We want to buy

LisaPol

Hi all, we have decided wed now like to buy. We know nothing. No idea if wed even be approved. Partner is in a permanent job, on 32k a year. Been there 5 years. Im almost two years self employed, tax exempt childminder on 15k. We have 13k deposit, and parents willing to lend another 5, hopefully have 20ish so. Have all our furniture. Renting four years, 1200 a month goes into rent account. 2 year old and another on the way. If we were to approach a bank, would partner be approved on his own, and how much are banks lending? Mortgages.ie calculater says hes get 156, would he though? Is two years long enough to be self employed at the moment, ive heard some places want three years accounts? What else do we need to know or take into account, pretty clueless!

Moonbeam

I think 156k is super optimistic.
Both of you are on low wages and they might not be able to take yours in to account.
I think you need to talk to the banks and see if they will give you a mortgage at all.

LisaPol

Ok, thanks. Frustrating since we would be better off with a mortgage of that size than paying the rent we pay.

RobAMerc

the way the housing market is going here and the economy, you may be much better off renting and keeping your flexibility rather than tying yourself to a depreciating asset. Also house ownership is much more expensive than renting .. relax and focus on having a good quality family life

kleefarr

See if you can negotiate a discount on the rent. There should be some flexibility, hopefully.

borderlinemeath

RobAMerc wrote: »

the way the housing market is going here and the economy, you may be much better off renting and keeping your flexibility rather than tying yourself to a depreciating asset. Also house ownership is much more expensive than renting .. relax and focus on having a good quality family life

This attitude annoys the hell out of me. Even if the OP and partner were on €100k+ per annum there would still be a poster who mentions 'depreciating assets' and getting 'tied down'.

Take into account that the OP is in a long term relationship with a child and another on the way and is looking for a home rather than an asset. Renting is fine for the young free and uncommitted that don't want to put down roots, but add a few kids into the mix and you start looking at areas for schools and somewhere that you can call your own without the bother of a landlord and the uncertainty that they may sell or get repossessed or worse still be a crappy landlord that deducts from a deposit for a stain on a carpet and refuses to get basics fixed.

OP it's a tall order to get a mortgage at the minute even with a decent income, but there's no harm in trying. Do your figures, don't overstretch yourself, look at how you'll pay back a mortgage with interest increases as they are currently quite low. Don't get suckered into a shoebox in a better area because it will always be a shoebox and the area may change. Stretch your boundaries and look for the biggest space possible for your buck because with an expanding family space matters a lot. Don't look for something to start with - if you seriously want to buy something it has to be long term, not just part of a plan. Just ask people who are stuck in little apartments that they bought as 'starter homes' and are stuck due to negative equity. Times have changed and it's a buyers market, but only because the banks lending habits have been reigned in.

StillWaters

RobAMerc wrote: »

Also house ownership is much more expensive than renting .. relax and focus on having a good quality family life

Thats not necessaily true.
If the OP gets a mortgage for €156,000, her repayments would be currently less than her rental payments. Even were interest rates to rise to 7%, based on a conservative 20 year mortgage, her repayments would only equal her current rental payments.

Were interest rates to average 7% over the course of the mortgage, the OP would pay about 300K over 20 years, the renter, allowing for a modest 2% annual increase in rent, would pay about €370K, even at an historically unheard of 1%, he still pays more than the OP.


Yes, there are costs associated with home ownership, property charge, buildings insurance, maintenance, but imo, this is compensated for by the fact that OP would have an asset at the end of 20 years, and the only ongoing costs would be these. Whereas the renter will continue to pay the adjusted €1,200 for the following 20+ years.

This is leaving out all the soft data, the comfort and security of your own house, not putting up with bad LLs (just have a read of some of the threads on here, you want to be dealing with that cr*p when you are 60?), security of a home for your children should something happen to you etc

When the maths work out that home ownership costs less or equal to renting (and it hasn't done so for quite a few years in Ireland), then for those whom home ownership suits, it's time to think about it.

Theboinkmaster

StillWaters wrote: »

Thats not necessaily true.
If the OP gets a mortgage for €156,000, her repayments would be currently less than her rental payments. Even were interest rates to rise to 7%, based on a conservative 20 year mortgage, her repayments would only equal her current rental payments.

