Central Bank to limit amount banks lend for home purchase

Michael D Not Higgins

molloyjh wrote: »

Bonuses are one off payments. They don't get them monthly. Why would they say they are saving €3k a month if they aren't saving €3k a month? It looks to me like you're trying to read something into this so that you can have a go at them over some imaginary issue.



Why should they deny themselves a few luxuries? Someone on that money invariably works hard and has earned it so they should be able to enjoy some of it without having people like you looking down your nose at them. When they started the process of saving the €3k a month that would have been a reasonable amount to save for a deposit for a house. That would have given them €55k after 12 months, but as I said above they obviously had savings prior to that. They wouldn't have known until late on that the LTV rules were changing.

And you also have no idea what other savings they have. Maybe they are saving €5k a month but the other €2k are for their kids future. That's a pretty common occurrence. It really is poor form that so many people feel the need to try and have a go at others, especially from a point of near complete ignorance.

In fact the well known budgeting rule of 50/30/20 says you should save at least 20% of your income, so they've surpassed that. The problem I would have is that I'd agree with Greyian, as the numbers seem to suggest they only started saving recently and it could be unsustainable for them.

Greyian

molloyjh wrote: »

Bonuses are one off payments. They don't get them monthly. Why would they say they are saving €3k a month if they aren't saving €3k a month? It looks to me like you're trying to read something into this so that you can have a go at them over some imaginary issue.

The only reference to savings from the original post is for €3k/month. There is absolutely no reference to the bonuses being saved on top of that. I would suggest that you are the one reading something into this, as there is no indication whatsoever that they're saving the bonuses on top of €3k/month.

You've also said €55k a few times, whereas it would actually be €65k/year if they were saving their bonuses (€36k + €29k).
Either:
A) They are now saving €36k/year, and have saved €110k over the last 5 years, for average savings of €18.5k/year over the first 4 years.
They are now saving €65k/year, and have saved €110k over the last 5 years, for average savings of €11,250/year over the first 4 years.

If A is the scenario, the banks would (or at least should) have concerns over their inability to save much outside of their bonuses.
If B is the scenario, the banks would (or at least should) have concerns over the sustainability of their current savings level, as it is entirely believable that the couple would want to increase their spending on lifestyle-related activities once they've secured the mortgage.

Michael D Not Higgins

Greyian wrote: »

The only reference to savings from the original post is for €3k/month. There is absolutely no reference to the bonuses being saved on top of that. I would suggest that you are the one reading something into this, as there is no indication whatsoever that they're saving the bonuses on top of €3k/month.

You've also said €55k a few times, whereas it would actually be €65k/year if they were saving their bonuses (€36k + €29k).
Either:
A) They are now saving €36k/year, and have saved €110k over the last 5 years, for average savings of €18.5k/year over the first 4 years.
They are now saving €65k/year, and have saved €110k over the last 5 years, for average savings of €11,250/year over the first 4 years.

If A is the scenario, the banks would (or at least should) have concerns over their inability to save much outside of their bonuses.
If B is the scenario, the banks would (or at least should) have concerns over the sustainability of their current savings level, as it is entirely believable that the couple would want to increase their spending on lifestyle-related activities once they've secured the mortgage.

The numbers seem to suggest the 3k/month is from the core salary, otherwise they're only saving 7k/year from their core salary for a prospective mortgage that will cost them more than 19k/year and any bank should laugh them out the door if that's the case.

molloyjh

Let's assume that this couple are putting the 10% into their pension (which is a mid-point and they could be contributing more). All figures are approximate:

Total Gross Salary: €11,600

Total Pension Contribution: €1,160
Total Childcare: €2,200
Total Rent: €1,200
Total Savings: €3,000
Total Health Insurance: €500
Total Initial Outgoings: €8,060

Remaining Income: €3,540

With that €3,540 they would need pay for their car loan, insurance, tax (for 2 cars) and keep a family of four looked after for a month. Anyone who thinks there is room for another €2k savings is not living in the real word.

