The Long "night of the living dead"

K-9

Niall Keane wrote: »

Keeps sounding like you see mortgage and house ownership as entitlements for only a privileged class? Right now house prices allow for many normally financially excluded to break free from tenurey, if they get the chance to enjoy the same fair treatment as everyone else!

I really don't have a clue what you are on about there.

K-9

Farmer Pudsey wrote: »

Mortgage money in intrest terms is the cheapest money that you can borrow. If the only loan that you ever borrow is a mortgage then you are laughing. It is car loan, credit union loans (nowaday as they are no longer cheap) or finance house loans for holidays, house improvments or excess credit card spending ( not pay off at end of month) are generally more of an issue. A lot of people that had debt issue's after the boom was not all associated with proper house loans. It was the 30-40% of the loan that they got ( by not have to have a deposit and 110-120% loans)which they used to furnish the house and put down lawns and tarmac as well as 40'' TV that crippled them and started the downward spiral.

To someone earning over 100K taking 70K longterm seems not to make sence. However it is slightly under 3 times her income. It is a borderline mortgage, however it is not like a 150k mortgage to a 50K income. For the cost of the loan she will find very no place to rent. You begin to wonder have the banks still not reached reality from the days of the 250K mortgage or are they still harking back to them. Also have they a preference to let all these houses in the sub 100K market to investors.

There is no reason why she may not pay down the loan early as lots of people do mind you mortgage debt is the last debt I would pay down. Also talking to a fellow with a tracker that is in a position to pay some of it down he felt that with the medium term outlook he would not pay off tracker loan at present rather he is looking at buying one of the sub 100k properties that are for sale at present. He feels that the tracker money is too good value to pay down and he will never again be able to borrow at this rate.

It isn't the amount that I've an issue with, its the term. There used to be a time 25 years would have been a long term for a mortgage, at her age that's the longest I'd recommend.

Niall Keane

K-9 wrote: »

It isn't the amount that I've an issue with, its the term. There used to be a time 25 years would have been a long term for a mortgage, at her age that's the longest I'd recommend.

They gave her a flat no, not yes but 25yr max, they could have put such stipulation in but didnt, even at 25 yrs it would be approx €460 a month, almost half her rent, again less than any other accomodation out there. €460 can be handled easily with 25k and you can walk into 25k jobs with unrelated qualifications. Its industry crash proof!

Compare to my profession, an architect earning 50-75k during the boom could not find a similar paycheck when the industry collapsed! Those mortgages are royally f....

This is actually what has motivatd her to buy, having once been a qs on quite a good salary to find herself mid-thirties reinventing her career, on nearly a third of what she had once been on. Like a lot of us of that generation who were stung (some of us a lot worse and lost far more than just a career) she tells me that she would never place herself under the sword. So instead of a plush southside suburb her peers once sought out, and some unfortunately succeded in acquiring, she has opted for risk reduction and going for something that can survive industry crashes and carrear changes.

How many of the larger mortgages granted this year could really handle such drastic carrear and salary changes?

I applaud this woman in her choice and risk aversion reasoning.

That the bank is so blind to all these factors is worrying, the archaic reasoning and checks they use to tick their boxes must be photocopies left over from '07. Well they'll save a bit there!

murphaph

The banks in Germany generally take your "cold rent" (before bins, water charges etc.) that goes to your landlord and accept that if you have been paying x for y years then you can afford at least x as a mortgage payment, which seems to make sense to me.

Generally they would want you to have 20% as a deposit, but 100% mortgages are (still) available here. They generally won't lend less than 50k.

In Dublin rents are not going to end up in the toilet IMO. They are holding firm now and I believe will head back up as people leave rural Ireland for the cities to search for work. An 80k flat in Dublin is financially sensible as I simply don't believe our long term prospects are all that bad.

