Some first time buyer questions

Dubhlinner

I recently started a job (26k gross/22350 net) and just accidently noticed how cheap property has become.

My plan is to save about 10-13K over the next 12-18 months for a deposit (ill be almost tax free til january and living between parents houses. Only debt is a 480euro credit card balance. will clear it before starting to save obviously

I'm pretty good at the kind of job I just started (did it before in another place) and I expect ill be a supervisor/team leader after not long so don't mind doing a few years being a bit poor. also the properties i like are 3-bed so ill be able to rent out at least one room & maybe two

So basically I have a few questions.

first I was looking at the finance calculator on daft.ie for a 125K house

It says the rate for this house is 3.28% or E457 euro per month for a 35 year term. (thats based on a loan of 115K)

This seems very doable to me because I was planning on renting a place for e600 per month.

Obviously its not that simple. Does anyone know what the extras will cost. eg life assurance & arrears payment protection. stamp duty solicitors fees etc.

I also realise ill need furniture but ill look that up myself. I can move into the place slowly and stay with parents until up and running so not considering that just yet.

Another thing: 115K is 5.14 times my net salary. that seems a bit high. for some reason there's a 3.5x times your salary max stuck in my head.

Also anyone know how to do a "stress test" google didnt return me anything of use.

also anyone's opinions on a sensible rate to use for the stress test would be much appreciated.

thanks for reading. if you can answer any of my questions or have any relevant info I'd really appreciate

Penny Dreadful

Dubhlinner wrote: »

I recently started a job (26k gross/22350 net) and just accidently noticed how cheap property has become.

My plan is to save about 10-13K over the next 12-18 months for a deposit (ill be almost tax free til january and living between parents houses. Only debt is a 480euro credit card balance. will clear it before starting to save obviously

I'm pretty good at the kind of job I just started (did it before in another place) and I expect ill be a supervisor/team leader after not long so don't mind doing a few years being a bit poor. also the properties i like are 3-bed so ill be able to rent out at least one room & maybe two

So basically I have a few questions.

first I was looking at the finance calculator on daft.ie for a 125K house

It says the rate for this house is 3.28% or E457 euro per month for a 35 year term. (thats based on a loan of 115K)

This seems very doable to me because I was planning on renting a place for e600 per month.

Obviously its not that simple. Does anyone know what the extras will cost. eg life assurance & arrears payment protection. stamp duty solicitors fees etc.

I also realise ill need furniture but ill look that up myself. I can move into the place slowly and stay with parents until up and running so not considering that just yet.

Another thing: 115K is 5.14 times my net salary. that seems a bit high. for some reason there's a 3.5x times your salary max stuck in my head.

Also anyone know how to do a "stress test" google didnt return me anything of use.

also anyone's opinions on a sensible rate to use for the stress test would be much appreciated.

thanks for reading. if you can answer any of my questions or have any relevant info I'd really appreciate

Life Assurance will be totally dependent on you and your health. No one here can really give you a quote on that.
House Insurance again will depend on the house rebuild costs and the contents too.
Solicitors fees are either a percentage of the sale price or they have a flat fee. Ask around if you don't already have a solicitor. Depending on how complicated the sale is (or isn't) the fee may change.

riclad

Say house is 180 k ,legal fees should be between 1000 to 1400 euro.
stamp duty is 1 per cent for residential ,non investment homes.
You may need to go to a broker to get a loan, broker doesnt charge you.
i think you,ll need between 10 to 20 per cent savings ,
ie its hard to borrow over 80 per cent of house value.
Banks are not making it easy to get loans,they see house prices still dropping.
MY advice save as much as you can, banks like to see 3 years earnings,
You might need to ask your parents for a loan,to increase your savings.

Milk & Honey

riclad wrote: »

You might need to ask your parents for a loan,to increase your savings.

Banks are now looking at the source of funds. Seeing the salary accumulate is the way to go. If parents are providing support it should be drip fed in by allowing more of the salary to be saved.

StillWaters

Why on earth should the parents provide a loan? I thought that sense of entitlement was dead, along with credit union loans for deposits.

Henry Ford III

Taking on a loan of over 4x salary, for 35 years, and at historically low interest rates is a disaster waiting to happen imho.

Dubhlinner

Thanks guys really helpful. loan off parents not gonna happen. Reckon I'll just save and by the time I have 8-10% hope my salary be bigger or I have a girlfriend lol

StillWaters

Congratulations on the new job by the way. I'd advise concentrating on the career for a while, you are clearly focussed and ambitious so invest spare cash in that at this stage of your career, upskilling to make promotion easier for example. The house will come along as you climb the ladder.

GeorgeOrwell

I agree with Stillwaters.

Keep saving and get your loan-to-value ratio as low as you can. Banks prefer to give as low a loan-to-value ratio as possible and they like to see customers who are regular savers.

House prices are still falling (or perhaps just stabilised) so there's no urgency.

Set up a simple online savings account and have a small amount of money transferred to it each month when you get paid. At the end of every month, if there's any surplus in your current account, transfer that into your savings account too.

If you're disciplined and pretend it doesn't exist so you can't tap into it, it will soon grow.

After 12 months, you'll have a nice sum of money and proof to the bank of your solid finances.

Niamhus86

Henry Ford III wrote: »

Taking on a loan of over 4x salary, for 35 years, and at historically low interest rates is a disaster waiting to happen imho.

Why do you say this??