Am I mad to buy in 2012

Man007

Hi

Me and my partner just got approved for a €400k mortgage.

I probably no the answer to this but am just curious to hear people's thoughts.

Am I MAD to buy a house this year.

We have started looking and there seems to be good value in our opinion we can now get a decent size 4 bed in a nice area which we would never be able to afford before.

I know prices are likely to fall by another 10-15% but if we rent for another year that will be 15k wasted anyway and don't want to put my life on hold anymore just because of all the negativity that's going on.

Is there anyone else on here also taking the plunge and buying this year.

Cheers

Idbatterim

what kind of property and in what area?

jobless

if you expect it to fall by 10-15% and you say 15k rent is money wasted.... what is the 40-50k (+ future interest on it) your losing in a year then?..... honestly do the basic maths before coming out with the rent is dead money.... its hardly dead money if it leaves you in a better position this time next year...

maxpowers

if you factor in Mortgage Interest Relief + savings on not renting you might be in a good position if you found the house of your dreams. It depends if the property is fairly priced or not. People never seem to put a economic value on owning your own house as opposed to renting - which i think can be alot.

mari2222

if your present joint income is circa 200K , no, you are not mad to borrow 400K.

alphanine

Man007 wrote: »

Hi

Me and my partner just got approved for a €400k mortgage.

I probably no the answer to this but am just curious to hear people's thoughts.

Am I MAD to buy a house this year.

We have started looking and there seems to be good value in our opinion we can now get a decent size 4 bed in a nice area which we would never be able to afford before.

I know prices are likely to fall by another 10-15% but if we rent for another year that will be 15k wasted anyway and don't want to put my life on hold anymore just because of all the negativity that's going on.

Is there anyone else on here also taking the plunge and buying this year.

Cheers

Do not be in an rush to but property no matter what your emotions/society may tell you. The thing to bear in mind in this case is that the property recovery will not be V-shaped so there will not be a situation where you will miss the boat. Stay renting and save cash and have an even better deposit when the time comes. Looks like 2013 or later.

3DataModem

If you find a house you love in a place you love at a price you can afford, fine.

Maybe take this opportunity to look at how much you could afford on one income, perhaps one of you may like to study or raise a family some time... will you still be able to afford 400k then? What if interest rates are - say - 8%?

Good luck.

Marcanthony

your in a great position. its a buyers market and you have the credit.haggle if you find the right property.go 25% under the asking price of any property your intrested in.

to be honest i think prices have bottomed out and if property continues to drop. it cant be by much more.

Also I have seen some properties for sale that cost less than they would to build. In my opinion property prices cant really drop below the rebuild value including the price of the land.

or can they?:eek:

Twiki

Marcanthony wrote: »

Also I have seen some properties for sale that cost less than they would to build. In my opinion property prices cant really drop below the rebuild value including the price of the land.

That isn't a reliable indicator - both building costs and site values are subject to the same downward pressures as the property market in general.

jobless

Marcanthony wrote: »

your in a great position. its a buyers market and you have the credit.haggle if you find the right property.go 25% under the asking price of any property your intrested in.

to be honest i think prices have bottomed out and if property continues to drop. it cant be by much more.

Also I have seen some properties for sale that cost less than they would to build. In my opinion property prices cant really drop below the rebuild value including the price of the land.

or can they?:eek:

of course they can..... property tax on the way, water charges tax increases and further tough budgets.... to say they have bottomed out is very very naive...

theg81der

How stable are your incomes? If your confident in your ability to repay I would buy right now. I think there is great value, I wish I was in your position.

testicle

Man007 wrote: »

Me and my partner just got approved for a €400k mortgage.

What kind of approval?

the groutch

400k approval? you're not Pat Kenny are you?

seriously though, nobody can tell advise you properly without knowing your circumstances, but there are two things I'd advise.

1. do a stress test for worst case scenario (eg. one of you loses job and interest rate hits 10%)

2. don't feel the necessity to borrow the entire 400k.

BailMeOut

Is this assuming a 20% down payment, i.e €80k so you are really looking at a home close to half million.

No question you will buy a serious home for that but most likely an even more serious one in 12 months time.