What if this place cost 40k? 30k? At what point would people say, "actually, that is a bargain". The more I think about it, the more it makes sense to me that banks would want to decline FTBers and leave them paying rent to a possibly distressed landlord whose mortgage hangs on a knife edge. If I was running banks with large exposures to BTL landlords I would probably do just that...they can use their own power to force boom time mortgages to be met. It's really quite simple! What benefit is there for a bank to allow a FTBer leave rented accommodation, which may have a mortgage on it from the same bank? Would it be such a stretch to imagine the banks have colluded to keep FTBers renting?

I am not a conspiracy theorist and indeed own property and rent it out, but it just seems like good business from the banks' side. Why wouldn't they do it?

Farmer Pudsey

murphaph wrote: »

What if this place cost 40k? 30k? At what point would people say, "actually, that is a bargain". The more I think about it, the more it makes sense to me that banks would want to decline FTBers and leave them paying rent to a possibly distressed landlord whose mortgage hangs on a knife edge. If I was running banks with large exposures to BTL landlords I would probably do just that...they can use their own power to force boom time mortgages to be met. It's really quite simple! What benefit is there for a bank to allow a FTBer leave rented accommodation, which may have a mortgage on it from the same bank? Would it be such a stretch to imagine the banks have colluded to keep FTBers renting?

I am not a conspiracy theorist and indeed own property and rent it out, but it just seems like good business from the banks' side. Why wouldn't they do it?

Is this not what they did during the boom lend money to developer to buy over expensive site, then lend him more to build houses which were build with expensive labour. Then when people could not afford deposits and furnishing house hey presto first the 100% mortgage then when they had neither deposit or house completion money the 110% mortgage ( to keep Harvey Norman happy in the new reatail park) and after that a car ( to keep motor companies paying rent for new show rooms) as well the 120% mortgage so that the nice young couple could spend 40K on a wedding at the developers hotel and have a fewK's to go on a nice honeymoon.


God it bring me back to the good old days!

maninasia

murphaph wrote: »

The banks in Germany generally take your "cold rent" (before bins, water charges etc.) that goes to your landlord and accept that if you have been paying x for y years then you can afford at least x as a mortgage payment, which seems to make sense to me.

Generally they would want you to have 20% as a deposit, but 100% mortgages are (still) available here. They generally won't lend less than 50k.

In Dublin rents are not going to end up in the toilet IMO. They are holding firm now and I believe will head back up as people leave rural Ireland for the cities to search for work. An 80k flat in Dublin is financially sensible as I simply don't believe our long term prospects are all that bad.

What if this place cost 40k? 30k? At what point would people say, "actually, that is a bargain". The more I think about it, the more it makes sense to me that banks would want to decline FTBers and leave them paying rent to a possibly distressed landlord whose mortgage hangs on a knife edge. If I was running banks with large exposures to BTL landlords I would probably do just that...they can use their own power to force boom time mortgages to be met. It's really quite simple! What benefit is there for a bank to allow a FTBer leave rented accommodation, which may have a mortgage on it from the same bank? Would it be such a stretch to imagine the banks have colluded to keep FTBers renting?

I am not a conspiracy theorist and indeed own property and rent it out, but it just seems like good business from the banks' side. Why wouldn't they do it?

This does make a lot of sense. AIB and BOI must make up most of the mortgage market. It would not make economic sense for a bank, which is trying to prevent a massive write-off on the BTLs, to loan to a FTB and therefore crystallise the write-off. It would be cutting off their nose to spite their face. Not much of a conspiracy but cold reality.
They can check their loan book to see if it is on their own mortgage list. But who is in charge of selling the property? Is the BTL landlord managing it? If so wouldn't he be left in negative equity...if this is in fact what is going on?

Niall Keane

murphaph wrote: »

What if this place cost 40k? 30k? At what point would people say, "actually, that is a bargain

Ive tendered only 2 weeks ago for another project (renovation & extension), i can vouch that to build one of the properties she is looking at would cost 150-200k, to bring it up to current standards with some green technology add another 20-50k, the site alone would cost 50k minimum.

It is a bargain!

