Saving/Applying for a mortgage 2015/16/17/18/19

Mickiemcfist

awec wrote: »

Yep that's one risk you take with waiting. Waiting it out is certainly far from being risk-free, nobody really knows what the story will be in the future. There are other risks like the mortgage rules changing for example.

If you see something now you'd be happy to live in forever then go for it, the only thing I'd be really wary of is buying somewhere you'd only want to live for 3 or 4 years. That's when the problems arise.

The bigger, and more likely risk is that you're wrong and property prices don't drop in the next two years. I'm no economist but they're building/planning nowhere near the required rate to meet demand, IMO 5 years would be a minimum, and even that is only if there's significant government assistance on developers loans or other incentives.

MayoSalmon

Mickiemcfist wrote: »

The bigger, and more likely risk is that you're wrong and property prices don't drop in the next two years. I'm no economist but they're building/planning nowhere near the required rate to meet demand, IMO 5 years would be a minimum, and even that is only if there's significant government assistance on developers loans or other incentives.

Have to agree here. Most people within the industry are saying it could be 10 years before demand meets supply...2020 is the date the Celtic Tiger prices will be hit in Dublin anyway

mloc123

awec wrote: »

If you see something now you'd be happy to live in forever then go for it, the only thing I'd be really wary of is buying somewhere you'd only want to live for 3 or 4 years. That's when the problems arise.

Sensible approach IMO... we spent 6 months looking and in that time saw only 3 house that met our requirements.. we were in no rush.

I have seen TV shows now like "find me a home" where people are making snap decisions and buying places that do not suit them out of fear they will never get a place. Last week a young couple on it bought an apartment.. they said themselves they never wanted a 2 bed apartment... the reason? It was cheaper to buy than to rent.

So people are now willing to buy something that doesn't suit their needs and tell themselves it is cheaper than renting so it makes sense... that is madness.

Colonel Claptrap

mloc123 wrote: »

Last week a young couple on it bought an apartment.. they said themselves they never wanted a 2 bed apartment... the reason? It was cheaper to buy than to rent.

Thats scary. It might be cheaper to buy than rent today, but not in the future.
A 2 bed will always be a 2 bed.

awec

Mickiemcfist wrote: »

The bigger, and more likely risk is that you're wrong and property prices don't drop in the next two years. I'm no economist but they're building/planning nowhere near the required rate to meet demand, IMO 5 years would be a minimum, and even that is only if there's significant government assistance on developers loans or other incentives.

The CGT exemption ends in 2019 which will have some impact. I doubt prices will drop at all within 2 years but the outlook could change significantly at that point.

The_Conductor

awec wrote: »

The CGT exemption ends in 2019 which will have some impact. I doubt prices will drop at all within 2 years but the outlook could change significantly at that point.

Its not a one off though- the ending of the CGT exemption will be stretched over 3 years. The start of the end is in 2019- it is anticipated that it will result in a number of properties hitting the market in quick succession- however, if these are all second hand properties- and FTBs are being corralled with schemes that only apply to new builds- the net result may be continuing high prices for new builds- but a fall in prices for second hand properties- and a difficulty in selling the second hand properties- if they have RPZ rent levels set against them (which a lot of them will have).

Its not the panacea that it appears to be at first glance........

monaghanmissus

Hi all,

Very lucky to be nearing the end of the process - thank God! The final funds were transferred from our bank to the vendor last week, how soon can we expect keys? Is there anyone I can contact to speed it up?

Mickiemcfist

awec wrote: »

The CGT exemption ends in 2019 which will have some impact. I doubt prices will drop at all within 2 years but the outlook could change significantly at that point.

Again I wouldnt be banking on that having a material impact on prices. You're correct to look for a property you're happy to stay in long term, but I wouldn't be pinning my hopes on a price drop. I know people would have said things like this in 2006, but the fundamentals of the market have a massive supply deficit & massive demand, it doesn't scream implosion to me. Also, unless there's some external factor (massive job losses in Ireland) people wont be in a rush to sell if there's a slight decrease in prices, they'll hold out. All in my opinion anyway, as I said I'm no expert

Jake2

monaghanmissus wrote: »

Hi all,

Very lucky to be nearing the end of the process - thank God! The final funds were transferred from our bank to the vendor last week, how soon can we expect keys? Is there anyone I can contact to speed it up?

