i want a decent answer.

cursai

Could someone please give a good answer on this query I have.
I'll all set to purchase a house. Id like to hold on a bit.
My only concern is with the demise of mortgage interest relief this year on the 31st Dec.
If the end of MIR could possibly bring down the price of houses next year as first time buyers will have less to spendsith due to a higher monthly repayment. Will the loss of the MIR offset the drop in price. Id imagine they'll fall slightly naturally next year anyway.
But if I wait will I lose more by missing out on the relief?

athtrasna

You can't get "a decent answer" as what you are asking is for people to speculate on the property market. Nobody can say for sure. All that we can say for now is that more than one body has come forward to say prices are low at the moment, too low in some cases, which would suggest that prices being lower in 12 months time is unlikely.

It's your money, your gamble. Only time will tell whether it's the right move or not. If you're after a home rather than just a house, and can afford the repayments you really should not stress too much about what might happen to the price.

Villa05

athtrasna wrote: »

All that we can say for now is that more than one body has come forward to say prices are low at the moment, too low in some cases, which would suggest that prices being lower in 12 months time is unlikely.

They are the vested interests and have being saying that since 2008. Beware of the wolf in sheeps clothing. there claim has been rubbished by those who accuratley predicted current trends

the groutch

use this tool to work out the total interest relief you'd get over the 7 years, and divide it into the total repayable (monthly repayments), it will give you an idea of the % price drop you'd need to see for it to be worth while waiting.

http://www.mortgages.ie/index.cfm/spKey/first_time_buyers.tax_relief_calculator.html

for most of the examples it worked out around the 3%-4% range, so you'd need a bigger price drop than that to benefit from waiting.

of course this doesnt take into account other factors, like interest rate changes, increased savings by waiting, etc.

I hope this make some sort of sense to you

cursai

the groutch wrote: »

use this tool to work out the total interest relief you'd get over the 7 years, and divide it into the total repayable (monthly repayments), it will give you an idea of the % price drop you'd need to see for it to be worth while waiting.

http://www.mortgages.ie/index.cfm/spKey/first_time_buyers.tax_relief_calculator.html

for most of the examples it worked out around the 3%-4% range, so you'd need a bigger price drop than that to benefit from waiting.

of course this doesnt take into account other factors, like interest rate changes, increased savings by waiting, etc.

I hope this make some sort of sense to you

thanks I've done that. Wonder now if it'll drop another ten percent to make the wait worth it.

killers1

cursai wrote: »

Could someone please give a good answer on this query I have.
I'll all set to purchase a house. Id like to hold on a bit.
My only concern is with the demise of mortgage interest relief this year on the 31st Dec.
If the end of MIR could possibly bring down the price of houses next year as first time buyers will have less to spendsith due to a higher monthly repayment. Will the loss of the MIR offset the drop in price. Id imagine they'll fall slightly naturally next year anyway.
But if I wait will I lose more by missing out on the relief?

If you were buying in the morning how much are you planning to borrow? Are you buying on your own?

Idbatterim

All that we can say for now is that more than one body has come forward to say prices are low at the moment, too low in some cases, which would suggest that prices being lower in 12 months time is unlikely.

they will also probably tell you Saturdays lotto numbers... This is coming from someone who just finished an auctioneering, valuation and estate agency course about a week ago!

when mortgage interest ends it will likely lead to further depressing prices. Although dont be surprised if they extend it. There are a colossal amount of variables. What kind of property do you want to purchase and where?

cursai

Thanks for the input. Im looking a buying a bungalow for +-150thous or a bit more in a good established estate. Im buying on my own. Mullingar east north area

Idbatterim

Thanks for the input. Im looking a buying a bungalow for +-150thous or a bit more in a good established estate. Im buying on my own. Mullingar east north area

ok, are there any or many nama controlled estates or developer ones in the vicinity that could come to the market in the shortish term and are there any allsops etc auctions for property in the area? what is the current rent on similar type properties?

cursai

Idbatterim wrote: »

ok, are there any or many nama controlled estates or developer ones in the vicinity that could come to the market in the shortish term and are there any allsops etc auctions for property in the area? what is the current rent on similar type properties?

Don't have any knowledge of nama or repossession properties. Current rent in the area or estate im in is +-600 monthly.

Idbatterim

Don't have any knowledge of nama or repossession properties. Current rent in the area or estate im in is +-600 monthly.

im asking this, because you dont want to purchase this house and then find out a few months etc later, that other similar properties are going for alot less than you paid for yours! Op are there many similar properties in the area?

Messi54

You won't get relief for 7 years as it finishes in 2017 completely. Take example of someone buying house at current national average price of approx E165,000,(E164,000 by time I finish writing this!), 1st time buyer in 2012.
Mortgage of 150K after approx 10% deposit @ 4% interest over 30 years.
Following Tax relief applicable: -
2012 - E1,460
2013 - E1,433
2014 - E1,264
2015 - E1,237
2016 - E1,209
2017 - E1,049.
Total of E 7,652 over 6 years.
That's only if bought in Jan 2012, the first figure of E1,460 can be divided by 12 and multiplied by number of months mortgage paid in 2012. ie If mortgage payments start in June 2012 that will be E1460/12=E121, x7months left in year = E851
Result: E7,043 MIR over the term which is approx 4.69% of initial price. Currently house prices dropping by about 10%/year.

cursai

Idbatterim wrote: »

im asking this, because you dont want to purchase this house and then find out a few months etc later, that other similar properties are going for alot less than you paid for yours! Op are there many similar properties in the area?