This of course is the problem facing my industry, but as long as artificial methods are being used to elevate the property and rental sector construction will not recover (these places need to be sold)
Currently we work in a uncertain market one that disuades any development, whether we like it or not, having once been bitten, "shelter" is a primary need. preventing a true crash, prevents a true recovery, and so has us living with zombie banks in this endless "night of the living dead" , indeed Ireland's economy is a black comedy!

astrofool

K-9 wrote: »

Personally I think anybody taking a 30 year mortgage on 70k is a poor decision, yes she might be able to pay more, but it's far too long a term for a relatively small amount. I'd call it poor advice myself. You'd be paying a crazy amount of interest on such an amount. Don't take it too personally.

There is no downside for an individual to take a loan over as long a period as possible, as long as they can make repayments faster (which they usually can with a mortgage).

It is a problem if they are taking a very long term loan to reduce the monthly repayments so they can borrow more.

K-9

astrofool wrote: »

There is no downside for an individual to take a loan over as long a period as possible, as long as they can make repayments faster (which they usually can with a mortgage).

It is a problem if they are taking a very long term loan to reduce the monthly repayments so they can borrow more.

I wouldn't say its a problem, just I wouldn't advise it. As Niall Keane said there isn't that much of a difference between the payments for a 30 year and 25 year term, personally I'd try for a 20 year term. On a 70k mortgage you could be talking a difference in interest of €20,000. Yes, she probably will get wage increases all going well, but we've a property tax and water rates to come which might make it difficult to budget for over payments.

Farmer Pudsey

K-9 wrote: »

I wouldn't say its a problem, just I wouldn't advise it. As Niall Keane said there isn't that much of a difference between the payments for a 30 year and 25 year term, personally I'd try for a 20 year term. On a 70k mortgage you could be talking a difference in interest of €20,000. Yes, she probably will get wage increases all going well, but we've a property tax and water rates to come which might make it difficult to budget for over payments.

On this type of property the water rates and tax should not come to more than 500/year (or else we are all fooked) about 40/month. In her case she is better off with a longer term loan and paying odd early in lumpsums. even if she went on a fixed as opposed to variable when she get a break at the end of a 2/3/5 year term it will give her a chance to pay a lump sum odf a couple thousnad off.It would amaze you the way this reduces payments and generates cash flow so that the next time you are paying a extra thousand off.

However as I stated earlier I would not worry about mortgage money it is the ability to keep away from other high intrest loans that keeps you out of trouble so I would not ne payind off 5K and taking out a 4K car loan.

K-9

Deciding to pay half your disposable income on rent maybe viewed as a dumb decision by banks from now on, not a wise one. Why would somebody pay half their disposable income on rent? Paying €900 a month is madness when you could pay half easily.

astrofool

K-9 wrote: »

Deciding to pay half your disposable income on rent maybe viewed as a dumb decision by banks from now on, not a wise one. Why would somebody pay half their disposable income on rent? Paying €900 a month is madness when you could pay half easily.

I'd imagine that boils down to what lifestyle a person wants to lead.

Spending half of your disposable income on restaurants and drink isn't a particularly wise decision either, but I'm sure many do it.

Farmer Pudsey

K-9 wrote: »

Deciding to pay half your disposable income on rent maybe viewed as a dumb decision by banks from now on, not a wise one. Why would somebody pay half their disposable income on rent? Paying €900 a month is madness when you could pay half easily.

People make choices on how to spend their own income. Some people spend a large portion in the pub over the wekend other's smoke 400 euro's/month. Maybe this lady is not inclined to share a house or an apartment with others, not wanting to live in a one room situtation and to have some privacy.

Just on a side issue people who smoke and even drink a liitle above moderate often spend 600/month on their habits.

