How can I get a house?

NeptunesMoon

at the moment i'm paying 600 quid a month rent and i hate the thought of throwing money away. I'm self employed and would have no problem paying up to 1000 a month, or more if i needed to, to pay off a morgage, id much prefer paying 1200 a month for something that will eventually be mine, than 600 for something that will never be mine.

heres my financial situation:
i've about 5k in my bank, because im self employed i can choose how much work i want to do, i dont do half as much as i could, but i still earn enough to get me by and am comfortable at the moment. between rent and expenses for the business and paying off a loan, i have about 1,400 coming out of my bank every month then I have food and all the every day things on top of that too, so say about 1,800 a month. I'm very good at saving and don't waste money at all. Don't smoke/drink/drugs/coffee/tea/gambling. If I pushed myself, I could be earning I'd say about 4.5k each month easily enough. I've some personal stuff I need to sort out before I have the mindset for that though.

The problem with applying for a mortgage is that if your self employed you need at least one years of accounts before a bank will even consider giving you one. im only new in business and as i said, im not working as much as i could be, so the accounts could be a lot better. I'm coming into some money soon from an inheritance, should be about 15K. my sibling will be to. so I should have 20k steady balance in my bank acc, but im wondering what should i do with this.

i can either:

• continue paying rent and use it to expand the business, but i dont feel ready for that yet
• leave it there until i am ready
• put it towards a morgage.

the last one is the one im curious about here. what options would be open to me? what about the likes of affordble houseing? would it be possible to put my money with my brothers and apply for a morgage together? he earns his money tax free through art and currently lives abroad so he wouldnt have anything to show the banks either. just money. would it be possible to go in on a house with a friend who COULD afford to pay off the whole mortgage with his income, but we agreed that i pay half and he pays half, but the onus or whatevr you call it is on him, as in the banks not going to trust me, but he will. and we could get a solicitor to draw up an agreement saying i own half as long as i pay half the morgage each month?

my mam also owns her own house, shes not planning on doing anything crazy i dont think and i heard that there is something where if you own a house, you can put it as calateral against a laon, or another morgage.

Basically i definitely have enough money to pay the monthly repayments, but i just need to get approved somehow first.

if anyone has advice that would be great and sorry for my spelling but dont let this think i dont have the brains to make enough money :D

SkepticOne

Would it not be an idea to save money for a few years? If you are able to earn 4.5k a month then it should not take too long to build up a decent deposit.

No one likes renting but much of the money paid over the course of a mortgage is interest payments - rent on money. Only a proportion of your total payments goes into capital repayments.

Unless you buy outright you will be paying rent of some sort and in the current market often ordinary rent such as you are paying now is less than rent on the money to buy the equivalent property.

NeptunesMoon

I know what you mean, but would that not just be delaying what I'd eventually have to do anyway? I mean, if I buy now, I'll have paid that rent in X amount of time, but if I wait, I'll still have to pay that rent for the same X amount of time so I'd be paying that rent, plus the rent I'm paying now and for however long until I eventually buy, the question I suppose is though, if bought now, would I end up paying more than the 7K in rent I pay now to that rent and would it be much less if I had more saved overall? I'm guessing it would be best to buy asap?

I also hear it's a great time to buy now? I don't want to start a big debate on that here but basically prices are pretty low at the moment and they could go up by the time I'd have saved up more money?

Would now be a good time to buy? If I was making 4.5K, then it'd mean I could just pay off quicker than if I was saving up, so it'd probably work out best to buy as soon as I can as the 600 euro a month I'm paying now is just going to waste either way.

SkepticOne

NeptunesMoon wrote: »

Would now be a good time to buy? If I was making 4.5K, then it'd mean I could just pay off quicker than if I was saving up, so it'd probably work out best to buy as soon as I can as the 600 euro a month I'm paying now is just going to waste either way.

So long as you are aware that you are in a sense renting in both cases. The goal is to minimise rent whether it is in the form of ordinary rent to a landord or interest payments to a bank. As I have said, in the current market rent to a landlord is often less than rent to a bank for the equivalent amount of money.

The advantage of saving first then borrowing is that you get a better deal from the banks. There is also less interest (rent on money) to pay over the lifetime of the mortgage.

The best thing might be to take a particular property. How much is the market value? How much does it cost to rent the equivalent property? Then it is possible to work out which makes more financial sense.

Sarn

I think you need to talk to a bank or mortgage broker to find out exactly what you require to get a mortgage.

If you require a year's worth of accounts you might as well get started. Start getting that extra cash in now, because in the current climate the bank is only going to give you a mortgage based on financial evidence. It's all well and good saying you can pull in €X if there is no evidence to support it. While you're doing that you'll be adding to your deposit and so will be in a better position.

In my opinion with prices falling at the moment now is not a good time to buy. Read back through some of the threads for opinions on both sides or check thepropertypin for a more bearish view.

johnnyskeleton

As ScepticOne says.

A slight variation would be:

1) Use the money to expand your business (so far as is consistent with your personal life of course)

2) get two years of certified accounts

3) build up enough for a 10-20% deposit and 6 months forward mortgage payments. If you are self employed you gon't get paid if you are sick etc, and payments can often be slow to come in. So a buffer zone is essential.

Depending on what sort of property you want, I would suggest that something along the lines of planning to buy in 2-5 years time when you have a deposit of €20-30k and another €8-10k reserve.

I believe house prices will drop for the next few years; if they do you will be tens of thousands of euro better off than if you buy now. You don't have to take the same view as me, but if you think it is a possibility, you should hold off.

jackal

You can look at it like this. Save in a bank* and gain 5 or 6%, or buy a property and, if current trends continue lose at least 6% per year.

Its, as they say in de states... a NB.





*If you have more than 22k, spread it around to insure yourself against a bank collapse.

groom

The apartment I rent costs me €1150 a month. If I wanted to buy it, it would cost over €2000 a month in interest payments alone.

I see it as my landlord subsidising my lifestyle

kmick

1200/month only buys you around 220,000 of a mortgage. You could get a one bed in Dublin 8 secondhand (new is more expensive) for that. You would need a 10% deposit of 22,000 and another 10,000 or so stamp duty. Add another 5 for solicitors, a bed, a couch and a kitchen table and the first years management fee means you need 37,000 cash + a 198,000 mortgage.

At 54,000 (4.5k x 12 months) earnings you could theoretically borrow 264,000 (using mortgages.ie calculator http://www.mortgages.ie/borrow.cfm ) which would be more than you need. You might even get the 220,000 at your current level.

Even better you get a 2 bed and then rent a room which could earn you 10,000 per annum tax free.

1 Bed Dublin 8 220k
http://www.daft.ie/searchsale.daft?search=1&s[cc_id]=ct1&s[a_id]=pc9&s[mnp]=&s[mxp]=&s[bd_no]=1&s[search_type]=sale&s[furn]=&s[refreshmap]=1&limit=10&search_type=sale&id=404779

2 Bed Dublin 8 250k
http://www.daft.ie/searchsale.daft?search=1&s[cc_id]=ct1&s[a_id]=pc9&s[mnp]=&s[mxp]=300000&s[bd_no]=2&s[search_type]=sale&s[furn]=&s[refreshmap]=1&limit=10&search_type=sale&id=391010

Note :I dont know what the areas of these apts are like and I only took Dublin 8 as an example it may not suit you at all.

If you are buying be prepared to screw the seller to the tune of 10% or more on their asking price.