Mortgage - how did you decide how much to borrow?

3DataModem

10-12% was the norm only 20 years ago.

I would expect that 8%-10% is the max we will see in the Eurozone for the forseeable future, probably 6-8% in the next 5 years.

I anticipate a new type of 'underpayment' strategy for banks and borrowers to copy with this in the short / medium term.

E.g person currently pays 1000pm. Can afford 1300pm.

Interest rate pushes cost to 1800pm. Person pays 1300pm and 500pm added to capital each month, until the person can afford more and / or inflation reduces effective cost and / or interest rates drop.

seamus

mal1 wrote: »

I apologise for my ignorance, but is 16.5% probable?

No, as said it won't happen as long as Ireland stays in the Eurozone. Being a small country in a big pond brings both curses and benefits. Something which can be both a curse and a benefit is the stability in interest rates brought about by being tied to big economies like Germany and France.

Typical rates in the Eurozone will hover around the 5%-7% mark (ECB Rate of 3% - 5%).

I wouldn't worry too much about double digit rates if you currently have a mortgage. If the interest rate hit 12%, you wouldn't be the only person in trouble. The vast majority of mortgage holders would probably default, even politicians would have difficulty keeping up with repayments. It's a scenario where you'd have to just put your hands up and say, "I don't care anymore, take the house".

population

I will freely admit that when I bought my house in 2003 I was 24 and did not really know an awful lot about interest rates and finance in general. I was a shady bankers dream come true in terms of selling over he odds mortgages but I warn you all in advance that I have a shock horror responsible lending bank story to tell. So gather around for this is a rare un'.

I did not want to pay over 200k for a place because I just had it in my head that if either myself or the wife lost our jobs or one of us got sick or we decided to have kids etc, that this amount plus interest would be too difficult to pay back.

I wanted to live in Dublin, as I am from Dublin, but simply could not afford it. Those are the breaks so I decided to look around Drogheda or East Meath as it is an area I was always fond of and was commutable to work without too much hassle. Applied for a mortgage with IIB as they were recommended by a broker I knew. Also applied to Ulster Bank as they were my bank. IIB agreed to the loan amount (177k} but made us jump through hoops to get it. Stress tested us to the 9s because I had recently set up as self employed and went through her salary with a fine tooth comb. Was about ready to agree all with IIB when UB came back to me saying things like "you know we can give you more and you can live where you want" etc. I just thought it all sounded too good to be true so pulled back from them and signed with IIB.

Now I am not saying IIB have been a picnic to deal with throughout our term together thus far but I feel they behaved responsibly at the outset and I will always count my blessings on that. Mods feel free to remove names of institutions if you feel it appropriate.

Duckjob

population wrote: »

I will freely admit that when I bought my house in 2003 I was 24 and did not really know an awful lot about interest rates and finance in general. I was a shady bankers dream come true in terms of selling over he odds mortgages but I warn you all in advance that I have a shock horror responsible lending bank story to tell. So gather around for this is a rare un'.

I did not want to pay over 200k for a place because I just had it in my head that if either myself or the wife lost our jobs or one of us got sick or we decided to have kids etc, that this amount plus interest would be too difficult to pay back.

I wanted to live in Dublin, as I am from Dublin, but simply could not afford it. Those are the breaks so I decided to look around Drogheda or East Meath as it is an area I was always fond of and was commutable to work without too much hassle. Applied for a mortgage with IIB as they were recommended by a broker I knew. Also applied to Ulster Bank as they were my bank. IIB agreed to the loan amount (177k} but made us jump through hoops to get it. Stress tested us to the 9s because I had recently set up as self employed and went through her salary with a fine tooth comb. Was about ready to agree all with IIB when UB came back to me saying things like "you know we can give you more and you can live where you want" etc. I just thought it all sounded too good to be true so pulled back from them and signed with IIB.

Now I am not saying IIB have been a picnic to deal with throughout our term together thus far but I feel they behaved responsibly at the outset and I will always count my blessings on that. Mods feel free to remove names of institutions if you feel it appropriate.

Fair play.

If more people had bought like you with a modicum of restraint and common sense, the country wouldn't be half the state it's in now.

population

Cheers Duckjob but I must admit that my head was turned by the second offer and I consider myself lucky above all else that I went with my gut in the end.

Fozzie Bear

noxqs wrote: »

My hobby is reading this very forum, from posts in 2005 and 2006.

Heres a few good ones:

110% to 120% mortgage article in the news:

http://www.boards.ie/vbulletin/showthread.php?t=283118

Quote from a poster:

Yeah....

Jesus Christ its madness reading back through that thread. There are some posters from then who don't just have egg on their faces, they have entire bloody chickens!