Greyian

Michael D Not Higgins wrote: »

In fact the well known budgeting rule of 50/30/20 says you should save at least 20% of your income, so they've surpassed that. The problem I would have is that I'd agree with Greyian, as the numbers seem to suggest they only started saving recently and it could be unsustainable for them.

Yeah, the sustainability would be the biggest issue for me too.

How many kids do people know who want a PlayStation for example and make deals with their parents to get one. I know I did for the PS3. My parents made a deal with me, that if I saved half the money for one, they'd loan me the other half. So I bought one in August 2007 for €630 (and, of course, it got a sizeable pricecut within a month or two :rolleyes:), with my parents loaning me €300. In the months before buying it, I'd basically stopped spending money altogether (no going to the shop and buying a bottle of Coke in the evening, no going to cinema with friends etc). Once I had the PS3 though, I started spending money on other stuff again. At that point, I had what I wanted (my PS3), and paying my parents back as quickly as possible wasn't as appealing as seeing movies with friends etc.

I know plenty of recent graduates who have to get money off their payments every month to pay part of their rent, because they grew accustomed to travelling abroad regularly as teenagers during the boom, and the idea of not having a few weekends abroad per year if repulsive to them, so they spend on booking their holidays etc, then try and figure out how to pay rent afterwards.

seamus

Greyian wrote: »

Didn't the original post on thepropertypin say their rent was €1.2k/month? So childcare + rent of €3.4k per month. For their childcare+pension+rent to equal €6.5k, they'd need to be putting €3.1k/month into their pension (and that's from the net equivalent of their wage). Their actual pension contributions in that case would be €5,255 I believe (€5,255 - 41% tax = €3,100). I don't imagine they'd be putting over €5,000 a month into their pensions, as that would be over 25% of their gross wage, and in their mid-30s, they'd only be entitled to tax relief of 20% of their gross wage.

You're still extrapolating though based on a single snapshot. Maybe they haven't been paying a pension until now and so have seen fit to throw money at it while they're making hay.

There are too many variables there to come to any conclusion about how much they should or shouldn't have saved by now (or be saving).

Greyian

seamus wrote: »

You're still extrapolating though based on a single snapshot. Maybe they haven't been paying a pension until now and so have seen fit to throw money at it while they're making hay.

There are too many variables there to come to any conclusion about how much they should or shouldn't have saved by now (or be saving).

That wouldn't even be the most tax-efficient way of doing it though.
If they instead put 20% into their pension, then the rest into a normal savings account, in the future (in the event of wage reductions, added expenses etc), they could maintain their 20% pension contribution by using the money in savings to support their day-to-day expenses. As it stands, your suggestion of putting in over 25% means they're getting their tax relief on 20%, but the remainder is being taxed, and in the future, they may have to reduce their pension contributions, to say 15%, so they'd have less money overall in their pension as a result.

More relevantly though, should the bank not look at such a scenario and see a couple who hadn't been saving for their pension in the past, and suddenly go throwing loads of money in, as unsustainable, and perhaps a warning sign that they may be prone to excessive spending in the future (previously very low comparative savings/minimal pension contributions may be repeated)?

molloyjh

Greyian wrote: »

The only reference to savings from the original post is for €3k/month. There is absolutely no reference to the bonuses being saved on top of that. I would suggest that you are the one reading something into this, as there is no indication whatsoever that they're saving the bonuses on top of €3k/month.

You've also said €55k a few times, whereas it would actually be €65k/year if they were saving their bonuses (€36k + €29k).
Either:
A) They are now saving €36k/year, and have saved €110k over the last 5 years, for average savings of €18.5k/year over the first 4 years.
They are now saving €65k/year, and have saved €110k over the last 5 years, for average savings of €11,250/year over the first 4 years.

If A is the scenario, the banks would (or at least should) have concerns over their inability to save much outside of their bonuses.
If B is the scenario, the banks would (or at least should) have concerns over the sustainability of their current savings level, as it is entirely believable that the couple would want to increase their spending on lifestyle-related activities once they've secured the mortgage.

