Mortgage Liability

Saint Sonner

If I bought a house at €285k and had to pay a deposit of €35k and had a monthly mortgage payment of approx. €1k on a short term deal I wanted to know what I am liable for something went wrong and I had to sell the house within a year or two. Would I be able to recoup the majority of €35k paid if the market price of the house remained constant?

draiochtanois

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seamus

draiochtanois wrote: »

This post has been deleted.

Actually a 30 year mortgage at 3.5% will repay around €10k off the principal in the first two years, with payments of around €1,120/month.

By my calculations, after auctioneer and solicitor fees you will walk away with around €39k.

That sounds like a tasty return on a €35k investment - over 10% - but in real terms that extra €4k has actually cost you €22,800 in interest repayments. And That doesn't include the maintenance costs and property tax you will pay on the property in those two years.

As a way of getting out of the rental market for a brief period it's not a terrible idea, but in terms of investing in property and flipping properties for a profit, you either need to be in it longterm or property prices need to be steadily growing by at least 5% YOY to offset the interest on the mortgage.

Saint Sonner

Thanks for that - It actually is BOI we are thinking of going with but the €5k would be used to fit out the house with appliances and furniture so hopefully that would increase the asking price if you did have to sell and the majority of that €5k will not be lost?

Sleepy

Unlikely tbh, furniture and appliances depreciate pretty quickly and you're unlikely to see anything back for repainting etc.

Saint Sonner

seamus wrote: »

Actually a 30 year mortgage at 3.5% will repay around €10k off the principal in the first two years, with payments of around €1,120/month.

By my calculations, after auctioneer and solicitor fees you will walk away with around €39k.

That sounds like a tasty return on a €35k investment - over 10% - but in real terms that extra €4k has actually cost you €22,800 in interest repayments. And That doesn't include the maintenance costs and property tax you will pay on the property in those two years.

As a way of getting out of the rental market for a brief period it's not a terrible idea, but in terms of investing in property and flipping properties for a profit, you either need to be in it longterm or property prices need to be steadily growing by at least 5% YOY to offset the interest on the mortgage.

Well its not really an investment for a profit we are intending to buy and live in it for the forseeable future but just wasn't sure how it all works re how much you are liable for if you did sell within a short time frame - just being prudent. As long as I got 90% of €35k back I would be happy as we are paying extortion amount of rent at the minute.

But best case scenario would be to keep the house long term!

The_Conductor

Saint Sonner wrote: »

Thanks for that - It actually is BOI we are thinking of going with but the €5k would be used to fit out the house with appliances and furniture so hopefully that would increase the asking price if you did have to sell and the majority of that €5k will not be lost?

You can be guaranteed in the current market that you will not get back any money you invest in a property- you may get a portion of it- however, even that is tenuous.

Do not assume that investing 5k in a property- adds 5k to the value of the property......... it doesn't...........

Saint Sonner

The_Conductor wrote: »

You can be guaranteed in the current market that you will not get back any money you invest in a property- you may get a portion of it- however, even that is tenuous.

Do not assume that investing 5k in a property- adds 5k to the value of the property......... it doesn't...........

I'm sensing a tone here!

SO what your saying here is that if I put the €35k deposit down and pay off the mortgage for a year and then sell the property I won't get any money back?

Will I owe more money at that stage?

The Mulk

Saint Sonner wrote: »

I'm sensing a tone here!

SO what your saying here is that if I put the €35k deposit down and pay off the mortgage for a year and then sell the property I won't get any money back?

Will I owe more money at that stage?

It depends what you sell it for.
Buy for 285k, mortgage 250k
Sell 285k clear mortgage of say 249k. 36k(original deposit) left.
There will be fees involved for selling though.
The longer you stay in it and service the mortgage, supposing house prices at least stay the same, the more cash you'll have left over when you sell.

dearg lady

Saint Sonner wrote: »

I'm sensing a tone here!

SO what your saying here is that if I put the €35k deposit down and pay off the mortgage for a year and then sell the property I won't get any money back?

Will I owe more money at that stage?

No one can answer that for you, we can only speculate, it all depends on whether house prices go up or down. I think the point being made previously was you are unlikely to see the 5k you put it to the house on furnishings make any significant difference to the price a buyer would be willing to pay.

Furnishings and decoration are very personal, the next owner might hate everything you've done and change it all.

aido79

Saint Sonner wrote: »

I'm sensing a tone here!

SO what your saying here is that if I put the €35k deposit down and pay off the mortgage for a year and then sell the property I won't get any money back?

Will I owe more money at that stage?

I think you really need to do some research on the basics of how a mortgage works. You mentioned a figure of 1000 a month in mortgage payments which might equate to 750 in interest and 250 off the principal in the first year (not exact figures but you get the picture) You are also relying on the property to either stay at the same value or go up to get your initial 35k back. If the property drops in value every euro it drops by in the early stages of a mortgage more or less comes straight out of your deposit.

Arbiter of Good Taste

Saint Sonner wrote: »

I'm sensing a tone here!

SO what your saying here is that if I put the €35k deposit down and pay off the mortgage for a year and then sell the property I won't get any money back?

Will I owe more money at that stage?

What about the money that you would otherwise be paying on rent? Are you factoring that in?

riclad

You are saving 1000-600 per month on rent,
the price of a house depends on the area, does, it have a new kitchen,
new windows etc .And the size of the house, garden size.
most houses are sold empty, with no furniture ,
my friend sold house,last month,
Only thing left in the house ,was the fridge and the dryer .
Spending money on expensive furniture will probably have no effect on the house value .
She removed all furniture before even advertising the house.
she left the fitted kitchen ,cupboards .and the electric oven ,cooker .
its built in to the kitchen.
my friend has standard variable loan,
the money ,owed , capital did not decrease til year 8 or 9 .

slowjoe17

I played with a spreadsheet.

BOI fixed rate mortgage for 2 years is 3.65%
30 year mortgage payment on 250k @ 3.65% is €1143, and the repayment element there is €383

After 2 years (because there's a break clause somewhere, and I don't care enough to find it), you'll have paid back €9,526.59.

For a 35 year mortgage, the monthly payment is €1,055.07 and the total repaid at 24 months is €7,324.67

For a 25 year mortgage, the monthly payment is €1,271.76 and the total repaid at 24 months is €12,711.26

For a 20 year mortgage, the monthly payment is €1,469.24 and the total repaid at 24 months is €17,620.38

Interestingly (haha), the BOI mortgage calculator provides lower numbers.