Rent-to-buy Scheme Dublin

jenniem01

Surely if you are planning on buying the house at the end of the 2 year or 3 years then would you car if it had dropped by 10-20K? That could easily happen when you buy the house outright so the risk is there whether you purchase with Rent2Buy or you save get your deposit and buy a house.?

If your planning on living there for 5-10 or even the rest of your life if you rent for 2 years and pay 300k in 2013 and your next door neighbour comes along and buys the same house for 280K... well their next door neighbour could buy next door to them in 2 more years for only 260k!?

Everyone takes the risk when buying whether it's rent2buy or buying outright.

HollyCat

The problem is that if prices fall in 2/3 years you'll only get a mortgage on the price then. Example - if the price is €200k now and you can get a 80% mortgage that €160k. If in 3 years the price has fallen to €180k you'll only get a mortgage of €144k. That's going to leave you €16k short if you've contracted to pay €200k.

jenniem01

True.. but in 2-3 years time chances of getting a salary increase are high also, so putting extra off your deposit or putting some money away incase that situation does arise means you should be relatively safe.

Rent2buy won't take you on until you've had a financial assessment and in all fairness if they say look you can get a mortgage of 300K your not gonna go and pick a house for that... unless your foolish your going to pick something a little less just in case.

So even if your contracted house price drops you've already been cleared to get the mortgage for 300K so whether it decreases in value or not why do the banks care if they already approved a 300k mortgage!?

HollyCat

Lucky you if you're going to get salary increases over the next 3 years. Even if you do most of it is going to be eaten up by stealth taxes - the gov has to find €3.6bn this year alone - Enda may be promising no tax increases or welfare cuts but he's going to have to get the money from somewhere, us!
The financial assessment you do now is only a snapshot of your current circumstances - there's no guarantee that these will be the same in 3 years or that the banks lending criteria wont change.
Even if you have approval now for €300k the bank will only lend you a percentage of what they value the property at in 3 years time - so if its only worth €100k then the most they'll lend you is €80k - it doesn't matter what aproval you have.
R2B is a good idea but I would suggest that a) you get a guarantee from the seller that if prices drop that they will give you the benefit of the lower price when its time to close the sale and b) that if, through no fault of yours, you cant get a mortgage in 3 years that you be allowed to extend the agreement for up to a further 2 years to give you more time - you don't want to be kicked out in 3 years.

jenniem01

Thanks I take your 2 tips on board and plan on getting a water tight contract or at least as tight as it can be. But really would that be the case that a bank sees you can afford to pay a mortgage of 300k and the house has decreased that they'd only lend you 80k?

So your interest rate would be little or nothing in comparison to a 300k mortgage etc.? Wouldn't they prefer to rip you off and see you pay the ridiculous price?!
Or in that case if the same house has dropped from 300k to 100k in 24 months surely you could get a mortgage pretty handy with a full-time permanent job and a record of paying 1200 a month already!?

MissFlitworth

jenniem01 wrote: »

But really would that be the case that a bank sees you can afford to pay a mortgage of 300k and the house has decreased that they'd only lend you 80k?

Yes - your house is the collateral for the loan so they're only going to lend you as much as the house is worth to make the loan as low risk as possible for them. In mad times you could get a mortgage & factor in a bit extra for kitchens/holidays/mad money. If they lent you 300k for an 80k house and you defaulted on the mortgage they couldn't hope to recoup very much of their outlay at all

jenniem01

Okay well being realisitic, judging by what the houses are dropping by now a house will lose maybe 5-6% in 24 months?! Which is the length I want to rent for.

Certainly not go from 300k to 100k in the space of 2 years!
Will a bank still give me the mortgage if I have 28,800 saved up in rent and the house was 300k now dropped to 285k...?

Say my circumstances havent changed my pay is the same or slightly higher and so is my partners?!
Does anyone actually know or will I just have to take the risk and wait and see?!

username123

jenniem01 wrote: »

Okay well being realisitic, judging by what the houses are dropping by now a house will lose maybe 5-6% in 24 months?! Which is the length I want to rent for.

Certainly not go from 300k to 100k in the space of 2 years!
Will a bank still give me the mortgage if I have 28,800 saved up in rent and the house was 300k now dropped to 285k...?

Say my circumstances havent changed my pay is the same or slightly higher and so is my partners?!
Does anyone actually know or will I just have to take the risk and wait and see?!

I dont think you understand the points being made re the bank lending you less if the property is worth less, the point is, the bank will lend based on what THEY value the property at, the will not lend you MORE because the property is their security - so if you decide to default, its the property they will sell to get the money back, makes no sense for them to lend 300k on a property worth 80k - that would be known as a negative equity mortgage.

With rent to buy - you may be locked into the original contract price.

5-6% in 24 months - you are joking right? Do you realise that prices have dropped up to 60%, in some cases more, since 2007? An apartment next to me sold for 400k in late 2007, one above me sold for 145k two months ago. What on earth makes you think that they are only going to drop by 5 or 6% in the next 24 months?

There is a very high chance that your pay will be lower in 2 years time, even if you both still have jobs, chewed up by stealth taxes and levies.

No one can tell you the future with house prices, or banks ability or inclination to lend.

i23098

6 years latter the original post, I decide to revive it Anyone knows if there are any buy to let schemes nowadays?

With the new lending rules and the crazy rental market, it's impossible to rent and save money for the deposit... I'd say now is the best time for a rent to buy scheme, something like 4 or 5 years rent with the option to buy (and turn those rents in deposit). If in the end, people decide rental is a better deal, noone force them to buy...

athtrasna

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