Are we all F***ed?

LegacyUser

Hi there guys,

Firstly I apologise for posting this in PI as it has nothing to do with my relationship and/or my genitals. I would prefer to post this anonymously as I will be stating my age, income and area i live...

I and my partner (8 years together engaged to get married next year) are 24 and stand in a pretty amicable financial situation.

Male IT specialist: 57,000 per annum.
Female social care worker: 38,000 per annum.

Grand total of 95,000 per annum.

We currently rent a 2 bed apartment in south side Dublin (cabinteely) for 1400 a month.

We are looking at the possibility of buying a house, but are limited to our options due to having only a very small deposit (19000 ish). we have only been able to get a 95% mortgage with one provider (ebs) and are under a time constraint to get a house sorted before the 95% is taken from us (about 2 months i'd say) as mortgage rates drop further and further.

We want to buy as we are sick of paying stupid money on rent in our area, we are sick of paying our landlords mortgage, we want to try and sort the house before the wedding (parents paying for wedding and a stipulation of this was we sorted the house before wedding) and we also wish to have some privacy as living with others caused us considerable stress in the past.

We are looking in the south county Dublin (yeah right...) and the north Wicklow area. due to our deposit restriction we sit on the potential for a 380,000~ish property which is pretty achievable in Wicklow. For example we found our dream house in north bray in the region of 390,000 for a 3 bed semi detach with great potential in a lovely secluded estate.

My concerns are this, how the hell are people expected to buy in this day and age... the mortgage repayments for a 4 years fixed rate (tracker mortgage my HOLE with the way the interest rates are going) runs in the region of 2200 per month, this doesn't even include the necessary house insurance, life assurance or mortgage payment protection.

As a couple of 24 earning just shy of 100,000 a year i for one would have considered us pretty f*cking successful but the incomprehensible prices we are expected to pay for housing in Dublin are leaving us fearful for our future if we are to take out a mortgage. If i lost my job within the next five years we couldn't possibly survive on one wage, and heaven forbid we choose to procreate in the next 7 years... lose one wage or pay 1200+ for creche fees...

Also with the current recession and rising interest rates, where will that leave me in 5 years with potential redundancies, job losses or wage cuts to retain a job...

Ultimately the housing market seems like a very daunting and scary place for us at present and we really wonder how people manage(d)... to me a mortgage of 1600 sounds like heaven... am I really to believe in 4-5 years time i would consider our 2200 as comfortable as a current 1600 mortgage?

I, as just one of the thousands of the young Dublin population am fearful of my position in this country, I am really just looking for some advise or words of encouragement that i shouldn't just pack in our dreams and emigrate or give up entirely...

Thank you very much for reading this post, it nearly helped me to write it all down... as i said please feel free to move this thread and i'm sorry for the admin work it entails

to end with a joke:

Whats grey, ugly and hangs off a satellite dish... every apartment in my block

madser

House prices are plumeting hold tight and you'll get sorted. Your young sucessful and starting out, your bound to feel under presure, but don't worry there never is a good time to buy a house have a child get married etc. but all these things will happen and you'll be fine.

Your doing much better than most people your age.

Tell me to mind my own business but do you live in Tullyvale or Glen na Ri by any chance:D

Victor

Lets not get into specifics please.

MortgageFear wrote: »

We currently rent a 2 bed apartment in south side Dublin (cabinteely) for 1400 a month.

Do you need a 2-bed?

We want to buy as we are sick of paying stupid money on rent in our area, we are sick of paying our landlords mortgage

So you want to pay for you bank manager's bonus instead? You want to buy into a falling market?

I realise that you would like a place of your own, before the wedding, but don't throw good money after bad. Start working full time on a deposit.

Fysh

I'll be honest, with the current state of the housing market buying is not a good idea unless you're certain that the house you buy is one you'd be happy living in for the next 20-30 years.

