First time buyer number crunching?

atat23

Any mathematical people with property experience want to break it down for a total noob like me?

Like if I make X euros per year before tax, this means that I should be looking at properties worth Y euros?

And if I want this property worth Y euros I should expect to pay a mortgage of Z euros a month for V years?

Or are there too many variables for general equations like this to work. I just want to know if I stand a chance of getting on the property ladder or if I should look for other options. i.e rob a bank

Can anyone even help me out with ball park figures? say for properties below the 400k mark

Sarn

Here, this site will give you an idea.

How much?

aster99

Are the likes of teachers and such jobs with secure futures still finding it easier to get mortgages?

ntlbell

3-4 times your yearly wage based on a 15-20 year mortgage

so if your on 30k you should be looking at 90-120k over 15-20 years

ntlbell

aster99 wrote: »

Are the likes of teachers and such jobs with secure futures still finding it easier to get mortgages?

if you show good saving good credit record etc you will get one

atat23

Sarn wrote: »

Here, this site will give you an idea.

How much?

exactly what I was looking for, thanks all!

spockety

Don't base your purchase on the amount you can borrow in the here and now.

If you earn 50k a year, and can borrow 220k, right now this will probably only get you a two bed apartment in a relatively decent area, or a 3 bed semi in a commuter town 50 miles outside of Dublin. In 2011 it might be possible that your 220k would get you a 3 bed semi in a relatively nice area of Dublin.

dny123456

wow, that mortgage affordability calculator gives quite a high figure. No where near NTLBell's estimate. Truth might be somewhere in between, but it looks like the website is running between 5 and 6 times salary.

The_Conductor

dny123456 wrote: »

wow, that mortgage affordability calculator gives quite a high figure. No where near NTLBell's estimate. Truth might be somewhere in between, but it looks like the website is running between 5 and 6 times salary.

I was wondering too- no way on earth would any lender offer me 600k in the current climate. Something seems screwy with it........

gurramok

And mortgages.ie is a bit biased, they use the 40yr mortgage as standard last time i checked, hardly a good barometer

professore

ntlbell wrote: »

if you show good saving good credit record etc you will get one

What I find funny is the way banks don't take your personal circumstances into account. For example, single guy in his mid 30's living at home with parents in reasonable job, goes out drinking 3 nights a week, and generally wastes money, parents give him 20K ... hey presto a mortgage.

married couple mid 30's, 2 kids, renting, paying far more each month for years than guy could save in his lifetime, no debts, hey presto no mortgage.

To me the second lot are a much lower risk.

ntlbell

professore wrote: »

What I find funny is the way banks don't take your personal circumstances into account. For example, single guy in his mid 30's living at home with parents in reasonable job, goes out drinking 3 nights a week, and generally wastes money, parents give him 20K ... hey presto a mortgage.

married couple mid 30's, 2 kids, renting, paying far more each month for years than guy could save in his lifetime, no debts, hey presto no mortgage.

To me the second lot are a much lower risk.

They don't really need to take personal circumstances into account what they need to take into account is your financial habits.

If you show the bank savings and proof of where your money is going it is taken into account.

e.g. if you apply for a 200k mortgage and the repayments are 1k

you save 200e a month and spend 800e on rent, they won't refuse you a mortgage because you can't save 1000e a month if you have solid evidence where that 800e is going you will get approved because if you were not renting you could afford the re-payments and you're showing you can save if you keep putting the 200e a month away.

if on the other hand your blow your wad every month on beer the bank want to know where your money is going I personally know people who were refused mortages because they were told they "spend too much money"

they didn't show the habits of someone who would be responsible with re-payments this to me was fairly diligent.

when the boom times came they didn't really give a hoot deposit no deposit if you were earning enough to re-pay they didn't care as long as you got yourself tied up into a ton of debt

but the tide has turned again and they are back to keeping an eye on who gets what which is proper order.

ntlbell

dny123456 wrote: »

wow, that mortgage affordability calculator gives quite a high figure. No where near NTLBell's estimate. Truth might be somewhere in between, but it looks like the website is running between 5 and 6 times salary.