Your logic is so completely flawed here. They have shown a consistent ability to save €3k a month along with €1.2k rent a month. Therefore they have demonstrated an ability to pay €4.2k a month in mortgage repayments consistently over the last 12+ months. We know what their current salary situations are, but we do not know what they were 2 years ago, or 5 years ago. We also don't know what their outgoings were in those times or how long the wife chose to be off when the children were born. And so discussing their ability to save during a period of time where we know absolutely nothing about them is utterly pointless. Because we don't know enough to make any kinds of statements on them.

It is also entirely possible that buying a home wasn't a priority for them until recently. In fact later in the thread the individual in question mentions that he is less concerned with buying a home than his wife is. So it's not a hard sell to imagine that maybe this just wasn't something they were planning for 5 years ago and that their circumstance or personal opinions on the matter have changed. Simply put we don't know. We do know the data they have presented. Let's keep our commentary to what we know.

In terms of sustainability that is a question, but that's a question for every mortgage application. Again we just don't know anything about where they were prior to last year to comment. The banks obviously see no issue with the sustainability as they seem to have been offered the max they could have expected with that deposit.

Balmed Out

molloyjh wrote: »

Why are people here so quick to try and judge situations that they know little to nothing about?

No ones judging anyone. An example was made in relate to bank lending towards those at the top end of the market. I was pointing out that I dont believe the example to be typical, I didnt mean to sound like I was giving out about anyone.
I would expect someone on that sort of an income to have had a fairly steady career progression and so have more saved at 35 years of age when they are both first time buyers. Consequently I expect perhaps their jobs have not been held very long or whatever that would lead a bank to offer less.

Greyian

molloyjh wrote: »

Your logic is so completely flawed here. They have shown a consistent ability to save €3k a month along with €1.2k rent a month. Therefore they have demonstrated an ability to pay €4.2k a month in mortgage repayments consistently over the last 12+ months.

The point I'm trying to make is that we have no idea whatsoever of the sustainability of that going forward. The person only mentioned €3k/month savings, yet you suggested €65k/year. We have no suggestion by the original poster whatsoever that they are saving their bonuses. We also don't know what sacrifices have been made to make those savings, but it would not be at all unreasonable to suggest that substantial changes were made to enable such a change in saving habits, and it would be perfectly acceptable for a bank to look at their recent savings changes and see them as unsustainable.

I know people who spend €20 on lunch+dinner on a Friday, but could save €20 on a single Friday if they fasted for the day, but I wouldn't suggest that makes them suitable for a monthly loan repayment of €600, because they can't just fast forever.
Likewise, I know college students who live off ~€100/month (their parents pay their on-campus accommodation costs, and give them €500/month spending money). All the buy is food, they save €400/month for going on a J1. But they only do that for 3 months of the year, because they have to give up partying etc to do it. If you looked at them at during week 11, you'd see someone who could take out a loan with monthly repayments of €400, but that's not at all sustainable long term.
I also know people who have been turned down for loans for cars, despite saving enough for a few months to match the monthly payments, because the repayments were seen as unsustainable. Why were the repayments unsustainable? Because they gave up holidays, nights out, socialising etc. to make those savings.

The fact is the bank have looked at their savings history, seen they're currently saving €3000 on top of rent of €1200, but are unwilling to offer a mortgage with repayments anywhere near that amount. That would suggest that the bank do not see their "consistent ability to save €3k a month along with €1.2k rent a month" as sustainable (and, as such, consistent) going into the future.

Bob24

Just a reminder that the post on thepropertypin is one click away if anyone wants to ask the guy about his situation rather than speculating about it ;-)

Michael D Not Higgins

Obviously the conclusion we can come to is that they haven't been regular savers before the previous year. There are a number of guesses on why this would be the case as have already been posited
- long period of unemployment (I think this is less likely due to the high salaries they have at 35)
- extended maternity leave (more likely, let's say they went a couple of years without the mum's salary and maybe dipped into savings)
- sudden massive salary rises (ha!)
- high outgoings/lavish lifestyle (bad for loan)
- bad investments (potentially bad for loan, possible sign of risk taking for future investments)
- debt repayments (possible, they say they're debt free but could have cleared that before their recent savings started)

The only one that makes sense is the extended maternity leave which is worrying as it clearly shows that were one of them to lose a job or have another kid they'd need savings to keep going, so can't afford the mortgage.