Ye're both doing pretty well financially, why not keep renting and keep building up your deposit? Rushing into buying because that's the rule your parents imposed in exchange for paying for the wedding seems daft; if you're that keen on buying and buying now perhaps consider scaling back the wedding and contributing the money saved from that towards your deposit.

PurpleBerry

Well of course they don't want to keep renting! Why should their hard work go toward lining their landlords pockets?

LegacyUser

Victor wrote: »

Lets not get into specifics please.Do you need a 2-bed?
So you want to pay for you bank manager's bonus instead? You want to buy into a falling market?

I realise that you would like a place of your own, before the wedding, but don't throw good money after bad. Start working full time on a deposit.

Granted a 2 bed may be a little too much space, but both rooms are at capacity and often used (i use the spare as an office when i work from home).

On the failing market point, i do agree its a failing market and its been beneficial thus far to allow us to buy so close to south dublin... I just feel very depressed that I am unable to buy a reasonably priced house in my area due to uncontrollable circumstances.

fysh wrote:

I'll be honest, with the current state of the housing market buying is not a good idea unless you're certain that the house you buy is one you'd be happy living in for the next 20-30 years.

judging by how these things go, peaks and troughs etc do you really feel it will be upwards of 20 years before prices catch up? I understand that buying in the short term will have an associated loss but so long as we are happy to stay in the house until the price comes back up again do we have much to worry?

We are interested in buying a home rather than buying purely for investment interests...

fysh wrote:

Rushing into buying because that's the rule your parents imposed in exchange for paying for the wedding seems daft; if you're that keen on buying and buying now perhaps consider scaling back the wedding and contributing the money saved from that towards your deposit.

its not a hard and fast rule, i feel foolish for placing that as a reason to consider buying. ultimately what we had hoped was to get settled into our new home prior to the wedding, the prospect of returning from our honeymoon to rented accommodation was not all that appealing.

Thank you both for your opinions as it has given me more food for thought,

4Xcut

Neesa wrote: »

Well of course they don't want to keep renting! Why should their hard work go toward lining their landlords pockets?

Because in this situation it may be the better course of action for a while. House prices are sinking, a mortgage means they will have to stay there for a good while(many years) and the lower cost of rent as oppossed to paying mortgage will allow them to save a deposit and have to take a smaller mortgage when the house prices sink more.

There is a mid-set in this country that rent is dead money and that you must get on the property ladder asap. This is not the case. Especially if you have to get huge mortgages(using phrases like only 95%). Some people even get 110% martgages, how bout this, buy the house and do it up as you can afford.

Sarn

It is difficult. Just be thankful you're not doing it on your own. Based on your two salaries you must be pulling in around €6000 net. There should be a sizeable chunk of disposable income left after basic expenses. I'd look at what you are spending your money on and set about some serious saving. You should be able to build up a decent deposit in no time.

As people have mentioned, house prices are falling. I would rather go about paying for the wedding myself than be forced into buying a house now. You both have €19k now, by next year it will be a lot more if ye set your minds to it. Maybe you could pay the wedding yourself and when the time is right get a helping hand with the mortgage instead?

I can understand the desire in owning your own place. Just think of renting (and saving) now as offsetting the interest that you pay on a mortgage.

jesus_thats_gre

Victor wrote: »

So you want to pay for you bank manager's bonus instead? You want to buy into a falling market?

20k into the landlords pocket or 100k into the banks/developers pocket..

petethebrick

Wow- At 24 you're doing great- don't be too stressed. To be honest I'd agree with some of the other posters- leave it another year or two to buy. You're gonna get much better value for money and a better mortgage even taking inot consideration the lost money on rent^^

Overheal

Victor wrote: »

Do you need a 2-bed?

Make babies much?