I'm not giving you an estimate.

I'm telling you what would be a sensible figure not what the banks will give you.

If you want to get into a ton of debt for the next 40 years I'm sure you'll find someone to give you enough rope to hang yourself.

You shouldn't need a calculator to work out what you can safely afford.

you deal with your finances you know what you can afford to go out and what you can't you know what money you need to live the lifestyle you want to lead

the banks don't know and I don't know.

dny123456

ntlbell wrote: »

the banks don't know and I don't know.

Surely that's the point of the thread, the OP doesn't know! That's why he was asking for advice. I was simply saying that the calculator on mortgages.ie was a little generous, so he shouldn't rely on that figure and also your formula was a little conservative and would underestimate (and probably depress) his buying power. The actual figure he can probably afford, is somewhere in between. No offense was meant.

ntlbell

dny123456 wrote: »

Surely that's the point of the thread, the OP doesn't know! That's why he was asking for advice. I was simply saying that the calculator on mortgages.ie was a little generous, so he shouldn't rely on that figure and also your formula was a little conservative and would underestimate (and probably depress) his buying power. The actual figure he can probably afford, is somewhere in between. No offense was meant.

When I said don't know I was referring to the level of lifestyle he wants to lead and how much expendable income he would need to live such a lifestyle the OP does know this the bank can't know it and I can't know it.

my formula is conservative the amount a bank will loan you is not a target to reach you shouldn't be relying on a bank to work it out you should be working out what you can AFFORD to pay comfortably each month taken some stress testing into consideration possible interest hikes and as said the amount of spendable income you require to live a lifestyle that doesn't mean you have to go without in order to pay your mortgage.

If your a hermit and have no hobbies don't smoke don't drink don't leave the house and play with your train set on weekends then your spending power is a lot more than someone that wants to take a few holidays drink 2/3 nights a week and do various activities, the bank can't work this out _YOU_ can tho...

aquascrotum

+1 to ntlbell.

Allowing the banks to decide what you can afford is what has got us to where we are (mortgaged to the hilt, mountains of personal debt). Just because the bank/credit card/store card might offer you a wad of money doesnt mean you can afford it. Time for new ftb's to get their houses in order and take some personal responsibility and a bit of cop on wrt what they can and can't afford. If the OP is already renting and paying bills at present then they would know full well what they can or can't comfortably afford per month and whether they can afford it long term. Go to a bank or FA, say you want a mortgage for 25/30/35years, you can afford X/month, and find out what does that translate to in current mortgage value terms.

The_Conductor

aquascrotum wrote: »

Go to a bank or FA, say you want a mortgage for 25/30/35years, you can afford X/month, and find out what does that translate to in current mortgage value terms.

I would qualify this- as interest rates are at historically low levels. You would really need to properly stress test this with a spread of at very least 3%, possibly 4%, to ensure you were capable of paying it when rates rise (as they inevitably will, eventually). In the interim- if you can afford it, given the spread you are factoring in- I would suggest accelerated capital repayments.

Boilerbad

y = about 5x

v= 30

z = y(1 + r)to power of v /30/12

r = interest rate

less tax relief

dny123456

smccarrick wrote: »

I would qualify this- as interest rates are at historically low levels. You would really need to properly stress test this with a spread of at very least 3%, possibly 4%, to ensure you were capable of paying it when rates rise (as they inevitably will, eventually). In the interim- if you can afford it, given the spread you are factoring in- I would suggest accelerated capital repayments.

Things have changed quite radically in the financial world. It's likely that rates are going to drop further and remain low, for the longer term. Inflation is not a problem anymore. ECB rates are relatively high and will be dropping and remain dropped for at least the next 5 years.

ZYX

smccarrick wrote: »

I would qualify this- as interest rates are at historically low levels. .

Not exactly historic. They were lower 3 years ago.