Will I ever get a mortgage?

theredletter

Hi all,

I am getting a bit worried...

My circumstances are as such:

- Work and live in Dublin
- Leaving permanent position and taking up a 1 year FTC hoping to move into permanent position in that place. I will be on circa €35k
- I was gifted 23k from parents and saved 2k over last few months
- Was paying rent of 650 and now paying 480 (I'm lucky! but to save for house I downsized)

I was on €40 so am taking a drop in wages. I will also be doing additional work for another company and can supplment my new income by around 5-6k a month but it depends if the work is there or not (freelance).

I want to buy in Dublin (anywhere really, thats' not super rough). Am I a complete lost cause on my current salary and savings etc?

Thanks all
Ross

gmisk

theredletter wrote: »

Hi all,

I am getting a bit worried...

My circumstances are as such:

- Work and live in Dublin
- Leaving permanent position and taking up a 1 year FTC hoping to move into permanent position in that place. I will be on circa €35k
- I was gifted 23k from parents and saved 2k over last few months
- Was paying rent of 650 and now paying 480 (I'm lucky! but to save for house I downsized)

I was on €40 so am taking a drop in wages. I will also be doing additional work for another company and can supplment my new income by around 5-6k a month but it depends if the work is there or not (freelance).

I want to buy in Dublin (anywhere really, thats' not super rough). Am I a complete lost cause on my current salary and savings etc?

Thanks all
Ross

My advice...don't get to stressed out...it will (in my experience) take time to buy somewhere, even with money etc in place.
You need to show a history of saving (More than a few months).
For the gift you might need a letter to prove it is a gift (i.e. not repayable).
It is a lot easier to get a mortgage if permanent (in my experience anyway).


So I would say keep saving, bare in mind banks are fairly strict on 3.5 times your wage when it comes to lending. They will also take into account your age (when it comes to term of mortgage). Don't be drawn in too much by cashback offers I would say, look at how the rate. You will need to set aside a decent amount of money over deposit for solicitors fees, white goods, furniture, house insurance, life insurance...the list goes on and on.

Its definitely possible to get a house, I wouldn't be on a huge amount more than you and I bought on my own roughly a year ago in Inchicore, house needed some work but luckily I am pretty handy and my dad is a plumber.

Michael D Not Higgins

I'm not sure if a bank will take the freelance work into account, since it isn't guaranteed and could dry up at any moment. I'd be looking to save as much of it as possible towards your deposit.

At the moment, you'd be able to afford something around 150k which isn't going to stretch very far.

L1011

The contract position is an instant no. Full time or solidly self employed is pretty much all the banks want to deal with now.

whiskeyman

L1011 wrote: »

The contract position is an instant no.Full time or solidly self employed is pretty much all the banks want to deal with now.

Not true!
Do you think all contractors are never approved mortgages?

Banks look on employability and past employment history.

Sure, it might make you look as favourable as a permanent employee, but if you've shown a steady period of employment, you should be ok.
I've a few friends in IT (all contract workers) who have been approved over the past year or so.

L1011

whiskeyman wrote: »

Not true!
Do you think all contractors are never approved mortgages?

Banks look on employability and past employment history.

Sure, it might make you look as favourable as a permanent employee, but if you've shown a steady period of employment, you should be ok.
I've a few friends in IT (all contract workers) who have been approved over the past year or so.

They've just (or are about to) quit paid work for a contract, e.g. have zero history of repeated contracts.

Long term IT contract workers are effectively self employed. Most are actually employees of their own Ltd company.

theredletter

Thanks, all, that is all good solid advice. And yes, the 150k is what's worrying me. I am going to be putting any freelance income into my car (no repayments to make, just insurance and that) and into the deposit. Hopefully I will be able to afford more like 200k in the next few years by myself. I would love to own by the time I'm 30 which gives me 2 years to get my act together lol.

About employ-ability, I think this is a bit of a con that people led me to believe... I have a PhD so not sure if that works in my favour? I have heard of people changing their title just for banking reasons (I never would use mine!! cringe). Just as an aside.

theredletter

L1011 wrote: »

They've just (or are about to) quit paid work for a contract, e.g. have zero history of repeated contracts.