Real Estate always bounces back, but for the moment prices everywhere seem to keep dropping. The problem being as you mention, banks aren't lending out money like they used to, but that will hopefully turn around before too long. Just keep your eyes out for the bank rates to shift and then jump on the house hunt before the property prices jump back up.

cance

having tried to respond to this thread and it not showing up its probably easier for me to just own up and admit its myself to answer the posts on this thread i did change location between posts so maybe the good mods in here saw me as a potential troll

Firstly i would like to thank everyone for taking the time to read my mini lament (maybe not so mini but meh) and responding as it has really helped me to make sense of my situation. Myself and my lovely OH are getting really frustrated with reality vs our dreams/plans and are just trying to make real sense of our options.

We have two bedrooms as i use the second bedroom as an office for work at home and other projects i do for pocket money... i understand this can be construed as excess or even waste but i figured after all the hard time we have put into our career progression this was a mini luxury we deserved... i also understand how counter productive to our saving potential it is... learning from our mistakes i suppose is what being human is all about.

using the wedding as an excuse to buy a house was foolish and to be honest it wasnt really the basis for the decision to try to buy, not only this but it wasnt what i was trying to say. we saw an opportunity to buy with the prices of houses we sought reaching our range and the ability to buy with the 95% mortgage a year in advance of the wedding.

I suppose ultimately what you are saying is true that waiting would be more of a financially sound idea, but again whether we hold out or buy is ultimately our choice.

Fysh, do you really feel that it will be 20-30 years before the market troughs and peaks again to current prices?

Fysh

Re: the current state of the market - I don't really have a specific idea for how long it'll take for the market to stabilise, but that wasn't what I was referring to.

What I was trying to get at is that the last ten or fifteen years have heavily encouraged the commoditisation of property such that everyone is supposed to get onto the property market as soon as they possibly can because a house is not just something you live in, it's an investment.

Whereas the current situation of painfully expensive mortgages, difficulty obtaining loans and house prices slowly declining suggests that if you do want to buy, it's probably best to plan on the longer term - in the sense that if you buy a place and it takes longer than you anticipate for prices to come back up to a point where you can sell without being put in a tight spot while doing so, at least you'll be living in a place that you're happy with and which meets your needs.

IanCurtis

Wealthy couple don't know whether to buy or rent.

Why is this in Personal Issues?

fastrac

The lifestyle must be good if you only got 19 k saved.Try to get some of those wages into a bank .You have to take the pain short term to beat the bank.

Madame Razz

to be fair 2200 between the two of you is 1100 each, plus your life assurance etc, add on 100 each; thats 1200 each.


Happily my mortgage is quite small but I have several friends who earn in or around what your other half earns, and pay a mortgage of more than 1200 a month themselves; and they manage fine.

So i really don't see why you're freaking out; its no biggie; you should manage a mortgage that size easily enough; albeit maybe living less of the good life; but thats one of the joys of home ownership!!

foggy_lad

Ye need to save a lot more and stop giving yourselves luxuries just because you think you deserve them! and possibly think about moving from where you are. My rent for two bed townhouse in the southeast used to be ?750 a month which is lot less than you are paying. And rents are starting to come down now.

4Xcut

If between you, you are earning a hundred grand this year, you should easily have 100 grand saved by this time next year. This is the time to do it, no kids, no mortgage(although that's what you are saving for), etc. There's basically food and rent for the two of ye.

Realistically, ye could get 60k.

tman

A lot of people may be ****ed, but the two of you are safe as houses (pardon the pun)
I'd say just save hard for a year or so before buying.

Wish I was in your situation at 24... I'm just about to turn 26 now and still nowhere near it!

watna

Cance, I feel your pain! It's something that plays on my mind too. As you know we're from the same area and I really wouldn't like to buy outside that. It's where all my friends and family are and I know the area so well. I try not to think of buying a house too much because it's so scary!

