessary diligence when it comes to saving a decent lump every month.
And in the end even if that does work out would you have saved any money by doing it that way?
Also don't forget that as your mortgage becomes less and less due to inflation (salary increasing over time etc) you can pay it off a lot earlier than the 30 years.

themole

Conar wrote:

This does make sense, but this all depends on you having the neccessary diligence when it comes to saving a decent lump every month..

No different than paying a mortgage. You can have the money taken directly out of your pay, or a transfer from you account the day you get paid.

Conar wrote:

And in the end even if that does work out would you have saved any money by doing it that way?

You are straight away saving the variable apr charged by the bank for the mortgage (you of course have to take the rent into account, as you are not making money on that). Plus you are investing the money in something else that may give a higher return than the increasing house value.

Conar wrote:

Also don't forget that as your mortgage becomes less and less due to inflation (salary increasing over time etc) you can pay it off a lot earlier than the 30 years.

But interest rates can also change, so the amount you have to pay back can increase.

Bottom line is that buying a house, paying a mortgage on it and living in it can often make sense. But not always.

Most people automatically presume it makes sense to buy a house. They never make the calculations to see if they might be better off investing and renting.