Long term IT contract workers are effectively self employed. Most are actually employees of their own Ltd company.

I used to have 2 FTEs in current company and then was made permanent. This will be the third annual FTE I have gotten in my life! New boss said that permanency is a possibility but depends on funding etc.

theredletter

theredletter wrote: »

........... I will be on circa €35k
- I was gifted 23k from parents and saved 2k over last few months
- Was paying rent of 650 and now paying 480 (I'm lucky! but to save for house I downsized)...........

theredletter wrote: »

..............I would love to own by the time I'm 30 which gives me 2 years to get my act together lol.............

Over the next two years save as much as you can and see what happens.

Lots of folk felt like you pre 2007, got there eventually and are now still in negative equity so don't be worrying to much about not having property.

If you have a decent income in 2 years time and a decent savings history sit down and have a look at the situation than. Aim for it but don't let it be a huge must do thing, there's more to life.

Michael D Not Higgins

theredletter wrote: »

Thanks, all, that is all good solid advice. And yes, the 150k is what's worrying me. I am going to be putting any freelance income into my car (no repayments to make, just insurance and that) and into the deposit. Hopefully I will be able to afford more like 200k in the next few years by myself. I would love to own by the time I'm 30 which gives me 2 years to get my act together lol.

About employ-ability, I think this is a bit of a con that people led me to believe... I have a PhD so not sure if that works in my favour? I have heard of people changing their title just for banking reasons (I never would use mine!! cringe). Just as an aside.

If you're actually making 5k a month on additional freelance work, I wouldn't worry about saving the additional deposit in two years. Although that depends on how regular that freelance work is.

theredletter

Augeo wrote: »

Over the next two years save as much as you can and see what happens.

Lots of folk felt like you pre 2007, got there eventually and are now still in negative equity so don't be worrying to much about not having property.

If you have a decent income in 2 years time and a decent savings history sit down and have a look at the situation than. Aim for it but don't let it be a huge must do thing, there's more to life.

I like that advice... but I suppose I am getting really tired of the rental market. I don't mind sharing a space with another 1-2 people but paying 800 for a box room and a tiny apartment is what's pushing me to buy. My sister has a lovely house in the country and pays around 500-600 on her mortgage. It just gets to me is all. I want somewhere permanent. I thought I had that in last rental but landlord decided to sell.

myshirt

That you were gifted €23k will be a huge help. Wow. Very generous.

Would you be willing to let it sit in a property fund for maybe 3-5 years, let the money keep pace with any growth in the property market.

Hopefully in a few years your salary will have grown, and you should be a good candidate then. The bulk of a deposit is the big one. €23k plus your 2 will help you greatly.

theredletter

myshirt wrote: »

That you were gifted €23k will be a huge help. Wow. Very generous.

Would you be willing to let it sit in a property fund for maybe 3-5 years, let the money keep pace with any growth in the property market.

Hopefully in a few years your salary will have grown, and you should be a good candidate then. The bulk of a deposit is the big one. €23k plus your 2 will help you greatly.

What is this property fund you speak of? LOL. I am such an ignorant person... I will google it! It's currently sitting in numerous accounts in EBS. I'm really aware of how lucky I am for having it. My parents are great people who saved that for me when I was a nipper. I just want to use it wisely!

myshirt

Speak to a financial advisor, but something like M&G's funds.

IMO the only place a deposit for a house should go is the Post Office or similar. The return is negligible but the risk is effectively zero.

Speaking to a financial advisor is all well and good but none of them can predict the future.

Alkers

You should be in a good position to buy in a year or so, more so if you find a life partner!

In the meantime, work on putting a fixed amount from your wages aside every month and don't touch this money. This, on top of any rent you're paying, will demonstrate mortgage repayment capacity.

_Kaiser_

The problem you're gonna have OP is not just the contract role, or the fact that short supply and high demand is pushing prices up, but that you're competing against couples for property (unless you are looking for a 1 bed somewhere)
Double the income and lower/shared bills means unfortunately that you'll find it tough to compete.

