Mortgage Advice

ladiesman216

I am looking for some advice:

I have recently been approved for a mortgage on my own. I am32 now and would really like to get my own place.

I live in Dublin so an apartment is the only viable optionfor me (work in south dublin).



Id only intend in staying in the apartment for maybe 3 years–then hopefully buy a house with my girlfriend.

I have 70K in savings and would need to use all this to buyan apartment for 300K



My question is: should I use all my savings and buy in areally good location so it will be easy to sell on or should I try and use aslittle of my savings as possible and not a desirable location as I will needmore savings in 3 years to buy a new place. If I use up most of my savings now I wont beable to get a deposit for another house in 3 years – or can you use the factthat you already have a property as a deposit?



New to all this so apologies if it is a stupid question.

JoeySully

If it were me i would keep my money in my pocket, but then im not a believer in the so called "property ladder"

3 years will go very quickly.

While you will have to rent you will save on - house insurance, property tax, maintenance, management fees + solicitor + moving fees + furniture

ted1

ladiesman216 wrote: »

I am looking for some advice:

I have recently been approved for a mortgage on my own. I am32 now and would really like to get my own place.

I live in Dublin so an apartment is the only viable optionfor me (work in south dublin).



Id only intend in staying in the apartment for maybe 3 years–then hopefully buy a house with my girlfriend.

I have 70K in savings and would need to use all this to buyan apartment for 300K



My question is: should I use all my savings and buy in areally good location so it will be easy to sell on or should I try and use aslittle of my savings as possible and not a desirable location as I will needmore savings in 3 years to buy a new place. If I use up most of my savings now I wont beable to get a deposit for another house in 3 years – or can you use the factthat you already have a property as a deposit?



New to all this so apologies if it is a stupid question.

Property is a long term investment. In 3 years you will only have paid off interest and the capital will not have reduced. You'll have paid soliciter fees, stamp duty, LPT, life insurance, management fees. Along with your mortgage.
Then in three years it'll cost to money to sell, and you may or may not achieve what you bought it for. In my opinion you'd be better of renting till you decide to buy something more long term

Rachiee

Yeah I would think selling in 3 yrs is not really worth it, especially on a 300k mortgage you'll be barely touching the capital your repayments, and you'll probably have to pay really expensive management fees on top of it. you might as well just rent for the three years it will be cheaper in the long run.

ladiesman216

thanks for the quick replies guys. its the criminal prices of rent in dublin plus the fact that i am sh*t sick of sharing accommodation with others and really want by own place that is possibly making me rush into buying. its realitively early days with my Gf so unlikely to be buying together for the next 3 -4 years.

Earleybird

I would agree completely with the other guys.

If I understand where you're coming from you're hoping that by living in your own place for a few years the money you'll save on rent will go somewhat towards reducing the capital element of your mortgage. While this would leave you in a good position have you considered the consequences of a drop in the price of your apartment which might mean you were unable to move as planned.

My advice would be to continue saving and keep an eye out for developments that might be more suitable to yours and your girlfriends circumstances a little further down the line. The money spent on estate agents, solicitors, management fees, property tax, furnishings etc will mean you would need to clear a decent amount in the 3 years to make it worth your while. Since property seems to be relatively stable at the moment I wouldnt be in any rush to change your circumstances. Get saving, invest your current savings in the best saver out there (you might get 1.5 or 2% with someone like KBC) and buy yourself a bit more time to make a decision.

If you have been approved for a mortgage now and you don't expect things to change too drastically in the future you should have no problem being approved again further down the road.

DublinDilbert

Why would you need to spend €300K on an apartment? Lots of perfectly good apartments in or around €200K. If your spending €300K your into buying a house.

ladiesman216

DublinDilbert wrote: »

Why would you need to spend €300K on an apartment? Lots of perfectly good apartments in or around €200K. If your spending €300K your into buying a house.

Ya im being a bit picky alrightbut just want to live in certain areas and not in a complete box of an apartment. dificutl to get any decent 2 bed for under 275K where I am looking.

Lycoge

I know a few people who bought apartments in the hope of selling them to buy a house and are now stuck in a negative equity apartment.
You should also consider that you won't be a first time buyer when it comes to buying a house if you've already bought an apartment. For now, that means a higher deposit would be needed. But in 3 or 4 years time, it could have other implications if different conditions are brought in for 2nd time buyers (eg higher stamp).

Jen44

Keep your money!! i made this mistake! bought a house on my own with the plan to sell it and buy with my then boyfriend now husband in 5 years time. 10 years on i am now an accidental landlord of that first house! I think anyone who would spend 300k on an apartment is crazy anyway! There is only so much money could be made on an apartment at that price anyway even if you were lucky enough that it didnt fall into negative equity

witchgirl26

Honestly OP I know you say that your picky in terms of areas but for that amount you could get a lovely house in some places. Is there any particular reason that you're only looking in those areas? I would never have considered where I am now before but we did some research & a lot of drives around the area at different points & despite the address, it's not what I expected at all.