My OH has been brilliant about things. He's from South Africa/New Zealand and doesn't seem to have this violent need all Irish people have to own property (all my friends talk about it a lot and we really are very young, my father is always pointing out that he didn't own property until he was about 33/34 and he's doing alright for himself now!). We're living in NZ now so we don't need to think about buying for a while but his opinion is that we should only buy if we can afford it to be in the area we really want and it's not going to bankrupt us. Otherwise what is the harm in renting? In many European countries i.e. Germany people never own and always rent. He is so good when I start to worry about if we'll ever afford a house. We're even thinking of buying in Wellington and renting it our when we go back to Ireland and waiting a good few years to buy in Dublin. What I'm trying to say (maybe not too clearly) is that owning your own house is not the be-all and end-all. You're getting married which is stressful and expensive enough. Why not cut yourself a break and give yourself a certain length of time i.e. two years to save more for a deposit and be in a better position to buy and get a better idea of the market. I'm sure your parents will understand, they must have a good idea of the market. I know my parents are concerned I won't come back from NZ because we won't be able to afford to buy in Ireland!

I completely understand about wanting a two bed place to yourself. Myself and my oh shared for a year or two and living with other people as a couple just doesn't work. We have a two bed place now and I love having the spare room. However, it may be worth your while finding a cheaper place/sharing (with the most normal people who can find!) just for a year to save more money. The thought of having to share again doesn't thrill me but if we really had to do it I would.

Hope some of my ramblings made sense and helped a little!

hefty_langer

If you are planning on buying in Wicklow, why don't you move out there for a year/two where rents are lower, stick the rent money you save into a bank for your deposit... reckon that'll speed things up a bit... makes sense to me.

Wibbs

This is more suited to the property & accommodation forum, so I'll move it there where you may get a different slant. If you want it moved back PM me, but I'm not seeing the personal issue to the degree that warrants it staying here.

The_Conductor

watna wrote: »

I start to worry about if we'll ever afford a house. We're even thinking of buying in Wellington and renting it our when we go back to Ireland and waiting a good few years to buy in Dublin. !

Hi Watna- just remember that you loose your First Time Buyer status and the favourable stamp duty it brings, if you buy elsewhere. Its not so much an issue if you do look at new houses- but if you decide you'd like a garden, you're looking at second hand properties, and the propensity to get fleeced by the taxman is so much greater.......

The_Conductor

Cance- a 19k deposit is quite reasonable. As per the other posters- I would also suggest continuing to save towards your deposit- apart from anything else- you will get quoted much better rates by the mortgage institutions the lower the LTV (Loan to Value) ratio of the house you propose to buy is.

Your combined salary is very decent, but akin to what everyone else is suggesting- you really need to look at your outgoings and prioritise better.

Re: renting or buying- I disagree with the get on the property ladder brigade...... At the moment its still far cheaper to rent, than to buy an equivalent property. If you were to buy that 2 bedroomed apartment that you are in- it is highly likely that the interest component of the mortgage repayment would vastly exceed the rent that you are currently paying- ignoring all the other costs associated with ownership of the property. So- the landlord is effectively subsidising your accommodation- far from the picture that many people would have you believe that you are paying his mortgage for him........

Particularly in the current market- do not feel pushed into property ownership.

As an aside- the ownership rules on non-locals buying into communities in Wicklow/Laois and some other areas are up in the courts at the moment. It is highly probable that the rules will proven illegal- most probably opening a lot of developments to purchasers that they were previously excluded from. Keep an eye on this.

Paulw

In fairness to the OP, you must be living the good life.

I bought a 3 bed apt on my own, costing 280k. I earn less than you do (alone). My earnings are about 55k.

I pay my mortgage, bills, and everything else, and still have money for 2 holidays a year.

You really need to start to investigate your spending. With what you and your partner earn, you should be able to save plenty. Stop living the high life, tighten your belt a little, and you can afford almost any property you want.

AARRRGH

Why do you feel so insecure that you must rush into buying a home? With your large salaries it's unlikely you're going to become homeless, so what's the rush?

It makes absolutely no sense to buy now. There are very bad times coming (I wouldn't be surprised if one of our banks collapse) so it's unlikely house prices are going to "recover" for a long time.