Pottler

Single income of 25k, throw in a six month illness and she's destroyed as would be her mortgage repayment. And if you are pinning your career hopes on refurbing a 70-80% mortgaged 80k house for a client who earns 25k then you'll be in the same boat fairly swiftly. Unrealistic is the word that springs to mind. Just to make you feel better, I'd struggle to meet a banks mortgage criteria at the moment and I earn her years salary in a month. There is very little lending taking place, that's a sad fact, but also there're a lot of people who are delusional about the Irish property market.
When the average house price falls to 65k(it will, be sure about that) then buying will make sense again - the banks have seen the light, they know prices will continue to slowly deflate, so they don't want to lend on overvalued brickwork. Rent on a three bed should be c.a €650 a month, topps, valueing it to me at 65k as a pure investment. When reality starts matching that reality, banks will start to lend again. Until then, best of luck with it.:)

K-9

Farmer Pudsey wrote: »

People make choices on how to spend their own income. Some people spend a large portion in the pub over the wekend other's smoke 400 euro's/month. Maybe this lady is not inclined to share a house or an apartment with others, not wanting to live in a one room situtation and to have some privacy.

Just on a side issue people who smoke and even drink a liitle above moderate often spend 600/month on their habits.

There's a difference between spending €400 on smokes or beer and entering into a fixed contract spending half your income on rent.

Spending half your income on renting is a lifestyle choice, and yes, people may wonder why you'd put yourself in such a tight financial situation, spending half your income on a lifestyle choice, and then others viewing that as wise, prudent behaviour.

When you are justifying a financial decision as comparable to a smoker or somebody who likes a few beers, well, you are losing credibility.

Head The Wall

Pottler, you should get onto the papers with that story. You earn 300k a year and you can't get a mortgage!!!!!!

Farmer Pudsey

K-9 wrote: »

There's a difference between spending €400 on smokes or beer and entering into a fixed contract spending half your income on rent.

Spending half your income on renting is a lifestyle choice, and yes, people may wonder why you'd put yourself in such a tight financial situation, spending half your income on a lifestyle choice, and then others viewing that as wise, prudent behaviour.

When you are justifying a financial decision as comparable to a smoker or somebody who likes a few beers, well, you are losing credibility.

First of all K9 if she buys the house it will be less (only margininly but still less) than 25% of her montly wages at present she is paying over 50% on rent. It would be easier for her to change rental accomdation (probally on a 12 month rolling contract) than for some people to give up there social habits. Have watched people for 30+ years with so call social habbits and a large amount fail to give up smoking/drinking habbits( some do and I have huge respect for them but a large amount do not).

Some times I think some posters want us to become a nanny state or they believe that they know what is best for everbody however I believe in personnel choice.

Take this lady if she continues to rent and remains single when she gets to retirement age ( even if she was paying 300 euro/month) a rent that is now very managable will become a finiancial noose around her neck. Poster may mention property tax , water rates etc but all these will be factored into rents by landlords bay 10 year time.

On a six month illness she will be able to take out illness protection however as other poster have stated this mortgage is immently managlable with short terms losses of work. Also you cannot live your life on thw ''what if''. What if she won the lotto next week (unlikly) or got a 3K rise in wages, or a small inheritance all are ''what if's''

Niall Keane

K-9 wrote: »

There's a difference between spending €400 on smokes or beer and entering into a fixed contract spending half your income on rent.

Spending half your income on renting is a lifestyle choice, and yes, people may wonder why you'd put yourself in such a tight financial situation, spending half your income on a lifestyle choice, and then others viewing that as wise, prudent behaviour.

When you are justifying a financial decision as comparable to a smoker or somebody who likes a few beers, well, you are losing credibility.

In the real world you cannot rent for 450 in dublin 15, its 650 minimum for a one bed.
So youre talking about 250 difference, which when you consider that most apartments use storage heating (elec) at 4 times the price per kilowatt hour than gas which she has in her rented house, utility bills drop from 180 - 300 every 6 weeks to 50-70, so its a false economy to rent appartments!

Maybe youre in your early 20's or something and you think it reasonable to share property, queue up for breakfast and bathroom with other adults each day but by 35 most of us aren't prepared to slum it!

Considering the above, suggesting that a mature independant professional should do so unnecessarily, and criticising their choice not to as foolish casts the shadow back on the person making such a statement!