If funds are transferred to your vendor then you pick up the keys as soon as they receive the funds. You own the house at that point !! I had funds transferred on Tuesday morning and picked up keys that evening. Id call your solicitor and ask them to confirm the vendors solicitor has received the funds and ask them to release the keys asap

Cina

awec wrote: »

Pretty unlikely in today's market that you'd be better off financially if you owned a property rather than rented it, in Dublin at least. Buying a house or apartment to save money on a month-to-month basis is probably not going to happen at the moment unless you get very lucky or seriously downgrade on the standard of property you are willing to live in.

I'm sorry but that's simply not true in many cases, at least in my experience.

My rent is currently €900pm and then I saved €600 pm for the deposit = €1,500 pm.

My mortgage, life assurance, and rent management on a brand new apartment (much nicer than my current place) will come in at €1,150 per month, or there abouts, quite a bit cheaper. And I'm not throwing money out the door on rent, either.

Not to mention the fact that it's a two bed so I can rent the other room for probably €800 a month and then I'd be paying peanuts (but I'll probably let the missus live there for half the mortgage cause I'm nice like that!).

Obviously not every situation is like mine but if you can afford a property that you are happy to live in then it's an absolute no brainer to purchase instead of continuing to pay these extortionate rent prices.

I see a lot of people using excuses to justify not purchasing in Dublin at the moment, and in some cases that's fair enough because prices are high and mortgages are difficult to get for places within your limits, but buying is quite simply better than renting right now and likely for the foreseeable future. We are already way above Celtic Tiger levels for rent and still around ~15-20% away from those buying levels.

fg1406

I'm the same. Our monthly rent plus saving for deposit came to €2800 per month. Our mortgage plus life assurance, home insurance and property tax is coming to €885. It was a no brainer for us to buy.

Homer

Finally moved in yesterday! Worth the wait.. Dealing with the bank was probably the easiest part compared to estate agents and trades people!

Jake2

My rent and saving for a deposit was about 1700. Mortgage and life/home insurance is 575. It puts me in a much better position. My rent alone was 1000. The rental market is very tough especially if you have animals and kids.

ELM327

Colonel Claptrap wrote: »

Thats scary. It might be cheaper to buy than rent today, but not in the future.
A 2 bed will always be a 2 bed.

It's always* cheaper to rent.
You are building up equity in a property which you can sell on at a later date, rather than paying someone else's mortgage


*always, except of course in an overheated market that you need an urgent sale.As a general rule property trends upwards over time.

ELM327

Jake2 wrote: »

My rent and saving for a deposit was about 1700. Mortgage and life/home insurance is 575. It puts me in a much better position. My rent alone was 1000. The rental market is very tough especially if you have animals and kids.

Similar situation myself, my figures are 2200 vs 700 approx (mortgage not yet approved).
1k rent per month.

Same with the animals, have a few chickens etc and it's lucky where we are renting now that there's a large site so we can keep them but if we don't get mortgage approved soon we will have to lose the chickens and cats etc.

Mickiemcfist

ELM327 wrote: »

It's always* cheaper to rent.
You are building up equity in a property which you can sell on at a later date, rather than paying someone else's mortgage


*always, except of course in an overheated market that you need an urgent sale.As a general rule property trends upwards over time.

The way I look at it is that the capital repayment is a balance sheet transaction, if the interest + other expenses (insurance, repairs) are less than the rent then you're better off buying.

ELM327

Mickiemcfist wrote: »

The way I look at it is that the capital repayment is a balance sheet transaction, if the interest + other expenses (insurance, repairs) are less than the rent then you're better off buying.

Yes that's a smart way to put it.
And with "other expenses" there can either be house price depreciation as a negative if owning, or price inflation as a negative if renting.

awec

Cina wrote: »

I'm sorry but that's simply not true in many cases, at least in my experience.

My rent is currently €900pm and then I saved €600 pm for the deposit = €1,500 pm.

My mortgage, life assurance, and rent management on a brand new apartment (much nicer than my current place) will come in at €1,150 per month, or there abouts, quite a bit cheaper. And I'm not throwing money out the door on rent, either.

Not to mention the fact that it's a two bed so I can rent the other room for probably €800 a month and then I'd be paying peanuts (but I'll probably let the missus live there for half the mortgage cause I'm nice like that!).

Obviously not every situation is like mine but if you can afford a property that you are happy to live in then it's an absolute no brainer to purchase instead of continuing to pay these extortionate rent prices.

I see a lot of people using excuses to justify not purchasing in Dublin at the moment, and in some cases that's fair enough because prices are high and mortgages are difficult to get for places within your limits, but buying is quite simply better than renting right now and likely for the foreseeable future. We are already way above Celtic Tiger levels for rent and still around ~15-20% away from those buying levels.