Remember that the increase in their housing costs will be 19k/year. This is more than they saved each year before the previous year's exceptionally high saving.

molloyjh

Greyian wrote: »

The point I'm trying to make is that we have no idea whatsoever of the sustainability of that going forward. The person only mentioned €3k/month savings, yet you suggested €65k/year. We have no suggestion by the original poster whatsoever that they are saving their bonuses. We also don't know what sacrifices have been made to make those savings, but it would not be at all unreasonable to suggest that substantial changes were made to enable such a change in saving habits, and it would be perfectly acceptable for a bank to look at their recent savings changes and see them as unsustainable.

I know people who spend €20 on lunch+dinner on a Friday, but could save €20 on a single Friday if they fasted for the day, but I wouldn't suggest that makes them suitable for a monthly loan repayment of €600, because they can't just fast forever.
Likewise, I know college students who live off ~€100/month (their parents pay their on-campus accommodation costs, and give them €500/month spending money). All the buy is food, they save €400/month for going on a J1. But they only do that for 3 months of the year, because they have to give up partying etc to do it. If you looked at them at during week 11, you'd see someone who could take out a loan with monthly repayments of €400, but that's not at all sustainable long term.
I also know people who have been turned down for loans for cars, despite saving enough for a few months to match the monthly payments, because the repayments were seen as unsustainable. Why were the repayments unsustainable? Because they gave up holidays, nights out, socialising etc. to make those savings.

The fact is the bank have looked at their savings history, seen they're currently saving €3000 on top of rent of €1200, but are unwilling to offer a mortgage with repayments anywhere near that amount. That would suggest that the bank do not see their "consistent ability to save €3k a month along with €1.2k rent a month" as sustainable (and, as such, consistent) going into the future.

For starters I was using that €65k figure to suggest that savings were already present. They could not have saved €110k by saving €3k a month even if they saved their bonuses. I was never trying to claim they were definitely putting that money away too, it was just to prove that existing savings were already present.

Secondly in your earlier posts you seemed to be making the assumption that they were not saving their bonus, which like me you simply don't know.

Greyian wrote: »

Based on the original post, they don't seem to saving €3,000 per month, plus their bonuses, they just seem to be saving €3,000 per month total. So they saved €29,000 from their bonuses last year, then €7,000 from their basic pay.
Their basic wage works out to ~€120,000/year net, so they seem to be spending €113,000/year, then saving €7,000, then also saving the €29,000 (net) in bonuses.

Just to add: So they're spending €113,000, having rent and childcare costs of €3,400/month (or €40,800/year). So after childcare and rent, they're spending over €70,000/year?

You would have a point if they weren't saving their bonuses, but there is nothing to indicate that this is true. You said €29k bonuses + €7k bsaic pay when for all you know it could be €29k bonus + €36k basic pay. Or something in between. My point was never addressing sustainability, just a flawed assumption that €0 of the €29k bonuses was being saved.

gaius c

You're kind of missing the point guys. Their earnings put them in the top 2% of all households in the country but the limit of their buying power in south Dublin is a semi-d in Rathfarnham.

Who can buy the million plus houses in donnybrook then?

Glenbhoy

I think the point many are missing is that they are being restricted by deposit here, not income.

The guy mentions that BOI mentioned there being a 25% deposit requirement on purchases over €450K. Other than that, it's quite strictly 20% as required by the CBI, now, we could have thought that they would qualify for exemption, but as someone else on the pin points out, the banks don't want to be handing the exemptions out willy nilly at this stage of the year, come december they may still have quotas to fill and that's when they'll be less picky.

BOI offered him 545K on a 685K house - 20% deposit is 137K, mortgage of 548K required, therefore the offer is pretty much exactly what the regulators are laying down.

KBC offered him a mortgage of 560K which was the max they could based on the deposit he currently has saved of 110K.