If your mortgage is going to be 2200+, and your rent is 1400, you are immediately saving 800 a month if you continue renting. Put this towards your deposit.

Also, calm down your lifestyle so you are saving around an extra 1000 or 2000 per month.

In 3 or 4 years time when you go to buy, you'll have over 100k saved. Not only will house prices be way cheaper than they are today, but the amount of interest you'll save by having such a large deposit is ridiculous, i.e. a few hundred thousand euros in interest.

I understand you want to build towards the future, but for the moment save your money and know you are doing the right thing.

johnnyskeleton

MortgageFear wrote: »

We currently rent a 2 bed apartment in south side Dublin (cabinteely) for 1400 a month.

We want to buy as we are sick of paying stupid money on rent in our area, we are sick of paying our landlords mortgage, ...and we also wish to have some privacy as living with others caused us considerable stress in the past.

We are looking in the south county Dublin (yeah right...) and the north Wicklow area.

...
My concerns are this, how the hell are people expected to buy in this day and age... the mortgage repayments for a 4 years fixed rate (tracker mortgage my HOLE with the way the interest rates are going) runs in the region of 2200 per month, this doesn't even include the necessary house insurance, life assurance or mortgage payment protection.
...
I, as just one of the thousands of the young Dublin population am fearful of my position in this country, I am really just looking for some advise or words of encouragement that i shouldn't just pack in our dreams and emigrate or give up entirely...
...
Whats grey, ugly and hangs off a satellite dish... every apartment in my block

It seems to me that rather than wanting to buy, you are getting annoyed with the property you are currently renting. I would therefore advise a move in the short to medium term because:
1) renting allows you to move to a different area/apartment whenever you get sick of the old one, and with no strings attached.
2) you are paying over the odds for that place, and you can get a lot of 2 beds for under €1200 in the south dublin/south county dublin area. Here's a 2 bed house just outside Dublin 4 for €1300. You could even get a 2 bed apt in a georgian building in a fancy part of the city centre for €1350.
3) Apart from the massive difference between renting and buying at the moment, house prices are dropping (a good thing for someone wanting to buy in a few years) and rents are also dropping (a good thing for anyone renting at the moment) so as other posters have said it makes no sense to buy at the moment.
4) I would always recommend to someone thinking of buying that they first try to rent in the area / in a similar property if possible. That way, if the walls are paper thin, if there are a lot of drunks on the street of a friday/saturday night or if there are serious anti-social elements in the area, you can rent there to find these things out which you never would have known if you just bought straight out.

MortgageFear wrote: »

As a couple of 24 earning just shy of 100,000 a year i for one would have considered us pretty f*cking successful but the incomprehensible prices we are expected to pay for housing in Dublin are leaving us fearful for our future if we are to take out a mortgage. If i lost my job within the next five years we couldn't possibly survive on one wage, and heaven forbid we choose to procreate in the next 7 years... lose one wage or pay 1200+ for creche fees...

Also with the current recession and rising interest rates, where will that leave me in 5 years with potential redundancies, job losses or wage cuts to retain a job...

These are the factors that people simply haven't been thinking about over the last few years, because if the worst did happen, they could usually sell the property for more than they bought it for. This is no longer the case, and so you need to be very careful re: your circumstances before buying. I would recommend that you simply refuse to take out a mortgage that is:

1) greater than 90% of the purchase price
2) for a period longer than 20 years
3) more than 4 times your income plus 2 times your partner's income (and it would be no harm to ignore your partner's income altogether).

Also, while I don't personally recommend it, a lot of people like to get Mortgage Repayment Protection insurance (MRPP). This usually costs an extra few quid per month, and if you lose your job it will pay your mortgage for a few months while you look for a new one. You're really paying for the peace of mind, as IME getting them to actually pay up for MRPP is like trying to get blood out of a stone, but if you know it's there you might feel safer.

