How much to spend on a house?

BertyytreB

Hi,

Myself and my wife have just gone through the approval process for a mortgage and we are now considering buying a house. We have a deposit of e85,000 and are first time buyers and we've been looking at houses around 425k. We would like to buy a house in south Dublin however what you get for your money now in our opinion isn't great. We don't want to increase our LTV however we are seeing houses that we like that are 20-30k more expensive. Should we stretch it or save some more and wait it out?

We are both in our 30s and have spent years scrapping our deposit together and I don't want to be saddled with huge debt. When the crash happened we both lost our jobs and I have been fortunate enough to get a really good rolling contract job soon after. We aren't in an urgent situation so can wait it out another year or two and save 10-20k. I am interested to see if the new CB rules will come in to effect and think this will be positive for us if it happens. However if houses keep rising I don't want to keep chasing.

Opinions and thoughts on our circumstance?

Dr. Dodger

Personally I wouldn't let €20k stop me from buying THE house if you found it and could afford it. We've been looking for years in the same area and finding a property you like that's in a decent condition and a decent size was the biggest problem.

It's a lot of money so it would want to be a house for life that you won't grow out of and wouldn't need another wad of cash pumped into it imo.

ted1

Do you have kids or plan in having them? What can you afford with only 1 income? To be that would be the decider

Moonbeam

The asking price is only an asking price ,offer what you can afford .

johndaman66

Moonbeam wrote: »

The asking price is only an asking price ,offer what you can afford .

Yeah but its unlikely they will get the house for €280k if thats all they can afford if its asking €425k. You are right though, theres definitely no harm putting in a couple of lowball offers for houses that tick the boxes...worst they can do is say no.

BertyytreB I think your probably best to hold off for the moment. Whether the 20% rule comes in or not you have a 20% deposit on a house price of €425k, If the rule does materialise it will most likely leave you in a better position as I think it will put downward pressure on house prices.

Having said that it wouldn't stop me viewing houses that may suit you in the meantime and even putting in lowball offers. If nothing else viewing houses will give you a good idea of whats out there. Having dealt with a large number of Estate Agents at this stage I can assure you that many are less than useless chancers but there are genuine guys out there too. In part some of them have gave me a good idea of what to look for in a house ; things worth paying a few quid extra for; good and bad estates etc....Even if you aren't going to buy now things like that will give you a head start.

I think too when you are renting you look at the figures and its apparent your rent would cover your mortgage, which is a bit of a b!tch. However, if thats the case with you don't just buy as soon as for that reason alone as thats a decision you may end up regreting...

spin777

Remember you are buying a home not a house. Very important and an extra €20k might seem like a small bit extra for future happiness and peace of mind. One other thing that was said to me a few years ago: "you buy your neighbours, not your house" , thought it was a great speak.

BertyytreB

Thanks for the responses. It's just where do we stop as bidding on houses can get out of control. There are houses now for 445 we'd really like but similar houses we have seen people bid 480+ for them. We are going to view two and take your advice John and offer 10k under and see how it goes. Would be great if other people stopped over paying for houses.

jimosterberg

BertyytreB wrote: »

Thanks for the responses. It's just where do we stop as bidding on houses can get out of control. There are houses now for 445 we'd really like but similar houses we have seen people bid 480+ for them. We are going to view two and take your advice John and offer 10k under and see how it goes. Would be great if other people stopped over paying for houses.

Hopefully the new central bank rules will stop them overpaying.

duckcfc

jimosterberg wrote: »

Hopefully the new central bank rules will stop them overpaying.

Them rules will be done away with once the property market doesn't pick up again in few years.

Saipanne

duckcfc wrote: »

Them rules will be done away with once the property market doesn't pick up again in few years.

You can be sure of literally none percent of that statement.

duckcfc

Saipanne wrote: »

You can be sure of literally none percent of that statement.

We live in a capitalist world, just sit back and see in few years that my comment will come true.

Saipanne

duckcfc wrote: »

We live in a capitalist world, just sit back and see in few years that my comment will come true.

Lol. Ok.

johndaman66

BertyytreB wrote: »

Would be great if other people stopped over paying for houses.

I'm not sure would I put it quite like that BertyytreB. Arguably people are overpaying for houses but you wont see a situation where people stop "over paying" as you call it. Its market forces, supply and demand. Don't know a hell of a lot about the South County Dublin property market as distinct from the property market in any other part of the country or the country as a whole other than its most likely one of the most vibrant property markets in the country at the moment and there is a lot of heat in it at the moment. To me it would clearly seem there is a supply shortfall, for that built up demand and thats whats driving up prices - too many people like yourself in competition for similar houses - as a whole that drives up prices. Fair to say nobody you are in competition with for these houses is intentionally going out to screw you over and drive up prices for you. Remember nobody else wants to pay more than they have to either. But clearly where there is a lack of supply to satisfy demand the market forces as a whole will put upward pressure on prices.

