First Time Buyer requires advice please

Angelicus_22

Hi All
Ok, so all the talk ive been hearing lately is how house prices are crashing through the boards and ive decided to maybe bite the bullet and take my 1st step on the property ladder. Some information about myself, i will be 24 in a month, im in full time employment earning 1'452 after tax monthly, i dont drink or smoke and my expenses are generally quite low.

At the minute im living in rented accom paying 440 a month, but ive estimated that over the last since ive moved outta home ive spent roughly 15'000 on rent, all dead money and im sick of living with random people and in shared accom, so the plan is to invest in a 2 bed apt and sub-let the other room to help with mortage repayments.

So would people view this as a wise decision, id be looking for a 2 bed apt on the southside near D24 with hopefully a price tag of 200'000 or less.

Just wondering if anyone else has been in my position and what have they done, or am i doing the right thing.... all comments and advice are welcome and appreciated. Thanks in advance.

Senna

Angelicus_22 wrote: »

Hi All
Ok, so all the talk ive been hearing lately is how house prices are crashing through the boards and ive decided to maybe bite the bullet and take my 1st step on the property ladder. Some information about myself, i will be 24 in a month, im in full time employment earning 1'452 after tax monthly, i dont drink or smoke and my expenses are generally quite low.

At the minute im living in rented accom paying 440 a month, but ive estimated that over the last since ive moved outta home ive spent roughly 15'000 on rent, all dead money and im sick of living with random people and in shared accom, so the plan is to invest in a 2 bed apt and sub-let the other room to help with mortage repayments.

So would people view this as a wise decision, id be looking for a 2 bed apt on the southside near D24 with hopefully a price tag of 200'000 or less.

Just wondering if anyone else has been in my position and what have they done, or am i doing the right thing.... all comments and advice are welcome and appreciated. Thanks in advance.

Have you got a deposit saved, i think you need 20% of the sale price now for apartments? Say you have the 20% deposit, and so have a mortgage of €160k, over 30years @ 5% thats €850 per month, thats almost 60% of you net wage going on the mortgage. I cant see any bank giving you a mortgage, its max 33% now and that would be stress tested as well.

Rent is dead money is it? you say you wasted €15k on rent, so at €440 per months thats about 3 years of wasted money, right. Say you had of bought that apartment in 2006, how much would it have costed you? €300k maybe? Its worth €200k now, so by renting for the last 3 years you have wasted €15k or if you had of bought you would have lost €100k. Did you say rent was dead money?
Its a falling market, rent is a smart choice, many home owner now wish they had of stayed rented and not bought.

Property ladder and taking your first steps; would it not be better to save and buy a house that will suit your need instead of trying to get on a mythical ladder that could leave you stuck in an apartment that is completely unsuitable.

Finally you are 24 years old, why do you want to straddle yourself with a mortgage that is nothing but a millstone around your neck of the next 30 years. Pay the rent (its not that much) save some money as well and enjoy your twenties, buy a house with a partner when you want to settle down, not when your 24 and you think its an investment. property will not be a good investment for the next 3-5 years. Dont worry about missing out, once property reaches a sustainable level it will stay there and not just rocket up again, not for years anyway.

If you still want to buy then just do some more research please.

Angelicus_22

Thanks for that, some interesting points raised which i will certainly take into consideration. I take your point about rent not exactly being dead money, i never looked at it that way...makes me feel a bit better about my last few years renting.

I still might go ahead sure and check out my eligibility for a mortage, sure no harm in that at all.... Anyway that was very much appreciated. thanks

gurramok

Angelicus_22 wrote: »

im sick of living with random people and in shared accom, so the plan is to invest in a 2 bed apt and sub-let the other room to help with mortage repayments.

Serious contradiction there. You are sick of renting with others in shared accommodation but yet when you buy you will rent a room out to someone else, whats the point of buying?:rolleyes:...still no privacy there!:)

As Senna said, you are young and down the line you will probably end up meeting someone and settle down, the risk of negative equity on that apt is around your neck for many years as apts are less favourable than houses for buyers.
Of course, if you see an ultra-cheap apt going in your area which stands to scrutiny and don't care about the risk of further price falls plus you can afford it with long term consequences and have a rock solid job, go ahead, do your research first though.

Also, you don't seem to earn enough, you might only get a 100k mortgage, you will need a big deposit.
Your only option is affordable housing(SDCC) with all the risks outlined above(nearly every single buyer is/was in same boat on housing so don't worry about being the only one ). Watch out for the council valuations on that as they are out of whack with market values plus their restrictions.

fly.on.the.wall

With regard to the deposit amount you require. The percentage of deposit is varied and wide depending on whom you go to.

I know from personal experience with just getting mortgage approval for an apartment, AIB were offering me 92% where as Bank of Ireland 85% and Halifax 80%.

Hope this helps.

Fatloss08

dude no offence that money ur on is peanuts thats like basic wage

why as the others , saddle urself with a mortgage ???? im 28 and at 24 had bought my first home , and looking at it now i wish i didnt

if i waited id have got my house for €230k now and not €360k i paid 3 years ago

ok we didnt know what would happen , but i was impatient thinking they would go higher and plus i liked the house alot

Money Shot

There is no need to get on the property ladder as early as you can - there never was. The premise behind the property ladder was to buy, sell at a profit, buy bigger, rinse and repeat. It was all a big con job - one huge pryamid scheme that we have passed on to our children.