Were interest rates to average 7% over the course of the mortgage, the OP would pay about 300K over 20 years, the renter, allowing for a modest 2% annual increase in rent, would pay about €370K, even at an historically unheard of 1%, he still pays more than the OP.


Yes, there are costs associated with home ownership, property charge, buildings insurance, maintenance, but imo, this is compensated for by the fact that OP would have an asset at the end of 20 years, and the only ongoing costs would be these. Whereas the renter will continue to pay the adjusted €1,200 for the following 20+ years.

This is leaving out all the soft data, the comfort and security of your own house, not putting up with bad LLs (just have a read of some of the threads on here, you want to be dealing with that cr*p when you are 60?), security of a home for your children should something happen to you etc

When the maths work out that home ownership costs less or equal to renting (and it hasn't done so for quite a few years in Ireland), then for those whom home ownership suits, it's time to think about it.

You've actually left out the largest immediate cost of ownership facing someone thinking of buying in today's market - depreciation.

RobAMerc

borderlinemeath wrote: »

This attitude annoys the hell out of me. Even if the OP and partner were on €100k+ per annum there would still be a poster who mentions 'depreciating assets' and getting 'tied down'.

Take into account that the OP is in a long term relationship with a child and another on the way and is looking for a home rather than an asset. Renting is fine for the young free and uncommitted that don't want to put down roots, but add a few kids into the mix and you start looking at areas for schools and somewhere that you can call your own without the bother of a landlord and the uncertainty that they may sell or get repossessed or worse still be a crappy landlord that deducts from a deposit for a stain on a carpet and refuses to get basics fixed.

This is very short sighted. If the OP buy's a house today that they could buy in a year or two for 50k less, thats 100k less they will have to pay the bank over the life of that mortgage. Does that sound nuts ? Or how bout when they are still paying that back at 70 rather than having paid the 100k less off already ?
Secondly, I am in a long term relationship with a kid and renting. My relationship is under no pressure because we have no roots and my child doesn't feel any less loved or secure in his home just because we don't own it. Do kids of rented houses not get into schools ? A nonsense argument, people have rented for years, the OP wont be charting new waters !
Thirdly - getting unnecessarily tied down to a property at a time when being as flexible and mobile as possible might better help you through these tough times is.

RobAMerc

StillWaters wrote: »

Thats not necessaily true.

Long term there are benefits to buying over renting of course. I didn't mean to suggest to the OP to never buy ( although re-reading my post it may look like that ). Putting themselves through the stress, both financial and mental of buying in the current climate is not imo a good idea.
I've owned 3 houses so far, and I can tell you home ownership is a lot more expensive than the monthly mortgage outlay, renting much less so. As for the deposit going because of a stain, try discover a leaking roof or even have your washing machine and fridge pack up in the same year - you'll wish it was only a months rent at stake.

StillWaters

Theboinkmaster wrote: »

You've actually left out the largest immediate cost of ownership facing someone thinking of buying in today's market - depreciation.

No I haven't. Even the most Bearish believe property prices have about 20% left to fall, and then to rise in line with inflation. The OP would STILL be better off than the renter were this to be the case.

borderlinemeath

RobAMerc wrote: »

This is very short sighted. If the OP buy's a house today that they could buy in a year or two for 50k less, thats 100k less they will have to pay the bank over the life of that mortgage. Does that sound nuts ? Or how bout when they are still paying that back at 70 rather than having paid the 100k less off already ?

Yeah it sure does sound nuts.:rolleyes: The OP is looking to get a mortgage for €156K MAX. So you're predicting now that if they buy a house in the region of €170k that next years depreciation on that particular house is going to be in the region of 30%??:D Even the most pessimistic of economists would disagree with you there.

Secondly, I am in a long term relationship with a kid and renting. My relationship is under no pressure because we have no roots and my child doesn't feel any less loved or secure in his home just because we don't own it. Do kids of rented houses not get into schools ? A nonsense argument, people have rented for years, the OP wont be charting new waters !
Thirdly - getting unnecessarily tied down to a property at a time when being as flexible and mobile as possible might better help you through these tough times is.

Not nonsense at all. And I never said a child would feel less loved:D, I don't know how you derived that from my post. Hilarious what you seem to be able to read into it.