Niall Keane

Pottler wrote: »

Single income of 25k, throw in a six month illness and she's destroyed as would be her mortgage repayment. And if you are pinning your career hopes on refurbing a 70-80% mortgaged 80k house for a client who earns 25k then you'll be in the same boat fairly swiftly. Unrealistic is the word that springs to mind. Just to make you feel better, I'd struggle to meet a banks mortgage criteria at the moment and I earn her years salary in a month. There is very little lending taking place, that's a sad fact, but also there're a lot of people who are delusional about the Irish property market.
When the average house price falls to 65k(it will, be sure about that) then buying will make sense again - the banks have seen the light, they know prices will continue to slowly deflate, so they don't want to lend on overvalued brickwork. Rent on a three bed should be c.a €650 a month, topps, valueing it to me at 65k as a pure investment. When reality starts matching that reality, banks will start to lend again. Until then, best of luck with it.:)

Im sure theres payment protection insurance whoch would cover a 6 month illness, and like i said earlier, you can walk in to a 25k job with unrelated qualifications fairly easily. So just making the point that a lifestyle based on 25k salary is more secure than others based on larger salaries that were earned with particular specialist skills and qualifications.

Of course im not pinning my hopes on small scale refurbs, this is more helping out a friend, as ive said in the OP this non-lending climate is killing viable work opportunities that does have knock on effects. This case, for me, with the reasoning given by AIB for the refusal, who have all her financial records to hand, just highlighted how hopeless the current envirnoment is.

I think you are incorrect in your average house valuation, (65k) though certainly the market probably will reach that level, especially in a non-lending envirnoment.

As i said before they cannot be built for that sum, even disregarding the site cost! I have found that irish product costs and general labour have fallen dramatically, but we have no control, or very little, on costs of glazing for example.

Also mechanical and electrical labour and product costs have not fallen in any significent manner, building maintenance has provided a safety net for that part of the construction sector. This can be up to 25% of a build in designs seeking to achieve passive standards. Currently a job i have on site is coming in 9k elec and 40k mech, and a house needs more than pipes and cables!

Certainly we have enough "stock" that will end up sold far below cost for years to come, probably explaining the calls for leveling of ghost estates.

On a side note, im wondering given the exclusion of FTB from credit, if this could lead to a "squatter culture" as exclusion to property ownership in one form or another when an abundance of empty buildings exist has done so in other cultures. Whole communities/ villages exist in France and the Netherlands which of course is fascinating to study as an architect, though economically an politically it probably leads to nervousness?

murphaph

Farmer Pudsey wrote: »

Poster may mention property tax , water rates etc but all these will be factored into rents by landlords bay 10 year time.

Very true.

New taxes will take a couple of years to filter through but they will. They'll be a cost that will ultimately be borne by the occupant, as it should be and as it is in the UK.

Stheno

Niall Keane wrote: »

you can walk in to a 25k job with unrelated qualifications fairly easily.

Why have we 450k people on the dole then?

Farmer Pudsey

Stheno wrote: »

Why have we 450k people on the dole then?

Because for alot of people there is very little reward between working and not. Thake this lady if she choose at her age she wood be entitled ro rent allowance etc, however she chooses not to live that live style, she could ahlso choose to have a child and have access to subsidised accomadatation etc, if you want to discuss go to the social welfare thread on this section of boards

KyussBishop

Farmer Pudsey wrote: »

Because for alot of people there is very little reward between working and not.

That's a variation of the "people on dole are lazy" argument; if there were adequate jobs out there, there wouldn't be so many people 1: Unemployed and 2: In Job Bridge doing internships for nothing (and a good portion of them doing that in crappy jobs to boot as well).

Niall Keane

Stheno wrote: »

Why have we 450k people on the dole then?

Maybe they have mortgages that 25k wont cover? The social welfare does not force people to work at anything available, but to "actively seek employment" in some chosen fields related to their qualifications.

To expand on this point...

I see a future for ireland in which debt will either be forgiven, like iceland, and we can all start to move on or it will stand and a generation who owe 2k a month mortgage and cant find work to service such debt will have no incentive to play any meaningful part of our economy or society.