So whilst many posters on here may be concerned about the amount they're spending (shouldn't we be thankful that someone is keeping the economy going;)), that wasn't what the underwriters were looking at.

MarkAnthony

gaius c wrote: »

You're kind of missing the point guys. Their earnings put them in the top 2% of all households in the country but the limit of their buying power in south Dublin is a semi-d in Rathfarnham.

Who can buy the million plus houses in donnybrook then?

I think people miss the point that the first house you buy isn't the only house you buy. Granted this is largely because of the crash and many are starting over but the €1m houses in Donnybrook are owned by the 0.5% and the rest who bought the €200,000 house, paid it off then the €450000 house paid it off then the €1m house.

On a note unrelated to the quoted post; why there is an assumption this fella has a bloody car loan or pays health insurance on that income I've no idea!

Cuddlesworth

MarkAnthony wrote: »

On a note unrelated to the quoted post; why there is an assumption this fella has a bloody car loan or pays health insurance on that income I've no idea!

Because people tend to scale their lifestyle to their incomes. Got that promotion to 150k, better buy that 100k car and replace it every 2 years. Pay the 4k per person top end VHI to not bother with public hospitals. Eat in the nice restaurants, where a meal sets you back 400 for 2.

Michael D Not Higgins

MarkAnthony wrote: »

I think people miss the point that the first house you buy isn't the only house you buy. Granted this is largely because of the crash and many are starting over but the €1m houses in Donnybrook are owned by the 0.5% and the rest who bought the €200,000 house, paid it off then the €450000 house paid it off then the €1m house.

There's a reason people called it a ladder (and still do). You don't drop into the most expensive real estate on your first outing in the market even with an exceptionally high income such as theirs.

As someone else stated, the deposit is their sticking point, which people trading up have in equity. There's nothing wrong with the property ladder per se, it's only when it encourages people to build and buy unsuitable properties to 'get on the ladder' that it becomes a problem.

by the seaside

Michael D Not Higgins wrote: »

There's a reason people called it a ladder (and still do). You don't drop into the most expensive real estate on your first outing in the market even with an exceptionally high income such as theirs.

As someone else stated, the deposit is their sticking point, which people trading up have in equity. There's nothing wrong with the property ladder per se, it's only when it encourages people to build and buy unsuitable properties to 'get on the ladder' that it becomes a problem.

Another feature (not intrinsic problem) of the property ladder is that the value of the 3 / 4 bed semi is in part based on a combination of the value of the 1 /2 bed starter home (currently owned by the couple wanting to trade up) and their ability to get credit.

The problem comes when credit is very cheap by historic standards, it inflates the value of the 3 / 4 bed semi (and other points on the ladder), and when credit becomes more expensive or more difficult to obtain, the ladder starts to shake.

Michael D Not Higgins

by the seaside wrote: »

Another feature (not intrinsic problem) of the property ladder is that the value of the 3 / 4 bed semi is in part based on a combination of the value of the 1 /2 bed starter home (currently owned by the couple wanting to trade up) and their ability to get credit.

The problem comes when credit is very cheap by historic standards, it inflates the value of the 3 / 4 bed semi (and other points on the ladder), and when credit becomes more expensive or more difficult to obtain, the ladder starts to shake.

They shouldn't be called starter homes. That's part of the problem.

My point is that in this particular example, they haven't got the deposit to fund the high level houses. They've already been told that they can afford 600-700k which should be plenty. Sure, let them pay down on that mortgage for a few years and trade up if they want, but I wouldn't advocate just because they're earning in the top 2% that they should be buying in the top 2%.

Bob24

MarkAnthony wrote: »

On a note unrelated to the quoted post; why there is an assumption this fella has a bloody car loan or pays health insurance on that income I've no idea!

First rule of the Internet: any assumption that supports my point is a good assumption :-)

molloyjh

gaius c wrote: »

You're kind of missing the point guys. Their earnings put them in the top 2% of all households in the country but the limit of their buying power in south Dublin is a semi-d in Rathfarnham.

Who can buy the million plus houses in donnybrook then?