I've just helped my sister move house after renting the same place for 8 years because the landlord is selling up. She's lost about a stone in weight with the worry of moving with a kid (and a dog) and finding somewhere suitable in the vicinity of school that my niece can easily get home by herself when she needs to. It's far from plain sailing. Moving home is one of the most stressful things you can ever do, so putting yourself in a position that is uncertain unless you can get a long term ie 10-15 year lease is why families want to buy homes. Not assets, so give up beating that drum as the OP wants to buy a home.

RobAMerc

borderlinemeath wrote: »

Yeah it sure does sound nuts.:rolleyes: The OP is looking to get a mortgage for €156K MAX. So you're predicting now that if they buy a house in the region of €170k that next years depreciation on that particular house is going to be in the region of 30%??:D Even the most pessimistic of economists would disagree with you there.




Not nonsense at all. And I never said a child would feel less loved:D, I don't know how you derived that from my post. Hilarious what you seem to be able to read into it.

I've just helped my sister move house after renting the same place for 8 years because the landlord is selling up. She's lost about a stone in weight with the worry of moving with a kid (and a dog) and finding somewhere suitable in the vicinity of school that my niece can easily get home by herself when she needs to. It's far from plain sailing. Moving home is one of the most stressful things you can ever do, so putting yourself in a position that is uncertain unless you can get a long term ie 10-15 year lease is why families want to buy homes. Not assets, so give up beating that drum as the OP wants to buy a home.

No one knows how much houses will drop over the next couple of years - a 30% drop over 2 years might sound nuts now - but a 65% drop over 5 years sounded inconceivable 5 years ago ! And we are no where near the end of the economic sh1t storm we find ourselves in. We also have NAMA propping up prices by hoarding thousands of properties that if allowed onto the market will cause major price drops, banks haven't started repossessions ( another factor in house price drops to come ), rent supplement is way above a sustainable level - also going to hit values when they drop it, not to mention the property taxes to come ( people won't be so keen to value their gaffs at 2006 levels when they are paying tax on it ) and lastly the property price database so we can see what houses are really selling for.
With all this you claim taking out a mortgage and buying a house is less stressful than the chance a landlord might want them to move on at some point ? btw - the OP never mentioned it as a factor so they maybe happy where they are and feel secure.
Judging by your aggressive tone and head in the sand attitude, I think you may be in an unhappy position yourself and are encouraging the OP to join you !

borderlinemeath

RobAMerc wrote: »

No one knows how much houses will drop over the next couple of years - a 30% drop over 2 years might sound nuts now - but a 65% drop over 5 years sounded inconceivable 5 years ago ! And we are no where near the end of the economic sh1t storm we find ourselves in. We also have NAMA propping up prices by hoarding thousands of properties that if allowed onto the market will cause major price drops, banks haven't started repossessions ( another factor in house price drops to come ), rent supplement is way above a sustainable level - also going to hit values when they drop it, not to mention the property taxes to come ( people won't be so keen to value their gaffs at 2006 levels when they are paying tax on it ) and lastly the property price database so we can see what houses are really selling for.
With all this you claim taking out a mortgage and buying a house is less stressful than the chance a landlord might want them to move on at some point ? btw - the OP never mentioned it as a factor so they maybe happy where they are and feel secure.
Judging by your aggressive tone and head in the sand attitude, I think you may be in an unhappy position yourself and are encouraging the OP to join you !

^^:D:D

Aggressive tone? Because I disagree with you? You make a blanket assumption on where you think property prices, when viewed as assets may be going and because I call you on it I'm aggressive:rolleyes:

You have no idea of my position. So making assumptions of it is laughable. I'm very happy with my living arrangements and yes I own a property.

The OP doesn't need encouragement, just have a look at the thread title;).

daltonmd

borderlinemeath wrote: »

Take into account that the OP is in a long term relationship with a child and another on the way and is looking for a home rather than an asset.

With respect - I kinda hate this attitude. Plenty of people who rent are in long term relationships, plenty have children. Contemplating home ownership is a huge risk now and people are entitled to give theri opinion, if that opinion doesn't sit well with you then fine - but this old fashioned attitude to renting is tiring now.

borderlinemeath wrote: »

Renting is fine for the young free and uncommitted that don't want to put down roots, but add a few kids into the mix and you start looking at areas for schools and somewhere that you can call your own without the bother of a landlord and the uncertainty that they may sell or get repossessed or worse still be a crappy landlord that deducts from a deposit for a stain on a carpet and refuses to get basics fixed.