Because they dont and cant spend, the generation after them has emigrated, when the current 45 yr olds become 65yr olds a huge vacume will exist here, the only activity will indeed be generated by our government's only ticket - foreign miltinationals, and employment oppertunities will indeed consist mainly of call-centres our glorified "knowledge economy" and most will indeed be on 20-25k.

We will be wage competitive but this will be worth nothing to small and medium irish business who have campaigned for such, as the average joe of the new leaner ireland wont have any disposable income to entertain purchasing their products. And with the increases in taxes on irish business to make up for the short fall in PAYE and still protect the low rates on foreign companies, such small irish businesses wont be competitive abroad either.

Of course all the wealth and property built up by the current 45yr plus generation who managed to hold on to it will be stripped away with increased capital gains and inheritance tax etc. by our future governments to pay back our debt

the banks will have been bailed out, ie given cheap money, invested it in bonds etc, ie borrowed from our countries right hand, in bailouts, invested in our countries left hand in bonds etc. earned 6% from the left to pay the right back 3% with the same money. During this time they will fail to provide banking services, in any real and meaningful manner, dressing the scam up in sound risk aversion tactics.

After all why take a risk by offering mortgages etc. when you can take your cheap money and invest it in guaranteed high interest schemes offered by the same fools that gave you the money to provide a banking service?

Of course markets dictate, and eventually someone will step in to seize the business opportunity of offering small mortgages, and recognise that mortgages that cost less a month than any rent payment are probably a sure thing, will it be the banks we have bailed out though?

K-9

Niall Keane wrote: »

In the real world you cannot rent for 450 in dublin 15, its 650 minimum for a one bed.
So youre talking about 250 difference, which when you consider that most apartments use storage heating (elec) at 4 times the price per kilowatt hour than gas which she has in her rented house, utility bills drop from 180 - 300 every 6 weeks to 50-70, so its a false economy to rent appartments!

Maybe youre in your early 20's or something and you think it reasonable to share property, queue up for breakfast and bathroom with other adults each day but by 35 most of us aren't prepared to slum it!

Considering the above, suggesting that a mature independant professional should do so unnecessarily, and criticising their choice not to as foolish casts the shadow back on the person making such a statement!

In the real world a bank may see spending half your wage on rent as dumb, just share instead.

Yep rent on your own, but its a lifestyle choice, don't pretend otherwise, don't try to make it a heroic choice. It doesn't matter if you drink or smoke €400 a month away, choosing to spend hald your income on rent is dumb, dress it up as much as you want.

Are people still that desperate for a house? I could understand people spending €900 a month on the ould plot, the Field, but €900 on rent? Sure renting is dead money. Not dead if you pay twice as month as your mortgage on rent, that shows character apparnetly.

Nope, it shows your obsessed with getting on the property ladder.

Architects like Niall Keane can't get their head around it. Its a shame you lost out on a fee.

Farmer Pudsey

K-9 wrote: »

In the real world a bank may see spending half your wage on rent as dumb, just share instead.

Yep rent on your own, but its a lifestyle choice, don't pretend otherwise, don't try to make it a heroic choice. It doesn't matter if you drink or smoke €400 a month away, choosing to spend hald your income on rent is dumb, dress it up as much as you want.

Are people still that desperate for a house? I could understand people spending €900 a month on the ould plot, the Field, but €900 on rent? Sure renting is dead money. Not dead if you pay twice as month as your mortgage on rent, that shows character apparnetly.

Nope, it shows your obsessed with getting on the property ladder.

Architects like Niall Keane can't get their head around it. Its a shame you lost out on a fee.

It is not about getting on the property ladder, it not about being desperate for a house, it about providing for your old age and a lifestyle choice.

When you are retired and you won your own house it is one less monthly bill. You also will not be renting some sh##hole of a bedsit in your seventies. It is all very fine when you are 25 you have friends or co-workers taht you can rent/share with it is a totally different choice when you get older