I'd be less interested in those and more interested in the ones a little further out. In Stillorgan you can get a small 3 bed semi that needs work for around €400k at the moment. And by work I mean probably needs to be rewired and the whole house totally redecorated if not more. To buy that a FTB would need a deposit of €58k and combined salaries of €98k. A home owner moving would need a deposit of €80k and combined salaries of €92k. And none of that factors in the money that would be required to sort out the house.

If you want to get a house in turnkey condition you're talking a minimum of €475k. For FTBs thats a deposit of €73k and combined salaries of €115k. For home owners it would be a deposit of €95k and combined salaries of €109k.

For a pretty standard 3-bed semi in a good area that's pretty excessive, more-so from the point of view of the deposits than income really. What home owner that is looking to move currently has equity + savings to the value of €100k? And how many FTBs will ever have €75k in savings?

These are surely the houses that are going to drop in price because of a reduction in the demand for them (at that price).

Glenbhoy wrote: »

I think the point many are missing is that they are being restricted by deposit here, not income.

The guy mentions that BOI mentioned there being a 25% deposit requirement on purchases over €450K. Other than that, it's quite strictly 20% as required by the CBI, now, we could have thought that they would qualify for exemption, but as someone else on the pin points out, the banks don't want to be handing the exemptions out willy nilly at this stage of the year, come december they may still have quotas to fill and that's when they'll be less picky.

BOI offered him 545K on a 685K house - 20% deposit is 137K, mortgage of 548K required, therefore the offer is pretty much exactly what the regulators are laying down.

KBC offered him a mortgage of 560K which was the max they could based on the deposit he currently has saved of 110K.

So whilst many posters on here may be concerned about the amount they're spending (shouldn't we be thankful that someone is keeping the economy going;)), that wasn't what the underwriters were looking at.

cough, cough... :P

molloyjh wrote: »

...it looks like the LTV bit is the problem there, not the LTI.

by the seaside

Michael D Not Higgins wrote: »

They shouldn't be called starter homes. That's part of the problem.

My point is that in this particular example, they haven't got the deposit to fund the high level houses. They've already been told that they can afford 600-700k which should be plenty. Sure, let them pay down on that mortgage for a few years and trade up if they want, but I wouldn't advocate just because they're earning in the top 2% that they should be buying in the top 2%.

Well if you have a ladder, you have a bottom rung, so why not call it a starter?

Villa05

Ladder was a phenomenon introduced to the market relatively recently. its there to try and maximise transactions and thereby feed the "professionals" that are involved in buying/selling property.
Prior to this people rented or stayed with parents until they could afford a mortgage and when they bought they most likely bought there forever home.

The ladder is a greasy poorly built with a trap door underneath it and is of no benefit to property buyers

Michael D Not Higgins

by the seaside wrote: »

Well if you have a ladder, you have a bottom rung, so why not call it a starter?

Because the bottom rung isn't always the most suitable. It encourages the bad elements of the property ladder. It passes off a couple starting to have kids in a tiny one/two bed flat as normal.

Michael D Not Higgins

Villa05 wrote: »

Ladder was a phenomenon introduced to the market relatively recently. its there to try and maximise transactions and thereby feed the "professionals" that are involved in buying/selling property.
Prior to this people rented or stayed with parents until they could afford a mortgage and when they bought they most likely bought there forever home.

The ladder is a greasy poorly built with a trap door underneath it and is of no benefit to property buyers

But the ladder is just the list of cheapest to dearest property. That's inescapable. People who trade up would do so without anyone pushing the ladder. They have more money and want a bigger house so they go buy it.

There are elements in how the ladder is pushed that causes the trap door, including the cheap credit available during the boom and small, poorly made apartments going for 300k-400k because of it, but that doesn't mean the ladder is a bad thing. In a well functioning market, a modest home would cost a modest price and would be bought by a first time buyer and would be suitable for their lifetime. Should they become successful and earn more money, they can sell their modest home and buy a more lavish one. Nothing wrong with that.

Michael D Not Higgins

molloyjh wrote: »

cough, cough... :P

And this is why we were discussing their savings pattern.