Seems to be a couple of bungalows and a lot more houses in estates. There's a developer estate in the exact area. Going for around 160 mark. Can't get a link working on phone. Try Glenmore woods mullingar on daft

cursai

Messi54 wrote: »

You won't get relief for 7 years as it finishes in 2017 completely. Take example of someone buying house at current national average price of approx E165,000,(E164,000 by time I finish writing this!), 1st time buyer in 2012.
Mortgage of 150K after approx 10% deposit @ 4% interest over 30 years.
Following Tax relief applicable: -
2012 - E1,460
2013 - E1,433
2014 - E1,264
2015 - E1,237
2016 - E1,209
2017 - E1,049.
Total of E 7,652 over 6 years.
That's only if bought in Jan 2012, the first figure of E1,460 can be divided by 12 and multiplied by number of months mortgage paid in 2012. ie If mortgage payments start in June 2012 that will be E1460/12=E121, x7months left in year = E851
Result: E7,043 MIR over the term which is approx 4.69% of initial price. Currently house prices dropping by about 10%/year.

Very good. Im pretty confident prices will drop at least another six percent at least for next year anyway. All the crap estate agents say to you, even though I know its slimy rubbish. It still tends to fog my judgement and create doubt.

killers1

There's a million +1 variables to this but I'll give you my 2 cents worth...

Buying for €150k, your TRS will be worth around 6K or 4% of the purchase price. So the market drops by 4% you're still up... You hold off & buy when TRS is gone, I presume you wouldn't wait till Jan 2013 to do this so you are probably talking another year or two away. For arguments sake interest rates rise by 2% between now and then. Your mortgage repayment has jumped from €455pm (including TRS) to €717pm a difference of €262pm or approx €13k over the next 5 yrs V waiting 2 yrs @+2% with no trs. The €13k saving in mortgage interest payments & the €6k trs brings you up to around a 13% protection on price drops. This doesn't include the additional cost if you are to rent in the area @ €600pm V mortgage repayment of €455pm...

You could go around in circles trying to pick the bottom of the market etc etc.. The fact of the matter is that few people will actually buy at the bottom in the same way few people sold at the height. If you are worried about falling values does it really make a difference if you purchase a property you intend to live in for 20 yrs and it drops by €15k-€20k?? Nobody's forcing you to sell.... In the same way if you buy at the bottom and the value increases by €15k are you going to sell to realise the profit??No.. It's simply a lifestyle decision for you... I you want to buy a property now do, if you want to wait a couple of years then wait a couple of years...

There's no mathematical equation which will give you the answer you are looking for, it boils down to your circumstances and wants. For sure everybody wants to buy at the cheapest possible time - the reality is very few do....

cursai

killers1 wrote: »

There's a million +1 variables to this but I'll give you my 2 cents worth...

Buying for €150k, your TRS will be worth around 6K or 4% of the purchase price. So the market drops by 4% you're still up... You hold off & buy when TRS is gone, I presume you wouldn't wait till Jan 2013 to do this so you are probably talking another year or two away. For arguments sake interest rates rise by 2% between now and then. Your mortgage repayment has jumped from €455pm (including TRS) to €717pm a difference of €262pm or approx €13k over the next 5 yrs V waiting 2 yrs @+2% with no trs. The €13k saving in mortgage interest payments & the €6k trs brings you up to around a 13% protection on price drops. This doesn't include the additional cost if you are to rent in the area @ €600pm V mortgage repayment of €455pm...

You could go around in circles trying to pick the bottom of the market etc etc.. The fact of the matter is that few people will actually buy at the bottom in the same way few people sold at the height. If you are worried about falling values does it really make a difference if you purchase a property you intend to live in for 20 yrs and it drops by €15k-€20k?? Nobody's forcing you to sell.... In the same way if you buy at the bottom and the value increases by €15k are you going to sell to realise the profit??No.. It's simply a lifestyle decision for you... I you want to buy a property now do, if you want to wait a couple of years then wait a couple of years...

There's no mathematical equation which will give you the answer you are looking for, it boils down to your circumstances and wants. For sure everybody wants to buy at the cheapest possible time - the reality is very few do....

Excellent. Thanks killers. Think I might just hang a bit longer and go on that trip to Paris this year. Im not worried about any losses on paying rent. As having one roof over my head is the same as the other. unless some amazing value appears I'll hold. I think I'll also throw in an offer of 20thous less than the asking and sit on it. They can get back to me. I have to keep telling myself its a buyers market.

gurramok

This MIR incentive was due to finish at the end of 2011, it did nothing to 'boost' the market so they extended it to end 2012. Sums it up really, don't worry too much.

Theboinkmaster

You don't need a crystal ball - overall prices will continue to decrease over the next few years.