Man007

Sorry just to clarify its a 92% mortgage from aib so the loan amount is €365k and with deposit that brings us to €400k

We are hoping to get a house for €330-€350 in the templogue area

I could really live with losing 10% in the short term for the sake of owning my own house it's not as if it's an investment we will be looking to get something that we are happy to stay in.

Once houses don't go down another 40% which I doubt or maybe I'm being naive but then again who knows the best we can do is guess what's gonna happen.

asomeday

Seriously consider how you would cope if either of you lost your job & had a family to support!

I understand you may be getting a house for €350ish that was priced much much higher a few years ago but you must consider what it's actually worth-& is it worth being mortgaged up to your eyeballs for?

Myself and partner have ability I borrow similar amount for mortgage but have decided to be hugely conservative instead....I agree what you mean about renting but our mortgage repayments would actually be cheaper than our rent!

Try to work out if you really NEED it OR if you just really WANT it

Best of luck

testicle

testicle wrote: »

What kind of approval?

Was it the fella in the branch that gave you this approval, or head office after you submitted reams of paperwork?

Man007

testicle wrote: »

testicle wrote: »

What kind of approval?

Was it the fella in the branch that gave you this approval, or head office after you submitted reams of paperwork?

Head office after we submitted

Bank Statements
Salary Cert
P60
Savings Statements
Loan and Cc

Came back to us after a week or so

Spiritofthekop

Marcanthony wrote: »

your in a great position. its a buyers market and you have the credit.haggle if you find the right property.go 25% under the asking price of any property your intrested in.

to be honest i think prices have bottomed out and if property continues to drop. it cant be by much more.

Also I have seen some properties for sale that cost less than they would to build. In my opinion property prices cant really drop below the rebuild value including the price of the land.

or can they?:eek:

When you own a couple of houses like you do mate... I'm sure the advice of "its already bottomed out" is wishful thinking on your behalf.

Also people looking to buy obviously think its great that property will hopefully crash down to pre bubble prices (i.e another 20 +%) plus its also a good thing for the country too as a whole that this happens.

The signs are that the former are more likely to happen.

BulliteShot

It's nice to see people are still getting mortgages.

If you want a house, buy it. Yes, house prices will probably fall again. With this theory though, you will be able to buy another house cheaper too.

Unless you can't keep up your mortgage payment, there isn't really a problem.

MagicMarker

Man007 wrote: »

I could really live with losing 10% in the short term for the sake of owning my own house

You can live with losing 35k for the sake of owning your own house?

Err, why?

Zamboni

MagicMarker wrote: »

You can live with losing 35k for the sake of owning your own house?

Err, why?

He hasn't mentioned his earnings.
To be that flippant with 35K he must be on well over 6 figures...

syklops

the groutch wrote: »

400k approval? you're not Pat Kenny are you?

seriously though, nobody can tell advise you properly without knowing your circumstances, but there are two things I'd advise.

1. do a stress test for worst case scenario (eg. one of you loses job and interest rate hits 10%)

2. don't feel the necessity to borrow the entire 400k.

Worst case scenario isnt one of them losing their job. Worst case scenario is both. Happened to me and my partner and is happening to others aswell.

solovely

MagicMarker wrote: »

You can live with losing 35k for the sake of owning your own house?

Err, why?

Because, believe it or not, happiness to some people means more than saving a notional amount, which in reality would never have been saved anyway, and instead moving on with life, focusing on functional and emotional needs rather than thinking of life in purely financial terms.

For some people, happiness is about moving forward in life, and not being stuck in an uncertain position determined by doom and gloom, it can be about having a permanent home for their kids, it can be about Sunday afternoons in Ikea and Woodies, about painting your own front door, getting to know your neighbours, becoming involved in a community, being part of something bigger and more real than numbers on a spreadsheet!

Once they are buying for emotional and practical reasons rather than purely financial ones (which it seems they are), in an area that's already developed and not in decline (which Templeogue is), are secure in their jobs, have done every stress test possible, then why the hell not?! Go for it!

MagicMarker

solovely wrote: »

Once they are buying for emotional and practical reasons rather than purely financial ones (which it seems they are), in an area that's already developed and not in decline (which Templeogue is), are secure in their jobs, have done every stress test possible, then why the hell not?! Go for it!