You say you'd consider anywhere in Dublin really.. Why not a bit further out but still closer to work/family? (EG: I'd consider Ratoath/Dunboyne if I worked in Blanch rather than trekking across from somewhere out on the southside every day)

theredletter

Simona1986 wrote: »

You should be in a good position to buy in a year or so, more so if you find a life partner!

In the meantime, work on putting a fixed amount from your wages aside every month and don't touch this money. This, on top of any rent you're paying, will demonstrate mortgage repayment capacity.

I have a partner but I really want to do this independently! I never thought about an Post either.. I will look into it.

Thanks all!

theredletter

_Kaiser_ wrote: »

The problem you're gonna have OP is not just the contract role, or the fact that short supply and high demand is pushing prices up, but that you're competing against couples for property (unless you are looking for a 1 bed somewhere)
Double the income and lower/shared bills means unfortunately that you'll find it tough to compete.

You say you'd consider anywhere in Dublin really.. Why not a bit further out but still closer to work/family? (EG: I'd consider Ratoath/Dunboyne if I worked in Blanch rather than trekking across from somewhere out on the southside every day)

Sound advice. I was looking at Clonee as well and Dunshaughlin! I suppose my day will come but to keep the head down and save.

SarahMollie

theredletter wrote: »

I have a partner but I really want to do this independently! I never thought about an Post either.. I will look into it.

Thanks all!

Now let me caviat this by saying that I am someone who has a partner and still bought on my own.... but why do you want to buy on your own?

I could justify it in my case as I'd been trying to do it since before we met - I'd everythign in place but "sale agreed"s kept falling through so long story short, it took me years to buy, and it was on my 4th attempt. I felt like just because I'd decided to buy didnt mean I'd the right to force him into it, even though the bigger budget would have been nice.

We now live in my house (our home),and he pays me "rent", which is well below the market rate but is fair in terms of my costs etc - I'm not out to make money off him! I think its good as my mortgage is definitely cheaper than our rent in our old apartment, so we should both be able to save over the coming years and buy together in maybe another 3-4 years.

I won't sugar coat it though - lots of people found this weird and were a bit pass-remarkable at the time. Have you talked with your partner about this? I was lucky that it worked find for us, but there is the potential for it to create inequality in the relationship.

theredletter

SarahMollie wrote: »

Now let me caviat this by saying that I am someone who has a partner and still bought on my own.... but why do you want to buy on your own?

I could justify it in my case as I'd been trying to do it since before we met - I'd everythign in place but "sale agreed"s kept falling through so long story short, it took me years to buy, and it was on my 4th attempt. I felt like just because I'd decided to buy didnt mean I'd the right to force him into it, even though the bigger budget would have been nice.

We now live in my house (our home),and he pays me "rent", which is well below the market rate but is fair in terms of my costs etc - I'm not out to make money off him! I think its good as my mortgage is definitely cheaper than our rent in our old apartment, so we should both be able to save over the coming years and buy together in maybe another 3-4 years.

I won't sugar coat it though - lots of people found this weird and were a bit pass-remarkable at the time. Have you talked with your partner about this? I was lucky that it worked find for us, but there is the potential for it to create inequality in the relationship.

Hi Sarah,

thanks for that but I honestly have no desire to buy with my partner. It's early days at the moment and we have talked about the next step etc. but I really want to consider my options as an independent like you!

Does anyone have any experience in going in for a mortgage with a friend? It's just a random idea I had last night in the shower!! Where I make all of my great financial decisions lol

Thanks again all - I am not feeling as badly!

Alkers

theredletter wrote: »

Hi Sarah,

thanks for that but I honestly have no desire to buy with my partner. It's early days at the moment and we have talked about the next step etc. but I really want to consider my options as an independent like you!

!

IS this position likely to change over the next couple of years. You will be in a much stronger position to buy with a partner. You should encourage your partner to start thinking towards this end also, even if it just means starting a good savings habit and without talking about buying a house together or anything like that.

theredletter

Simona1986 wrote: »

IS this position likely to change over the next couple of years. You will be in a much stronger position to buy with a partner. You should encourage your partner to start thinking towards this end also, even if it just means starting a good savings habit and without talking about buying a house together or anything like that.