MortgageFear wrote: »

Ultimately the housing market seems like a very daunting and scary place for us at present and we really wonder how people manage(d)... to me a mortgage of 1600 sounds like heaven... am I really to believe in 4-5 years time i would consider our 2200 as comfortable as a current 1600 mortgage?

The housing market really is a daunting place (read the bubble thread or go to thepropertypin.com). If you buy now and get into difficulty in 4-5 years time, don't expect any sympathy. You know the risks, you know the impossibility of servicing such a loan, and now that people are starting to realise that property prices don't always go up, you are entitled to wait until the market suits you, rather than the other way around.

The reality is that you probably will have children in the next few years and that will mean less income and more expenses. If you insist on a mortgage that suits you (as above) you will probably only be able to raise about €200k or so for a €220k property. Prices may well have fallen to that point in 4-5 years time (either in actual terms or in real terms i.e. your wages and inflation will increase while prices remain static) but even if they don't, the best way to secure your family's future is not to buy at all costs, but to buy when you can afford to do so. If this means living in rental accomodation and scrimping and saving for the next 5 years, so be it.

Best of luck whichever way it goes.

WRENALDO

Between yourself and your girlfriend (wife to be ) you are earning 100,000 a year and you are still not happy, go to a village in Kenya for two weeks and then you will have a differnet perspective on things.

punchestown

4Xcut wrote: »

If between you, you are earning a hundred grand this year, you should easily have 100 grand saved by this time next year. This is the time to do it, no kids, no mortgage(although that's what you are saving for), etc. There's basically food and rent for the two of ye.

Realistically, ye could get 60k.

19k already saved so 81k to go. Earning 100k (approx) for the next year and you are expecting them to save 81% of it!!:eek: Its Ireland not Egypt we are living in. With a good bit of effort I would expect them to reach 50k by this time next year. In the period we are entering in terms of cash being King and cheap credit a thing of the past, they will be in an excellent position (providing both jobs are still secure) Have patience, save hard and you will get you rewards op. You could look back on the advice received in this thread in a years time and be thankful that you held back.

AARRRGH

WRENALDO wrote: »

Between yourself and your girlfriend (wife to be ) you are earning 100,000 a year and you are still not happy, go to a village in Kenya for two weeks and then you will have a differnet perspective on things.

I think the title of the thread is very interesting: "Are we all ****ed?"

This guy is clearly comparing himself to others, hence the "Are we all" rather than "Am I".

We all know trying to keep up with the jones's just results in unhappiness and debt.

If he focussed on his life and stopped watching what others are doing, he wouldn't be in a panic to be seen owning a home and doing well for himself.

/No offence OP

cance

Thanks to everyone for taking the time to post replies as you have really opened my eyes to the possibilities we face in a few years.

there have been a few over estimated saving potentials due to the sheer amount of tax we pay but the moral behind what is being said is very valid. To be fair i didnt consider us to be living the "high life" but i do see where money can be saved.

WRENALDO wrote: »

Between yourself and your girlfriend (wife to be ) you are earning 100,000 a year and you are still not happy, go to a village in Kenya for two weeks and then you will have a differnet perspective on things.

How much i earn is not a reflection of my unhappiness, i fail to see why you would drag under developed countries into my confusion about the housing market

dublindude wrote: »

I think the title of the thread is very interesting: "Are we all ****ed?"

This guy is clearly comparing himself to others, hence the "Are we all" rather than "Am I".

We all know trying to keep up with the jones's just results in unhappiness and debt.

If he focussed on his life and stopped watching what others are doing, he wouldn't be in a panic to be seen owning a home and doing well for himself.

/No offence OP

None taken, and i do have to laugh at the "are we all ****ed" comment i decided to open with as it should have read "will i be fucked"

oh, and just to finish i should probably mention my wage was increased substancially with a newish job so we havent really had a chance to get used to the influx of money... might be best to take now as an opertunity to curve our spendings while we are not used to it.