In order to fit at the top end of what the regulations allow you need to save 87.5% of your gross income as the deposit (for 20%). In their case it would need to be 25% deposit for AIB over a certain amount, so they'd need to save 117% of their gross income, where they had saved 55%.

Currently I have about twice of my gross salary in savings and sure, if I were in their position in a few years after a wedding and kids it might knock some of that off but not three quarters of it.

flintash

Villa05 wrote:

Ladder was a phenomenon introduced to the market relatively recently. its there to try and maximise transactions and thereby feed the "professionals" that are involved in buying/selling property. Prior to this people rented or stayed with parents until they could afford a mortgage and when they bought they most likely bought there forever home.

ladders as such doent make sense to me at all. especially if you married with kids. which one of you want to move home every 5 years or so? you just set up the house the way you want to, and off you go to next house. and with the kids its more hassle never mind going through buying-selling process which is big headeck as well for most of poeple. by the time you get on top of your " ladders", kids leave and you alone in the big house.
the only sense to me is when you in early twenties , have loads of money and want to deversify your portfolio.

molloyjh

Michael D Not Higgins wrote: »

And this is why we were discussing their savings pattern.

In order to fit at the top end of what the regulations allow you need to save 87.5% of your gross income as the deposit (for 20%). In their case it would need to be 25% deposit for AIB over a certain amount, so they'd need to save 117% of their gross income, where they had saved 55%.

Currently I have about twice of my gross salary in savings and sure, if I were in their position in a few years after a wedding and kids it might knock some of that off but not three quarters of it.

I would argue that you are the exception there. Are you living in Dublin?

Salaries do not remain constant. If over the last 10 years I had been saving 20% of my salary I'd probably have in and around 1.5 times my current salary. But in my current situation if I were to save 20% of my gross income I'd be down just over 50% of my gross income before I even pay for a single thing due to savings and tax. Factor in my mortgage and that's 65% of my income gone. Add 5% for my pension and we're at 70%.

With that 30% I need to feed and cloth myself, pay for health insurance, fork out for transport in Dublin, pay all my bills etc. Trust me when I say that this would be, at best, difficult. And would necessitate that I have absolutely no life at all.

And I still wouldn't have enough for a deposit for that standard 3-bed in Stillorgan I was talking about earlier, never mind that paying for a wedding would have reduced the savings further or the fact that I was working in the public sector for a lot of that which reduced my ability to save by a further 5-6% of my gross salary because of the pension levy.

So basically there is simply no way that I could ever have saved twice my current gross salary short of living on bread and water and locking myself in the house for 10 years straight (while also refusing to get married). As great as your savings are they simply aren't representative of people living in Dublin today. The cost of living is simply too high to enable that for most.

Michael D Not Higgins

molloyjh wrote: »

I would argue that you are the exception there. Are you living in Dublin?

Salaries do not remain constant. If over the last 10 years I had been saving 20% of my salary I'd probably have in and around 1.5 times my current salary. But in my current situation if I were to save 20% of my gross income I'd be down just over 50% of my gross income before I even pay for a single thing due to savings and tax. Factor in my mortgage and that's 65% of my income gone. Add 5% for my pension and we're at 70%.

With that 30% I need to feed and cloth myself, pay for health insurance, fork out for transport in Dublin, pay all my bills etc. Trust me when I say that this would be, at best, difficult. And would necessitate that I have absolutely no life at all.

And I still wouldn't have enough for a deposit for that standard 3-bed in Stillorgan I was talking about earlier, never mind that paying for a wedding would have reduced the savings further or the fact that I was working in the public sector for a lot of that which reduced my ability to save by a further 5-6% of my gross salary because of the pension levy.

So basically there is simply no way that I could ever have saved twice my current gross salary short of living on bread and water and locking myself in the house for 10 years straight (while also refusing to get married). As great as your savings are they simply aren't representative of people living in Dublin today. The cost of living is simply too high to enable that for most.

I was living in Dublin but I'm living in the UK now. The bulk of my savings are from Dublin. I know I'm an outlier, but the fact is that to reach the top of the 3.5LTI 80%LTV you need to save 87.5% of your gross salary.