I can't see the logic in buying an apartment over renting at the moment. For starters, you won't be a first time buyer when you go to buy a house that you really want. You will also run the risk of not being able to sell your apartement easily, so could jeopardise the purchase of the house that you really want when you 'settle down'. Finally, you could loose a lot of money when you go to sell.

If you were telling me that you wanted to buy a place to live in for the foreseeable future, I'd say go for it, but it seems like you have some sort of speculation in mind.

Freddie59

To the OP:

Listen very closely to the experience of Fatloss08 (I'm really sorry to hear that FL08 - my sympathy goes out to you:()

Then visit this site:

www.treesdontgrowtothesky.com

Look at the price drops. And there are more to come. You're young, OK your wage is not that high. But when prices come down it will make a huge difference to you.

Don't jump - under any circumstances.

Agent J

OP,

Its been said already but it is worth repeating

Renting is not dead money.

It has put a roof over your head. It is paying for a service/item or whatever term you choose.

Consider that if you had been able to buy a few years ago the house you would have had would have lost more then 15k in value and now in a negative equity situation.

And no offense intended but you wont earn enough to get a mortgage anyway and intending to rely on rental income as well in this market is a bad idea.

johndaman66

Don't do it Angelicus...Not at the moment anyway. The general consensus is that property prices will continue to drop considerably yet for the considerable future before they will show any signs of stabalising despite what the estate agents and vested interests would have us believe. You say your expenditure is low so if it is possible that you could save a few quid towards your deposit it may mean you only need to take out a much smaller mortgage a few years down the line I reckon and when you also factor in continued drops in property prices in the meantime. Furthermore taking this course of action a bank may be more willing to give you a mortgage as you may find it is not so easy to be approved at the moment depending on your savings obviously. Also I wouldn't be suckered in by low interest rates at the moment as they will invaribly rise at some point in the future. If you feel that your rent is high you should maybe consider re-negotiating it with the landlord. I'm sure (s)he may well play ball if you threaten to leave and we continue to be reminded how rents are falling.

As you suggest it may well be worth a call to the bank and if only to get a finance check up for yourself. Be careful and wary if they try to sucker you into an investment Fund where your investment is liable to fall as well as rise though. At least get independent secondary advise before making any such commitments. On a side note and not trying to be any way smart about it but your wages do seem rather poor. Without knowing your full circumstances would it be possible to seek a payrise or promotion? Or more hours if you are only part-time.

Back to the house/ appartment and from my own perspective I am lucky in that I am living at home with my folks rent free at the moment but even if I was renting I would continue to do so presently and save every cent I could and only buy in a few years time (which I will be doing).

MG

Jill Kerby (the Sunday Times money advisor) was on the radio yesterday. She is a rock of sense and is well worth reading.

She was asked yesterday if now was a good time to buy. Her answer was to shout down the microphone "Abosoluetly no way at the moment". According to her the only people who should buy at the moment are people who are in very secure, recession proof well paid jobs who abolsutely love a house and its location, who will live there for the long term and can afford to carry negative equity for a while.

Rock of sense.

spockety

MG wrote: »

Jill Kerby (the Sunday Times money advisor) was on the radio yesterday. She is a rock of sense and is well worth reading.

She was asked yesterday if now was a good time to buy. Her answer was to shout down the microphone "Abosoluetly no way at the moment". According to her the only people who should buy at the moment are people who are in very secure, recession proof well paid jobs who abolsutely love a house and its location, who will live there for the long term and can afford to carry negative equity for a while.

Rock of sense.

She also said that a house that was on the market now for maybe 300k that had already fallen from about 400k will probably end up costing only about 150k in a year or two.

Sarn

With a net take home pay of €1452 you must be on about €18k a year. A bank will only give you between €70-90k. Unfortunately that won't go very far at the moment unless someone gifts you a lump sum. Sit back and rent, prices will come down, your earning capacity will go up, build up that deposit.

bobbiw

I can only tell you what I would do.

Prices are not going up any time soon, the commuter towns will be hit hard but then so will the rest of the country.

I think its very probable that a apartment that is 200k today will be worth 100k or less in the next 2 years. It would then not get back to 200k for about 10 years or more, maybe a lot more.

Ireland is in a grip of something that it never experienced before, yes there was unemployment but not like what you have now.

Back in the 80s the banks were not crashing, and people were not paying for a house that was worth 80% what they paid for it.

I would rent, hold off, put the money in a secure interest bearing account. Save and wait. The lack of banks lending will drive prices down a lot more.

It is my belief that they will drop at least another 50-70% in some areas.

And by the way, I have no interest in buying Irish property. Even if the city center apartments were going for 40k I would not touch them.

Angelicus_22

To all who have replied thanks so much for your help, to be honest a lot of people have said that it would be mad not to buy now, but when i look at all the points raised here i think il probably stick it out for a year or so, at least start saving for a decent deposit..... thanks it's all very much appreciated...