See above - renting is a perfectly acceptable way to live and the best thing that ever happened to the rental market in this country was the house price crash. Just because these things bother YOU doesn't mean that every renter has your priorities.

Most people would eventually like to own their own homes - but not at any cost. It isn't only about the monthly cost of owning a home, not in this climate - it's whether you can pay for it in 5 years - can you tell us what the property charge will be? Can you tell us what interest rates will be? Can you tell us if the OP's husband will have a job?

Personally I'd rather be looking at my money than looking for it.

The upshot of renting is that you can scale down, move to other areas to get a job - it is, as someone pointed out, flexible.
When you have a mortgage you are not, it's that simple. Until we get the database of property prices and until the economy is in better shape then buying rather than renting because of the difference in monthly payments is really a bad idea - in my opinion of course.

borderlinemeath

daltonmd wrote: »

With respect - I kinda hate this attitude. Plenty of people who rent are in long term relationships, plenty have children. Contemplating home ownership is a huge risk now and people are entitled to give theri opinion, if that opinion doesn't sit well with you then fine - but this old fashioned attitude to renting is tiring now.




See above - renting is a perfectly acceptable way to live and the best thing that ever happened to the rental market in this country was the house price crash. Just because these things bother YOU doesn't mean that every renter has your priorities.

Most people would eventually like to own their own homes - but not at any cost. It isn't only about the monthly cost of owning a home, not in this climate - it's whether you can pay for it in 5 years - can you tell us what the property charge will be? Can you tell us what interest rates will be? Can you tell us if the OP's husband will have a job?

Personally I'd rather be looking at my money than looking for it.

The upshot of renting is that you can scale down, move to other areas to get a job - it is, as someone pointed out, flexible.
When you have a mortgage you are not, it's that simple. Until we get the database of property prices and until the economy is in better shape then buying rather than renting because of the difference in monthly payments is really a bad idea - in my opinion of course.

Well I see it from both sides. Members of my family rent and the uncertainty is very unsettling for them. Other members of my family own their own homes and are perfectly happy in their situations. Some people don't want what you perceive as flexibility. Some people call it uncertainty.

If you look back to my first post I told the OP to do her figures and work out what repayments would be with higher interest rates. She has already stated she wanted to buy and I doubt she's had her head in the sand for the past 5 years.

Yes prices may decrease but to some people that is the price you pay for home ownership. In the 80s interest rates were sky high so while house prices didn't fall, the overall cost of home ownership increased but this didn't put people off buying homes. Not assets.

daltonmd

borderlinemeath wrote: »

Well I see it from both sides. Members of my family rent and the uncertainty is very unsettling for them. Other members of my family own their own homes and are perfectly happy in their situations. Some people don't want what you perceive as flexibility. Some people call it uncertainty.

The homeowners have no choice as they cannot sell, unlike the renters, who may feel unsettled but are still renting despite it.

You think you see it from both sides because for whatever reasons your family members have, this is where they are - but the reality, not perception, is that the homeowner can't get out of his home and the renter isn't in NE - they may feel a little rattled - but that's it.

It is a fact, not a perception, that renting is flexible. It isn't about the old renting V buying arguments anymore - I suppose that's my point. It is simply about whether people will be able to afford the homes that they buy today in 5 years time. How many people who bought in 2007 regret it?

At the moment interest rates are as low as they are going to be for a very long time - in a "normal healthy poperty market" interest rates should be 6/7% - now we have zombie banks, broken banks - in 5 years time god only knows what we'll be looking at.

borderlinemeath wrote: »

In the 80s interest rates were sky high so while house prices didn't fall, the overall cost of home ownership increased but this didn't put people off buying homes. Not assets.

We didn't come out of the mother of all booms. In the 80's we had falling interest rates - now they're rising. In the 80's we had falling unemployment, it's now at best static, we had rising disposable incomes, now they're falling, we had falling tax rates, now they're rising - house prices were increasing and the cost of homeownership was falling - it's for this very reason that people need to be careful - and careful about comparing it to a time that held the exact opposite than what the next 5 years hold for this country.