You are factoring in saving a deposit here to make it seem more expensive. While that may have been with the aim to buy, ultimately your rent was 250 cheaper per month than your mortgage. You are not comparing like for like.

What sort of property were you renting for 900pm? What sort of property did you buy? How do the locations compare?

Look at rents on daft and then look at property prices, the numbers just do not add up unless there is a significant difference in the property you buy compared to the one you rented (e.g. moving to a less desirable area or downsizing). And while long term you are undoubtedly better off, you will ultimately still be forking out higher costs every month.

I am not looking at it from an investment point of view or anything like that, purely from the view that your monthly outgoings are not going to decrease by buying a property in Dublin in the overwhelming majority of cases without you making a material change in your living standards.

fg1406

My rent is €950 for a 2 bed apartment. My mortgage plus property tax and insurances will be €885. I have bought a 3 bed house ready to walk into with no work at all required. It's not always better to rent.

I could have stayed renting, with rent increases at the whim of the LL as I live outside of an RPZ. My rent is actually €50 cheaper than most 2 beds which are now renting for €1k per month and 3 bed houses are €1200 per month.

Cina

awec wrote: »

You are factoring in saving a deposit here to make it seem more expensive. While that may have been with the aim to buy, ultimately your rent was 250 cheaper per month than your mortgage.

I'm factoring it in because anyone who is considering buying needs to save monthly for a deposit too. It's basically a given.

Someone who's not saving a deposit is irrelevant to the discussion because they've clearly got no intention to buy. Of course there are exceptions like lucky folks who'll get the deposit off their parents but that's the minority.

mloc123

awec wrote: »

You are factoring in saving a deposit here to make it seem more expensive. While that may have been with the aim to buy, ultimately your rent was 250 cheaper per month than your mortgage. You are not comparing like for like.

What sort of property were you renting for 900pm? What sort of property did you buy? How do the locations compare?

Look at rents on daft and then look at property prices, the numbers just do not add up unless there is a significant difference in the property you buy compared to the one you rented (e.g. moving to a less desirable area or downsizing). And while long term you are undoubtedly better off, you will ultimately still be forking out higher costs every month.

I am not looking at it from an investment point of view or anything like that, purely from the view that your monthly outgoings are not going to decrease by buying a property in Dublin in the overwhelming majority of cases without you making a material change in your living standards.

Seems odd to me also... saving for a deposit is saving, it is not rent. After buying a house... you should/will still save amounts each month, maybe not as much.

awec

Cina wrote: »

I'm factoring it in because anyone who is considering buying needs to save monthly for a deposit too. It's basically a given.

Someone who's not saving a deposit is irrelevant to the discussion because they've clearly got no intention to buy. Of course there are exceptions like lucky folks who'll get the deposit off their parents but that's the minority.

You still need to save after buying a property, savings as a cost does not just disappear. But anyway, I am not just talking about people who want to buy, I am talking in general.

Look at the rent rates in Dublin on Daft, look at the prices of the same type and standard of properties in the exact same areas and do a basic mortgage calculation. The rent will be lower in almost all cases.

Cina

mloc123 wrote: »

Seems odd to me also... saving for a deposit is saving, it is not rent. After buying a house... you should/will still save amounts each month, maybe not as much.

What's odd about it exactly?

Most people put money into savings when they decide they want to buy a house at some point. Just read back to the last few posts and you'll see that. Once you buy the property you don't need to save it anymore, because... you've bought what you were saving for.

awec

Cina wrote: »

What's odd about it exactly?

Most people put money into savings when they decide they want to buy a house at some point. Just read back to the last few posts and you'll see that. Once you buy the property you don't need to save it anymore, because... you've bought what you were saving for.

The deposit saving is not a living cost, it's just a saving. It could be for a house, it could be for a car, it could be for a new kitchen, whatever. It's still just savings and it's still entirely optional at the end of the day.

This money doesn't just disappear once you get a mortgage, you either stop saving (which means you are spending the money on some other cost that should be factored in) or you continue to save it (in which case you should factor it in again).

In your case:

Renting - 900 + 600
Mortgage - 1150 + ?

Where does the 350 difference go?

Cina

awec wrote: »

You still need to save after buying a property, savings as a cost does not just disappear. But anyway, I am not just talking about people who want to buy, I am talking in general.

