To buy or not to buy

Snakeweasel

Hi All, I'm in my late twenties, single and still living at home. Don't really want to rent as any rental property in my locality tends to be in an undesirable estate/area. There are very few forever home style properties that come up for sale in my area and when they do they quickly go out of my price range.

There are however some properties in decent estates in my local town that if I bought I could pay off in <10 years. The idea of doing this is because I know that on my income alone I would never get a mortgage to build, but if I did meet someone I could pay off the reasonably priced house and go for a mortgage to build whilst in my mid thirties.

Has anyone else been in this situation? Or even anyone that knows someone that was in a similar situation?

Michael D Not Higgins

From the wording of your post you seem to have already made up your mind. As you say, the rental properties are not in areas you want to live and you can pay off a mortgage in less than 10 years. I'd go with buying a house that suits you now and worry about other accommodation later.

Disclaimer: I am basing analysis on you having a decent deposit and working up equity without substantial falls in the market in the intervening years.

Snakeweasel

Thanks for replying, I wouldn't say I have my mind made up. I suppose what I am asking is if there are potential problems when looking for a second mortgage or will a bank care once you have the first house paid off?

Lombardo86

Snakeweasel wrote: »

Thanks for replying, I wouldn't say I have my mind made up. I suppose what I am asking is if there are potential problems when looking for a second mortgage or will a bank care once you have the first house paid off?

The obvious one and one most recently in the news is you will need 20% on the full value of the house.

Michael D Not Higgins

Snakeweasel wrote: »

Thanks for replying, I wouldn't say I have my mind made up. I suppose what I am asking is if there are potential problems when looking for a second mortgage or will a bank care once you have the first house paid off?

If you've paid off a mortgage in full, it stands even better to your name as you have equity in a property with no lien against it.

Of course, you wouldn't be considered a first time buyer and would need at least 20% deposit for a new mortgage. If you were selling the other house this wouldn't be a problem but it's likely that you'd keep it as you said you want to build in which case there would be an overlap in the time which you apply for a mortgage and when the build is complete. In this case, I would enquire with a mortgage broker or someone in the mortgage dept of the bank to see what their standard practice is.

Michael D Not Higgins

Lombardo86 wrote: »

The obvious one and one most recently in the news is you will need 20% on the full value of the house.

Not sure how this works with a mortgage to build. What's the value of an unbuilt house?

handlemaster

if your content with small town life why not.

MarkAnthony

Buying the forever house is a modern phenomenon, traditionally (in the UK at least) people started off in a two bed/flat and traded up as they met someone and started a family.

Best of luck to you OP.

riclad

There,s not much building going on in ireland now,
say you get a site for free,
you need planning permission,
standard 3bed house costs 100k plus to build.
Outside dublin its cheaper to buy a house , than build a new one .
The building thats going on is mostly higher priced apartments .
no point in worrying about 2nd mortgage,
if necessary you can sell off house 1 ,
and go for joint mortgage if you meet someone .
or rent out the house .
i presume forever house is somewhere where you can stay for 30 plus years .

i know someone bought house 1,
in city, met someone in her home town,
sold house 1,
bought house 2 in rural town.
she,s very happy now.

Basically self build is more expensive now ,with new rules re project
manager etc
so in most cases its cheaper to buy a 10 year old house .

The bank looks at your income ,debts ,asset,s etc when assessing your
loan application , and also savings record etc
Are you working full time, also age .
and salary vs amount of loan.
you can only borrow your wage times x .
And you need 20 per cent of loan amount approx.

Snakeweasel

riclad wrote: »

There,s not much building going on in ireland now,
say you get a site for free,
you need planning permission,
standard 3bed house costs 100k plus to build.
Outside dublin its cheaper to buy a house , than build a new one .
The building thats going on is mostly higher priced apartments .
no point in worrying about 2nd mortgage,
if necessary you can sell off house 1 ,
and go for joint mortgage if you meet someone .
or rent out the house .
i presume forever house is somewhere where you can stay for 30 plus years .

i know someone bought house 1,
in city, met someone in her home town,
sold house 1,
bought house 2 in rural town.
she,s very happy now.

Basically self build is more expensive now ,with new rules re project
manager etc
so in most cases its cheaper to buy a 10 year old house .

The bank looks at your income ,debts ,asset,s etc when assessing your
loan application , and also savings record etc
Are you working full time, also age .
and salary vs amount of loan.
you can only borrow your wage times x .
And you need 20 per cent of loan amount approx.

This is pretty much where my thinking is coming from! I have friends building 4/5 bed dormers for almost double what it would cost to buy one that is approx 10 years old. The main reason I would build is that I would have a free site, but given the rest of the costs it doesn't seem possible, which leads back to buying a house that would do for now.

riclad

IF you have a free site ,
its still cheaper to buy a house in rural area,s .
Self build houses ,are almost illegal now,
as you have to hire a project,manager, registered builder etc
Even if i got a site free in dublin, it would cost 100k plus to build a 800ft sq house .
MY advice is buy a house ,get a mortgage,
look at older 2bed houses ,if you want to keep the cost down.
look at the property register of houses sold in the area you want to live in .

i see apartments going for 60k in rural towns,10 years old.
I don,t think you could build a new apartment for 60k now .

Snakeweasel

riclad wrote: »

look at older 2bed houses ,if you want to keep the cost down.
look at the property register of houses sold in the area you want to live in .

i see apartments going for 60k in rural towns,10 years old.
I don,t think you could build a new apartment for 60k now .

In the estate I'm looking at you can get a 4 bed semi for 70-80k!

handlemaster

Snakeweasel wrote: »

In the estate I'm looking at you can get a 4 bed semi for 70-80k!

Can you get a job locally if not not much good unless your retired or working from home

MouseTail

What is the rent like in your area? If property prices have remained that depressed in your area, it is unlikely you will get much capital appreciation, but if Mortgage and associated ownership costs are less than renting, it makes sense to me to buy.

riclad

I think he wants to buy a house ,in a nearby town,
as he cant afford to buy where he lives now.
ie buy now ,get a mortgage ,now.
mortgages last for 25 years at least.
Over a certain age it becomes hard to get a loan,
as the bank presumes you ,ll stop working at 60/65 .
You can buy house, rent it out,
if its not handy to live there at the moment .
Note , you,ll be taxed as a landlord,
you can claim tax relief for loan interest,repairs ,insurance etc
for the first 10 years loan interest most of the loan repayments .
IF its in a rural area, theres not much chance of house going up in value .
you may not be able to get a loan in 10 years time .