Edit to add - Interest rates have not started rising but they have to.

Monty Burnz

StillWaters wrote: »

No I haven't. Even the most Bearish believe property prices have about 20% left to fall, and then to rise in line with inflation. The OP would STILL be better off than the renter were this to be the case.

The most bearish believe that the price of property will fall to zero, and we'll be living in the mountains with shot-guns in a post-hydrocarbon, famine-stricken apocalypse.

There are plenty of good arguments around that suggest that prices could easily halve again from here. I think prices probably will fall another 20-30% from today's levels, but then again I'm an optimist - back in 2006 I thought prices would only fall about 30% too.

iguana

borderlinemeath wrote: »

Take into account that the OP is in a long term relationship with a child and another on the way and is looking for a home rather than an asset. Renting is fine for the young free and uncommitted that don't want to put down roots, but add a few kids into the mix and you start looking at areas for schools and somewhere that you can call your own without the bother of a landlord and the uncertainty that they may sell or get repossessed or worse still be a crappy landlord that deducts from a deposit for a stain on a carpet and refuses to get basics fixed.

Don't be ridiculous. I'm married with dogs and a baby due later in the year and there is no way on earth I'd buy now as it would be a horrible financial decision. Part of my duty as a parent is to ensure the best life for my child and taking on a large debt for an item worth about a third of what I'd be paying would only mean that in later years I have less for my child. Renting with children might not be ideal but at the end of the day it makes almost no difference whatsoever to the baby. What will make a difference is having an extremely comfortable financial position in a few years time, where I don't have to worry about money and can afford to pay for the education I want my child to have as I'm not pissing that money away each month on an overpriced mortgage.

Zamboni

borderlinemeath wrote: »

This attitude annoys the hell out of me. Even if the OP and partner were on €100k+ per annum there would still be a poster who mentions 'depreciating assets' and getting 'tied down'.

Take into account that the OP is in a long term relationship with a child and another on the way and is looking for a home rather than an asset. Renting is fine for the young free and uncommitted that don't want to put down roots, but add a few kids into the mix and you start looking at areas for schools and somewhere that you can call your own without the bother of a landlord and the uncertainty that they may sell or get repossessed or worse still be a crappy landlord that deducts from a deposit for a stain on a carpet and refuses to get basics fixed.

Children that grow up in rented accomodation will have a far better appreciation that mobility is a valuable commodity in context of a global labour market.
They will realise that they should seek opportunity rather than wait and expect opportunity to come to them.
They will learn how to change social circles and deal with loss and become adaptable.
They will be exposed to the practice of negotiation and managing business relationships with business partners.
Most importantly, they will learn that permanence is not a realistic concept or expectation.

Francie Barrett

LisaPol wrote: »

Hi all, we have decided wed now like to buy. We know nothing. No idea if wed even be approved. Partner is in a permanent job, on 32k a year. Been there 5 years. Im almost two years self employed, tax exempt childminder on 15k. We have 13k deposit, and parents willing to lend another 5, hopefully have 20ish so. Have all our furniture. Renting four years, 1200 a month goes into rent account. 2 year old and another on the way. If we were to approach a bank, would partner be approved on his own, and how much are banks lending? Mortgages.ie calculater says hes get 156, would he though? Is two years long enough to be self employed at the moment, ive heard some places want three years accounts? What else do we need to know or take into account, pretty clueless!

I have recently bought a house, I used AIB to source the mortgage. Personally, I wouldn't bother with a broker, so few institutions are giving a decent deal, that it's quickest to just schedule appointments yourself. AIB, Bank of Ireland, Ulster Bank and NIB were the only ones who really seem to be interested. I wouldn't pay any attention to that online calculator either, those figures are made up.

First thing, you will need to make sure than you have a 10% deposit at very minimum (some banks look for a savings history, in my case, AIB just wanted a statement with the account balance). Second thing, then you need to make sure you have all the documentation intact and that you have no black marks on your credit record. Have you gotten your credit report from the ICB (www.icb.ie), I suggest you do so. Not sure what the self-employed route is like, but I never heard of anyone needing as many as 3 years of account, I could be wrong though.