Look at the rent rates in Dublin on Daft, look at the prices of the same type and standard of properties in the exact same areas and do a basic mortgage calculation. The rent will be lower in almost all cases.

Of course you need to save but you don't need to save the money you were saving to put towards the deposit for the property, which was my whole point. I'm not saying the €600 was my overall savings, it was the money I was putting away to get the 10% deposit. It's very relevant because most buyers will have to do it.

Yes rent will likely always be cheaper but not really by that much and if you buy a 2, 3, 4 bed or whatever you can rent out the other rooms anyway and end up paying far less than you would for rent. Hell I could rent out my new place for €1800 if I wanted and stay in my current place and pay the mortgage and rent and it'd still work out cheaper than my current rent!

Ultimately buying gives you far better options going forward.

Cina

awec wrote: »

The deposit saving is not a living cost, it's just a saving. It could be for a house, it could be for a car, it could be for a new kitchen, whatever. It's still just savings and it's still entirely optional at the end of the day.

I'm sorry but you're missing the point completely, it's pretty basic logic.

You save x for a deposit for a house, and y for whatever else. You buy the house and no longer need to save x, so you pay (y - x) = less money to save. Or you can still pay x + y if you can afford it, why not? The choice is yours. Point is you do not need to save as much money anymore because you're eliminating the deposit factor.

If I'm saving money for a car, and then buy the car, I don't need to save the money for it anymore. Same applies to a house. What's so difficult here?

awec

Cina wrote: »

I'm sorry but you're missing the point completely, it's pretty basic logic.

You save x for a deposit for a house, and y for whatever else. You buy the house and no longer need to save x, so you pay (y - x) = less money to save. Or you can still pay x + y if you can afford it, why not? The choice is yours. Point is you do not need to save as much money anymore because you're eliminating the deposit factor.

If I'm saving money for a car, and then buy the car, I don't need to save the money for it anymore. Same applies to a house. What's so difficult here?

It is like you buying a car on PCP and paying 200 quid a month, and then saving 200 quid a month to buy a new car in 2 years time and claiming that your car cost you 400 quid a month.

No, that car costs 200, you entirely of your own choice decided to save 200 extra on top of that for a period of time.

If you buy another house in 5 years time and start saving another 600pm for your next deposit your cost of living doesn't magically change to 1750 a month, you are still paying 1150 (or whatever it has changed to with interest changes) and are entirely optionally deciding to save more on the side for a period of time.

mloc123

Cina wrote: »

What's odd about it exactly?

Most people put money into savings when they decide they want to buy a house at some point. Just read back to the last few posts and you'll see that. Once you buy the property you don't need to save it anymore, because... you've bought what you were saving for.

Yes but comparing rent + saving to a mortgage isn't a fair comparison IMO.
For a more direct comparison the amount saved for deposit split over the length of the mortgage is maybe... so 30k deposit over 30 years = 80e/month.

Most people save their deposit over a short period... 1-2 years, that is a short term expense. It isn't as if they will continue to save that amount for another 10 years and keep renting.

commited

awec wrote: »

Look at the rent rates in Dublin on Daft, look at the prices of the same type and standard of properties in the exact same areas and do a basic mortgage calculation. The rent will be lower in almost all cases.

I'm not one to say rent is dead money as it's providing a roof over your head but unless we're talking about buying expensive areas of Dublin then I don't see where the cheaper vs buying argument comes in (assuming we're taking initial deposit payment out of it). Your mortgage payment is made up of capital payment and interest payment and as long as interest payment (stressed @ +2%) + management fees is less than interest quantum of mortgage payments for first year, you should be well covered. Plenty of places in Dublin still attractive for investors as rental properties - they wouldn't do that if it was cheaper to rent than buy.

If there was reasonable pricing in the rental market at the moment, I would tend to agree with your point but it's just absolutely mental.

Edit: As a point of illustration, when we lived in Sydney our rent was less than the interest portion of what an equivalent mortgage would cost, therefore we rented indefinitely and were happy. In Ireland, I did the sums and the situation reversed so we bought.

awec

Also I am not suggesting it is a bad idea to buy. In almost all cases buying a property in Dublin will mean higher monthly outgoings, but if you can afford it then this still makes financial sense in the long run in many cases as you are paying off your own asset.

I am purely saying that people suggesting you can trim down your monthly expenses by buying are not being entirely correct. It is certainly possible, but would require you to buy somewhere that's a decent step down on where you rent (in most cases) in order to get monthly mortgage payments + other property ownership costs that come close to the rent rate.