How do most people get their deposit to buy a house?

el27

Single person here. Recently bought a house by myself. Saved nearly €50k over 6 years - put away at least 500pm, paid Dublin rents that whole time too, all other living expenses, etc. Still managed to have a life.

Luck to be on very good salary now but was only on slightly higher than average wage when I started.

Only began to think of buying a couple of years ago, before then just wanted to build savings. So, getting into a saving habit ASAP is probably the best advice.

Really can't relate to whoever said a lot of house purchases are funded by parents. It's kind of insulting to people who saved entirely by themselves, while also living independently.

lima

Alf Veedersane wrote: »

Why?

If they are paying off a mortgage for a property worth say e500k in the boom but only worth e250k now then they are effectively throwing away money because their property is simply not worth what they paid for it. Fact is at this present time their 'asset' is worth e250k. Obviously there is scope for the price to increase further but it will never be worth e500k again so it's wasted/dead money (both the capital and interest)

Tasden

Mrs OBumble wrote: »

And those are the people who social housing should be for: ones who through no fault of their own cannot afford to house themselves.

.

Yep, should be, but unfortunately it's not the case as it stands, but that's a topic for another day!

Alf Veedersane

lima wrote: »

If they are paying off a mortgage for a property worth say e500k in the boom but only worth e250k now then they are effectively throwing away money because their property is simply not worth what they paid for it. Fact is at this present time their 'asset' is worth e250k. Obviously there is scope for the price to increase further but it will never be worth e500k again so it's wasted/dead money (both the capital and interest)

Versus the rent paid to landlords covering repayments of housed they bought in the boom and who are at liberty to increase if demand allows it.

Security of your living arrangements has a high value for a lot of people.

A lot of people pah what they pay because that is what it is worth to them. It's theoretical value at any point in time might make no difference to them if they are happy where they live. Similarly if it was worth more. If my house was valued more than we paid for it, it makes no difference to me.

Tarzana2

Saipanne wrote: »

I save a grand a month, and I still have a social life. I'm going to Thailand in a few weeks! Yay!

Yep. He was definitely addressing you. Fact.

jon1981

el27 wrote: »

Really can't relate to whoever said a lot of house purchases are funded by parents. It's kind of insulting to people who saved entirely by themselves, while also living independently.

I think some people wish this to be true to make themselves feel better for not having saved. Likewise of my friend's and family that have bought , they did not have Mammy and daddy propping them up with the deposit.

lima

Alf Veedersane wrote: »

Versus the rent paid to landlords covering repayments of housed they bought in the boom and who are at liberty to increase if demand allows it.

Security of your living arrangements has a high value for a lot of people.

A lot of people pah what they pay because that is what it is worth to them. It's theoretical value at any point in time might make no difference to them if they are happy where they live. Similarly if it was worth more. If my house was valued more than we paid for it, it makes no difference to me.

I'm just highlighting the point that the dead money thing Irish people say about rent is the same as calling mortgage interest and capital loss dead money

The only issue with security is that you are stuck if you need to move because of work or life reasons.. if you want to move you don't have that noose of debt hanging over your neck

Citroen2cv

Most people I know that are my age and own their own home, were helped out with the deposit by mammy and daddy. In fact Id say mammy and daddy payed the whole amount of the deposit. :mad:

pwurple

lima wrote: »

If you want to move you don't have that noose of debt hanging over your neck

It's only a 'noose of debt' if you can't/won't sell it for some reason.

Market should be free, buy and sell as needs changed. We've moved house 4 times in a few years as work and family needs changed.

It becomes a problem when people have very low equity, or neg equity in their house. But a lot of that can be prevented by having a deposit up front. I've never bought without having at least a 15% deposit, and have overpaid at the very start to get that capital down as fast as possible.

pwurple

Citroen2cv wrote: »

Most people I know that are my age and own their own home, were helped out with the deposit by mammy and daddy. In fact Id say mammy and daddy payed the whole amount of the deposit. :mad:

What age are you?

Eldarion

pwurple wrote: »

What age are you?

He's old enough to be bitter about it, that's for sure.

I wouldn't worry about the people who needed the Bank of M&D to fund their deposits, those are the type of people who will always spend what's in their pockets regardless. The people who got into the habit of saving for their deposit won't stop that good habit just because they have the house. They'll continue to save and stay much more debt free than the other crowd and will probably end up more financially sound in the long run anyway.

Alf Veedersane

lima wrote: »

I'm just highlighting the point that the dead money thing Irish people say about rent is the same as calling mortgage interest and capital loss dead money

I appreciate that. But you're essentially paying someone else's mortgage and you have nothing to show for it and you're still not particularly secure.