Francie Barrett

iguana wrote: »

there is no way on earth I'd buy now as it would be a horrible financial decision.

It's all relative.

I just bought my house at over 60% off peak with a 25 year mortgage that's around 3 times my salary. My repayments are less than the rent and I am actually going to be paying off the house, rather handing it over to a landlord.

Francie Barrett

Zamboni wrote: »

Children that grow up in rented accomodation will have a far better appreciation that mobility is a valuable commodity in context of a global labour market.

I can only speak for myself, but I certainly didn't think of that as a kid.

daltonmd

Francie Barrett wrote: »

It's all relative.

I just bought my house at over 60% off peak with a 25 year mortgage that's around 3 times my salary. My repayments are less than the rent and I am actually going to be paying off the house, rather handing it over to a landlord.

Can I ask what interest rate you got and for how long? Because your mortgage (Excluding property tax, water charges, maintainance, interest) is lower than your rent now - but what about when your fixed rate is finished?

LisaPol

Thanks for the replies everyone, its certainly given us lots to think about anyway :-)

borderlinemeath

Fair enough. All you people who rent and love the freedom and flexibility of it all.

Look ahead to the future if you may. You're not buying a property now, hell no. Save your money, hold off, maybe 5 years, maybe 10 years. When you go to purchase your property you will take out a mortgage, maybe 20, maybe 25, maybe even a 30 year mortgage. Maybe you will never buy and will continue to rent for as long as you can.

Now, here's my question. When you're of a pensionable age, ie 60/65, maybe 70 where will you live if you haven't bought a home? Do you expect the state to accomodate you? Do you expect your children to have you live with them as they tend to do in mainland Europe?

My mortgage will be paid off by the time I'm 50 as will my OHs properties. That's not all that far away and we will have the certainty that we don't have to rely on family or the state to house us.

borderlinemeath

Zamboni wrote: »

Children that grow up in rented accomodation will have a far better appreciation that mobility is a valuable commodity in context of a global labour market.
They will realise that they should seek opportunity rather than wait and expect opportunity to come to them.
They will learn how to change social circles and deal with loss and become adaptable.
They will be exposed to the practice of negotiation and managing business relationships with business partners.
Most importantly, they will learn that permanence is not a realistic concept or expectation.

They're kids ffs. They will not be behaving like you suggest.

All they'll care about is whether they get they're place on the local football team or if they're living close by to their friends.

The kids you describe are like those child prodigy types that make it to the final of countdown age 10.:D

Francie Barrett

daltonmd wrote: »

Can I ask what interest rate you got and for how long? Because your mortgage (Excluding property tax, water charges, maintainance, interest) is lower than your rent now - but what about when your fixed rate is finished?

I am on a variable rate of 3.04%. I don't want to give my exact details, but my mortgage is nearly 3/4's what my rent was. By using the money I have saved, I think I can be mortgage free in 16 years.

Bigcheeze

Francie Barrett wrote: »

I can only speak for myself, but I certainly didn't think of that as a kid.

Traveller kids have a far better appreciation that mobility is a valuable commodity in context of a global labour market.

Francie Barrett

Bigcheeze wrote: »

Traveller kids have a far better appreciation that mobility is a valuable commodity in context of a global labour market.

Busted :P

iguana

borderlinemeath wrote: »

Fair enough. All you people who rent and love the freedom and flexibility of it all.

Look ahead to the future if you may. You're not buying a property now, hell no. Save your money, hold off, maybe 5 years, maybe 10 years. When you go to purchase your property you will take out a mortgage, maybe 20, maybe 25, maybe even a 30 year mortgage. Maybe you will never buy and will continue to rent for as long as you can.

Now, here's my question. When you're of a pensionable age, ie 60/65, maybe 70 where will you live if you haven't bought a home? Do you expect the state to accomodate you? Do you expect your children to have you live with them as they tend to do in mainland Europe?

My mortgage will be paid off by the time I'm 50 as will my OHs properties. That's not all that far away and we will have the certainty that we don't have to rely on family or the state to house us.

Seriously? You realise that by buying a cheaper house you have a lower mortgage not a bigger one right? It's pretty basic maths. Personally I see myself buying for cash in 2-5 years.