If you were in your 20's & single & looking for an apartment, I'd think it might make great sense but you might need to consider a place you'd be happy to stay if you got stuck in it for more than 3 years. Or if you'd be happy to become a landlord.

mel123

I'm with everyone else on this:

300k will get you a lovely house, in some very desirable areas, maybe not the one you have your heart set on but you have to choose which do you want more.

Buying an apartment is very risky, you could be stuck with it, you don't know what the market is going to be like in three years time, no one can predict that. Only buy something now that you would be happy to spend 10/20/30 years living in. You mention moving in with your girlfriend, perhaps you should consider what you are buying incase you have kids (either intentionally or accidentally)

I wont tell you to stay renting/go renting, because trust me, I know what it feels like when your just at the end of your tether living with people and you just want to get out.

I agree with wanting to buy over renting as it could quite well work out cheaper over the three years with the price of rent. It's something I may do myself (buy with only living there short term in mind) as I couldn't handle handing over massive rent every month when I cold be paying off a place myself.

However if I was you I'd spend less and dont use all your savings. Then you can continue saving after you have bought (as your mortgage will be less than rent) and adding to your savings again.

Then in a few years time your saving could be decent again, added to your gfs savings you could have a decent pot again for buying.

Also personally I would rent out the place rather than look to sell unless it has had a considerable increase in what it was worth. That said I'd be interested in having a rental property on the go anyway so it wouldn't bother me at all renting it out.

Claw Hammer

If you are going to buy anything buy a council purchase house in a settled area. It will sell well and quickly when you want to go.

Mrs OBumble

Why can't you just move into a rental on your own? I know rents are crazy, but I still reckon that you'd be better of paying crazy rent for a 1brm, than the mortgage and ownership costs for a three year timeframe.

mirrorwall14

You have 300k, why not just buy the house you plan on getting in three years? If you want your girlfriend living with you get a solicitor involved, draw up a rental agreement etc

mirrorwall14

mirrorwall14 wrote: »

You have 300k, why not just buy the house you plan on getting in three years? If you want your girlfriend living with you get a solicitor involved, draw up a rental agreement etc

Why would you get a solicitor involved? She can just move in. You can't have a rental agreement either as its not a rented house its owner occupied. People really try to complicate straight forward arrangements.

mirrorwall14

I may be wrong but a partner can claim part of the house if living there a number of years. Someone i know said they got their solicitor involved drawing up agreements to avoid this in case they break up. Its anectodal, apologies if I'm in error

mirrorwall14

mirrorwall14 wrote: »

I may be wrong but a partner can claim part of the house if living there a number of years. Someone i know said they got their solicitor involved drawing up agreements to avoid this in case they break up. Its anectodal, apologies if I'm in error

Its 5 years living together before any rights to the property kick in so the op should know at the stage if she is a keeper or not.

I doubt you can easily sign away these rights though even with a solicitor involved.

johnnyskeleton

The scenario is that there is a cost to both renting and buying. The rental costs are easy over 3 years 36 times the monthly rent of lets say €1,200 so 43.2k (you can assess what you would pay in rent better than us, and adjust).

The purchase costs are stamp duty (3k), solicitor (3k - 2k on purchase inc outlay, 1k on sale), furniture depreciation and repairs (c. 3k but can vary widely), life ins (600), LPT (1k), managment fees (e.g. 6k) and, most importantly, mortgagse interest which, over 3 years on 300k 25 year term at 4.5% is c. 39k or 32k on 250k borrowed. So the expense of purchasing is c. 55k or about 12,000 more than renting over that term.

You can work out more precise details yourself and get a more accurate estimate.

The other factor is opportunity cost i.e. interest on your deposit saved/invested over 3 years and whether you think prices will go up down or stay the same. If they will go down, dont buy. If they stay the same, youd be better off renting.

Its only if prices go up significantly that you would be better off buying. Thats your call to make and is one of he trickier decisions to make in life.

lima

Hi,

I pretty much done this last year. After 3 years renting a 1br apt I bought a 2br apt and moved into it. Mortgage is e850-ish and equivalent rent would be e1500, so there's a massive saving.

If you can, it would be good to keep it on the side when you eventually go to buy a house with your gf. It's definitely doable to rent it out, and if you use less of your savings and more of a mortgage then you can get tax relief on 75% of the mortgage interest, plus you'll have more for your savings for your house.

Another thing is that you can enjoy living in your own place and making it a high-quality rental. That's the fun part :-)

I'd recommend Sandyford or Dundrum for decent apartments up to 300k (but you should easily be able to get one under 300k right now)

Quorom

Location, location, location

Quorom

My advice is this- the day you buy is the day you sell, location, location, location