That's fine if you move around a lot but if you don't, then it's something that adds to the potential stress.

Largely because renters have no security in Ireland compared with other countries.

LaGlisse

Eldarion wrote: »

He's old enough to be bitter about it, that's for sure.

I wouldn't worry about the people who needed the Bank of M&D to fund their deposits, those are the type of people who will always spend what's in their pockets regardless. The people who got into the habit of saving for their deposit won't stop that good habit just because they have the house. They'll continue to save and stay much more debt free than the other crowd and will probably end up more financially sound in the long run anyway.

Exactly. Lived with a fella like this. Daddy stumped up the deposit and went guarantor. The guy is still paying interest only 7 years into mortgage, went a few months paying nothing, constantly getting deals with the band to lower his payments giving them the poor mouth. meanwhile he's off eating in Michelin star resteraunts, blowing E100 on nights out basically living the life when he should be out on his ear and renting. people like him (and there are tens of thousands of them) are why property prices are still sky high!

Eldarion

Alf Veedersane wrote: »

I appreciate that. But you're essentially paying someone else's mortgage and you have nothing to show for it and you're still not particularly secure.

What if the Landlord doesn't have a mortgage? Who's mortgage is being paid then? :rolleyes:

Alf Veedersane wrote: »

Largely because renters have no security in Ireland compared with other countries.

If anything renters have too much security, it may be that it's unintentional but renters can overhold on a property for nearly a year before being forcibly removed.

Tasden

LaGlisse wrote: »

Exactly. Lived with a fella like this. Daddy stumped up the deposit and went guarantor. The guy is still paying interest only 7 years into mortgage, went a few months paying nothing, constantly getting deals with KBC to lower his payments giving them the poor mouth. meanwhile he's off eating in Michelin star resteraunts, blowing E100 on nights out basically living the life when he should be out on his ear and renting. people like him (and there are tens of thousands of them) are why property prices are still sky high!

This is one person who is irresponsible with money. It doesn't mean all, or even the majority, of people who get help from their parents are like this. For a lot of people it is unexpected but very much appreciated and doesn't take away from the hard work they personally did to save a deposit.

Alf Veedersane

Eldarion wrote: »

What if the Landlord doesn't have a mortgage? Who's mortgage is being paid then? :rolleyes:

No one's and the landlord usually drops the rent out of the goodness of their heart.

Eldarion wrote: »

If anything renters have too much security, it may be that it's unintentional but renters can overhold on a property for nearly a year before being forcibly removed.

Yeah, stress-free.

I'm talking about genuine security of tenancy not exploiting legalities.

pwurple

Alf Veedersane wrote: »

I'm talking about genuine security of tenancy not exploiting legalities.

There's no absolute security if you buy either. You might lose your job and be forced out, the property might be CPO'd for a new motorway, a drug dealer might move in next door to you and turn the place into a heroin-den.

lima

Alf Veedersane wrote: »

I appreciate that. But you're essentially paying someone else's mortgage and you have nothing to show for it and you're still not particularly secure.

That's fine if you move around a lot but if you don't, then it's something that adds to the potential stress.

Largely because renters have no security in Ireland compared with other countries.

You have a roof over your head to show for it and you are not expecting anything at the end of your rental. Perhaps you are planning for retirement funds in other ways. It is not for everyone though particularly people who get stressed easily

Someone who bought in 2006 is essentially paying interest on a property worth half what they paid for it, which for me anyway is worse than paying someones mortgage

whippet

lima wrote: »

You have a roof over your head to show for it and you are not expecting anything at the end of your rental. Perhaps you are planning for retirement funds in other ways. It is not for everyone though particularly people who get stressed easily

Someone who bought in 2006 is essentially paying interest on a property worth half what they paid for it, which for me anyway is worse than paying someones mortgage

it all boils down to personal preference.

I have a good mate who hasn't bought .. rented from his student days and now is married with two children. He was in dublin and eventually moved back to his home town .. rents a nice big place .. been in it for a couple of years and is quite content. His rent isn't much more than what a mortgage would be and does not have the expense of maintaining a property. He is relatively secure but always know he can have the lease ended at any stage; outside of dublin there is a nice market for decent large family home rentals and he knows he will quite easily get another place if needed.

All the while he is building up a decent investment portfolio in lieu of owning any property and that should serve him well in retirement.

I'm of the other persuasion, I tried the renting thing but really didn't like the lack of absolute certainty which was out of my hands. I didn't like the idea that I couldn't mould and change my property to suit my needs and desires .. plus I have no intention of ever leaving where I am now. fortunately I managed to buy my current house at the very bottom of the market and the repayments are about 60% of what an equiv. rental would be.