I don't think I can ask my partner of 5 months to consider saving for a mortgage with me just yet... Let's go on holidays together first

Alkers

theredletter wrote:

I don't think I can ask my partner of 5 months to consider saving for a mortgage with me just yet... Let's go on holidays together first

No but you should emphasise the importance that they save for a mortgage in any case!

_kookie

If you ask anyone you will find that almost all people who have mortgages now went through a phase a few years before they did get a mortgage where they thought they would never ever qualify for one.
Dont sweat it. It will happen.

theredletter

Simona1986 wrote: »

No but you should emphasise the importance that they save for a mortgage in any case!

Throwing a spanner in the works here... but my partner already has a mortgage! Long story and should have mentioned that earlier!!! But again, it's something I want to do independently.

lawred2

L1011 wrote: »

The contract position is an instant no. Full time or solidly self employed is pretty much all the banks want to deal with now.

that's not true

but you'd need about 2 years solid contracts

SarahMollie

theredletter wrote: »

Hi Sarah,

thanks for that but I honestly have no desire to buy with my partner. It's early days at the moment and we have talked about the next step etc. but I really want to consider my options as an independent like you!

Does anyone have any experience in going in for a mortgage with a friend? It's just a random idea I had last night in the shower!! Where I make all of my great financial decisions lol

Thanks again all - I am not feeling as badly!

Ah ok, when you said "partner" that just made me thing it was more of a long term relationship. In my case we were together just over 2 years by the time I got my paws on the keys.

Honestly, I wouldnt buy with a friend. I think theres such a limited number of years that that situation is going to work for, especially if you're already 28 and not yet approved. You could be 30 by the time you've saved enough, found a house and moved in! Then maybe at 33 your priorities change, maybe for one or both of you, but its a minefield.

Buying alone or with your partner is best, if you feel confident that the relationship will go the distance.

theredletter

SarahMollie wrote: »

Ah ok, when you said "partner" that just made me thing it was more of a long term relationship. In my case we were together just over 2 years by the time I got my paws on the keys.

Honestly, I wouldnt buy with a friend. I think theres such a limited number of years that that situation is going to work for, especially if you're already 28 and not yet approved. You could be 30 by the time you've saved enough, found a house and moved in! Then maybe at 33 your priorities change, maybe for one or both of you, but its a minefield.

Buying alone or with your partner is best, if you feel confident that the relationship will go the distance.

Thanks. I don't know why I didn't just say boyfriend #internalisedhomophobia

Thanks a million again. I think I'll work towards that!

SarahMollie

theredletter wrote: »

Thanks. I don't know why I didn't just say boyfriend #internalisedhomophobia

Thanks a million again. I think I'll work towards that!

Good luck with it anyway! All you can do right now is save, save, save!

Just keep in mind that buying the wrong place for the sake of buying can be more expensive than just renting until your circumstances are better. Think professional fees, taxes, moving and decoration costs. If you do buy, make sure its either somewhere you could see youself in for at least 10 years even if you don't actually plan on staying that long. Also, make sure its rentable in good times or bad - right now almost anything is rentable, but places near transport links or other infrastructure like a hospital or airport will always have some sort of rental maket if no longer meets your needs

theredletter

SarahMollie wrote: »

Good luck with it anyway! All you can do right now is save, save, save!

Just keep in mind that buying the wrong place for the sake of buying can be more expensive than just renting until your circumstances are better. Think professional fees, taxes, moving and decoration costs. If you do buy, make sure its either somewhere you could see youself in for at least 10 years even if you don't actually plan on staying that long. Also, make sure its rentable in good times or bad - right now almost anything is rentable, but places near transport links or other infrastructure like a hospital or airport will always have some sort of rental maket if no longer meets your needs

Maybe saving for another 5-7 years might be great. If I even saved 2k a year I would have around 10k more and have around 40k as a deposit and savings. That might be the best way forward!