Due to recent prices rises you might be looking at houses that were asking circa 420k but now a lot of seem to be asking circa 480k/500k and as a result you might be cursing those paying the 480k/500k. But remember the houses that were previously asking 360k/370k are now asking circa 420k and those people may be cursing those paying that for them - its market forces I suppose really.

BertyytreB wrote: »

Thanks for the responses. It's just where do we stop as bidding on houses can get out of control. There are houses now for 445 we'd really like but similar houses we have seen people bid 480+ for them. We are going to view two and take your advice John and offer 10k under and see how it goes.

I think first you need to decide what you can comfortably afford BertyytreB and thats the maximum limit full stop. As others have mentioned allow for contingencies - you or your partner loosing a job or being made part-time, your partner becoming pregnant (the likes of this may not be in yer mindset at the moment, in fact ye might be saying not a hope in the world this will happen, but believe me yer mindset may quickly change).

If its unfortunate that the type of houses you are hell bent on are outside your budget then you either have to choose in making sacrafices, no utility room for example, or hold out buying for longer and keeping saving as much as you can towards house. I say that on the assumption that if this 20% rule materialises it will take some heat out of the market when its introduced...however, I dont have a crystal ball either, don't take my word as gospel on that.

If bidding on a particular house I think you need to set out in your mind whats its worth to you first. Assuming the figure is of course within the budget of your affordability as previously mentioned.... If bidding goes past this figure then you would need to leave if off irrespective of what you feel the house is worth in the current market. However, the maximum the house is worth to you could of course be below your maximum figure of affordability (house may be needing work/ modernising etc etc). If bidding against others you should stick firmly to the figure you have decided in your head and if bidding goes past this figure, even by a grand I'd say you should leave the house go....You need to know when to hold and know when to fold as the saying goes.

Dont let Estate Agents bully you or coerce you into doing something your not comfy with or spending more than you have set out to on a particular house. Be firm (not rude) with them and treat it as a business transaction. What I'm trying to get at here is don't go in head over heels about the house and keep it very clinical when dealing with them. Even if your not tell them you have a few other houses lined up to view with other Estate Agents (but this will require a small bit of homework, at least have 1 or 2 addresses in your head). Dont approach it by saying this house is so perfect, ticks all the boxes etc when dealing with the Estate Agent, even if it does. If you do that you will be like putty in their hands.

jester77

I would keep it simple, write down the min and max square metres you want as a home. Then write down your max price per square metre you are willing to pay. Rigidly stick to it if a bidding scenario arises and walk away if the price goes over.

chopper6

I sure as hell wouldn't be borrowing 400k based on having a 'rolling contract' .

Saipanne

chopper6 wrote: »

I sure as hell wouldn't be borrowing 400k based on having a 'rolling contract' .

Good point. Perhaps his spouse's income is more secure?

BertyytreB

johndaman66 wrote: »

I'm not sure...

Cheers good advice. We're looking at max borrowing 350k but I ideally less. If we could get that down to 300k that would be the ideal situation. We are being clinical in how we are dealing with this as in our current situation we are living rent free and can do so for another 1-2years. So we are not feeling any pressure. We have reached a point with our savings however that we feel we can now get a house and not over stretch ourselves.

We have no kids yet but this may change in the near future however childcare again this wouldn't be an issue for 1-2years in our present circumstance. It's a situation now where we don't want to get carried away but we would like to move on.

BertyytreB

chopper6 wrote: »

I sure as hell wouldn't be borrowing 400k based on having a 'rolling contract' .

The contract is renewed every few years and I have just renewed it again so my job is secure for another few years.

Stheno

BertyytreB wrote: »

Cheers good advice. We're looking at max borrowing 350k but I ideally less. If we could get that down to 300k that would be the ideal situation. We are being clinical in how we are dealing with this as in our current situation we are living rent free and can do so for another 1-2years. So we are not feeling any pressure. We have reached a point with our savings however that we feel we can now get a house and not over stretch ourselves.

We have no kids yet but this may change in the near future however childcare again this wouldn't be an issue for 1-2years in our present circumstance. It's a situation now where we don't want to get carried away but we would like to move on.

Where in South County Dublin are you hoping to buy?