As for the discussion about how to save for a deposit ... the average first time buyers mind set is totally different to what it was 20years ago. There is a sense of instant requirements. A property is probably going to be the biggest purchase of your life and if you can't discipline yourself and sacrifice the nicer things in life for a couple of years to save a decent deposit you have to question the attitude towards the responsibility of having a mortgage and property.

There are plenty of anecdotal evidence of mortgage holders currently in arrears or in default who would ensure that the foreign holiday, up to date wardrobe, nice car are in place before paying for the mortgage .. I would think that there is a cohort of people out there who didn't save for the deposit (gift from Bank of Mammy and Daddy or CU loan) and now when things are tighter financially are incapable of the discipline required to cut out unnecessary expenditure to cope.

Alf Veedersane

lima wrote: »

Someone who bought in 2006 is essentially paying interest on a property worth half what they paid for it, which for me anyway is worse than paying someones mortgage

And you don't think that rent is covering the mortage of something that is worth less than it was bought for?

Alf Veedersane

pwurple wrote: »

There's no absolute security if you buy either. You might lose your job and be forced out, the property might be CPO'd for a new motorway, a drug dealer might move in next door to you and turn the place into a heroin-den.

I didn't say there was absolute security but if you're the kind of person who worries about the potential of a motorway being designed over your house or heroin dealers moving in next door, then you've bigger problems.

But there's a lot more security than renting. It's just a reality.

I've had good landlords in my time but there was always the annual concern that they mght either want to raise the rent or sell.

Rezident

I tried to save €500 a month (not always every month) but it took around 13 years. Finally got there aged 37 and just moved in!:)

The house is freezing compared with my old warm apartment, the commute is a killer, the extra cylce home last night was a nightmare, the alarm went off first day back at work, I think someone tried to break in, Panda didn't bother to collect my bins yesterday for some unknown reason and I'm actually afraid to start googling 'property tax' and 'water charges' yet. What have I done!? :eek:

Tasden

Rezident wrote: »

I tried to save €500 a month (not always every month) but it took around 13 years. Finally got there aged 37 and just moved in!:)

The house is freezing compared with my old warm apartment, the commute is a killer, the extra cylce home last night was a nightmare, the alarm went off first day back at work, I think someone tried to break in, Panda didn't bother to collect my bins yesterday for some unknown reason and I'm actually afraid to start googling 'property tax' and 'water charges' yet. What have I done!? :eek:

Congratulations!

Malari

jester77 wrote: »

Just always saved since I started work. Around 400 a month on average. Less when I was younger, more as I got older and earned more. There was also SSIA and work bonuses over the years. Had over 100k saved for deposit.

Doesn't take much effort really, just start as you mean to continue. I don't understand why some people decide 3 or 4 years before they want to buy a house, that they suddenly must start saving and then they go into ultra scrooge mode and live a miserable existence.

This is essentially it. Since I started working I was saving. I suppose the discipline started by having to paying back loans, then I just continued putting that money aside, and any extra. I didn't know what I was saving for, but I was able to pay for a car, then when I decided I wanted to buy a house I already had a deposit, and then some.

I didn't live on the breadline either, I certainly went on holidays and went out for meals and bought nice things, but I just didn't need to spend all of my disposable income.

Hollister11

Save save and save.
Sure some people might get lucky and have parents with extra money, get a nice bonus from work, get luck in the stock market, lotto ect
But just save every penny you can for a few years!

lima

Tasden wrote: »

This is one person who is irresponsible with money. It doesn't mean all, or even the majority, of people who get help from their parents are like this. For a lot of people it is unexpected but very much appreciated and doesn't take away from the hard work they personally did to save a deposit.

it does take away the hard work, they don't have to work to get it!

lima

Alf Veedersane wrote: »

And you don't think that rent is covering the mortage of something that is worth less than it was bought for?

It's not the renters business where the money is going, they are purchasing a service to provide shelter and that's how far they should be thinking into it

It's like paying your phone bill and being angry about the money being used to pay off the operators debts

Tasden

lima wrote: »

it does take away the hard work, they don't have to work to get it!

Depends how much their parents give them. If they only get a portion towards their deposit then they still have to work hard for the rest. Even if the parents end up giving them a full deposit who is to say they weren't saving themselves prior to that.

lima

Just make sure you get a job that you love that pays well. Then go out and enjoy yourself but don't waste money on drink (total waste - e5 a pint & e8 a G&T?!) - have some awesome experiences, but save up too..

lima

Tasden wrote: »

Depends how much their parents give them. If they only get a portion towards their deposit then they still have to work hard for the rest. Even if the parents end up giving them a full deposit who is to say they weren't saving themselves prior to that.

Yeah but they don't have to work for mammy+daddys money