If you were offered a house now for 350k but told if you waited a year you could buy the same house for 315k, which option would you choose? I think that should answer your ''why the hell not?!'' question.

A person who chooses to buy for 'emotional' reasons tends to rationalise away paying 35k over the odds. It's not a smart move and would probably explain why so many are in arrears these days.

Slozer

I would wait. House prices have fallen 16.7% last year and they are going to continue to fall. Prices were in a bubble and like all previous bubbles they will overshoot to the downside and stay there for at least a year before they start coming back up. When this happens, houses will be cheap and you will have a window of opportunity to get a really good bargin. Based on all previous financial bubbles this has a very high probability of happening.

I know you are excited and eager to move into your own home and I know from experience that this can cloud your judgemnt where financial matters are concerned. If you are asking this question I would suggest you do a bit of research into house prices yourself, look at the indicators that drive house prices, for instance the level of employment and the condition of our economy. Do not listen to estate agents who are likely to tell you that house prices are bottomed out and now is a good time to buy.

I am not in the market for a house at the moment but when prices overshoot I will give it strong consideration.

Best of luck.

Man007

solovely wrote: »

MagicMarker wrote: »

You can live with losing 35k for the sake of owning your own house?

Err, why?

Because, believe it or not, happiness to some people means more than saving a notional amount, which in reality would never have been saved anyway, and instead moving on with life, focusing on functional and emotional needs rather than thinking of life in purely financial terms.

For some people, happiness is about moving forward in life, and not being stuck in an uncertain position determined by doom and gloom, it can be about having a permanent home for their kids, it can be about Sunday afternoons in Ikea and Woodies, about painting your own front door, getting to know your neighbours, becoming involved in a community, being part of something bigger and more real than numbers on a spreadsheet!

Once they are buying for emotional and practical reasons rather than purely financial ones (which it seems they are), in an area that's already developed and not in decline (which Templeogue is), are secure in their jobs, have done every stress test possible, then why the hell not?! Go for it!

Thanks solovely for once someone is talking something other than doom and gloom you've hit the nail on the head we would have liked to buy 2 years ago and feel we've put our life on hold enough as it is and want to settle down in a place that's our own which I put a value on.

Just for the record im not on anything near 6 figures just an average salary in my opinion with scope to increase but we are sensible.

We have paid 1300 rent for 3 years and managed to save 1k a month on top of this as well as pay 2 car loans a personal loan and cc which will all be fully paid sooner rather than later.

I'm not being flippant about 35k I just don't see it as a real loss if I sell the house in 20 years and it's worth less that's a real loss which I don't think will happen.

No one nos what will happen maybe next year there will be no 92% mortagage stamp duty might go up interest relief scrapped

I'm happy enough with our financials was just seeing what people thought re prices didn't expect so much response.

Hopefully things will work out ok

jobless

Man007 wrote: »

I'm not being flippant about 35k I just don't see it as a real loss if I sell the house in 20 years and it's worth less that's a real loss which I don't think will happen.

tell that to the people in Japan who bought 20 years ago and their properties are still worth a fraction of what they paid

Snakeblood

Man007 wrote: »

Thanks solovely for once someone is talking something other than doom and gloom you've hit the nail on the head we would have liked to buy 2 years ago and feel we've put our life on hold enough as it is and want to settle down in a place that's our own which I put a value on.

To be totally honest, if you wanted someone to agree with you, you should have asked someone to tell you you were doing the right thing, not ask people if they thought you were doing the right thing.

Zamboni

Man007 wrote: »

Just for the record im not on anything near 6 figures just an average salary in my opinion with scope to increase but we are sensible.

Shame on AIB for offering you a 92% of a 400k mortgage which is probably ten times your salary.
They have clearly learned nothing.

D3PO

OP I dont think anybody is mad to buy in 2012 once the reasons are right for it and there is a certain level of rational financial thinking behind it.

However I do think its mad for anybody to be stupid enough to apply for a joint mortgage in the middle of the biggest recession since the depression.

That is piss poor financial planning and the reason so many people are in the crapper right now. Your clearly overstretching yourselves financially and would be in the crapper if one of you lost your job or if interest rates rise from their historic lows.

are people mad to buy in 2012 - No
Are you mad to get a 350k joint mortgage on average salaries - Yes