BertyytreB

Stheno wrote: »

Where in South County Dublin are you hoping to buy?

South county Dublin anywhere really

Mrs OBumble

chopper6 wrote: »

I sure as hell wouldn't be borrowing 400k based on having a 'rolling contract' .

Depends what industry the OP is working in, and what the chances of getting work elsewhere are. Really, most so-called permanent jobs are no more secure than some contract ones.

BertyytreB

Mrs OBumble wrote: »

Depends what industry the OP is working in, and what the chances of getting work elsewhere are. Really, most so-called permanent jobs are no more secure than some contract ones.

Exactly I've been let go from a full time "permanent" job in the past. At least on contract I know my term and I am paid better.

lima

Why not look Northside? There are more facilities there and the houses don't cost as much as DLR or or South Dublin.

Saipanne

lima wrote: »

Why not look Northside? There are more facilities there and the houses don't cost as much as DLR or or South Dublin.

Clontarf is lovely.

chopper6

BertyytreB wrote: »

The contract is renewed every few years and I have just renewed it again so my job is secure for another few years.

But surely a mortage will need to be paid for 25-30 years..and that doesnt take into account any major changes in your situation..eg having a child.

lima

Saipanne wrote: »

Clontarf is lovely.

Yeah it is but it's pricey too ( I'm from there originally)

Dearg81

Personally I'd wait until next year if I was you as I dont think there's good value for money at the moment in south Dublin.

There is a lot of uncertainty about the new CB rules which is affecting prices so I think it's a bad time to buy now. The new CB rules will be coming in so dont panic buy, keep saving and see what it's like next year.

In terms of how much you should borrow - I thinks its recommended that your monthly repayments shouldnt be over 30% of what you earning. Best of luck whatever you decide though, it's not an easy decision!

The Spider

Dunno, I'd think carefully before listening to people saying hold off, they've been spouting that tune around here for about three or four years now, and prices have kept going up. The problem is the location, it's essentially the most desirable place in Ireland to live and has an extemely limited supply of housing and will have for the foreseeable future. Analyse the situation, how much if any effect are the new CB rules going to have on SCD? Builders are refusing to build now because they can't make a profit at current prices, and prices are rising, if rules are put in place to stop prices rising what's going to happen?

Builders are definitely not going to build, supply will be even more restricted in SCD, prices will continue to rise there, also there's extremely limited space for any substantial development, supply will always be restricted.

How many other couples are like yourselves who want to buy in SCD have decent jobs and a chunky deposit? There's currently 708 houses at a minimum of 3 beds for sale in South County and South City Dublin, I'm sure if you trawled through it you'd eliminate areas like Tallaght, Clondalkin etc. as if you're spending 400k plus lets face it, they're not your target areas.

The CB rules will more than likely have some effect outside SCD, but in all honesty I don't see how they'll affect prices within it, (I say this as someone who does not own a house in SCD).

Couple of things to keep in mind now as opposed to the last crash, at the moment the economy is on the up, more jobs, more people chasing a dwindling supply of SCD houses, if things keep improving into next year, a lot more people will have that twenty percent deposit and maybe topped up from parents.

No one knows, but you can make an informed guess, like I say analyse the situation, and be honest do you think houses in your target area will drop next year?

Oh and trawl through some of the posts on this site saying prices would drop further in 2011.

BertyytreB

Saipanne wrote: »

Clontarf is lovely.

I find Clontarf too expensive, I'm from the north side but my wife would prefer the south side and we have lived on both sides together.

JohnTravolta

I bought a house in August that was really below what we can afford. I'm happy as hell. Before I was living in Dundrum and paying 1800€ rent every month. Now, I live in Clonsilla and pay 1000€ mortgage every month. This puts a lot of pressure off our budget and gives us more space for doing other things like travelling, our kids, car and, in due time, an extension.

I really think that Dublin South is a nice place to live, but is really overpriced. You either have to be rich or you have to plane stupid to pay 400k for some of the 3-beds that are on the market.

With the money you save on buying a house of 400k you can buy a second one somewhere in Portugal

Me and my spouse are lucky and are on decent money (way above national average), but I have never been able to understand who can afford these houses.

Sala

You are in an excellent position with your deposit at the moment. Next year a lot of FTBs may be unable to but due to the new lending/deposit limits so hopefully that will contain price rises. There is no harm looking at houses asking abov what you can/ are willing to pay - every day I am getting alerts of falls in asking prices in SCD. If people are willing to drop their asking prices within a few weeks of being on the market, they should be open to offers when it's first listed.