Will I ever get a mortgage?

sbsquarepants

To be honest the new rules are very restrictive and banks seem afraid to lend money to anyone not in the public sector - the 60k freelance work will likely be largely ignored.
I don't do any freelance work but in my own case the bank would only count 10% of overtime payments as they said they can be stopped at any time, had the effect of knocking over 60k off the amount they'd give me and that was with me stumping up a 50% deposit.
Cutting your earnings from 95k to 40k or so would have a disastrous impact on what they'd loan you from 300k plus down to maybe 150k.
Realistically you'll need a much bigger lump sum and maybe even then a second persons earnings.

SarahMollie

theredletter wrote: »

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!

Sorry to keep piping up but I'd try to save a bit more. Thats only €166 per month. I think based on your income you could save a bit more. €40k is good, but wouldnt €50k or €60k be better? Banks will want to see evidence that you've saved a decent amount on top of rent. Anyone I know saving for a deposit is putting away about €500 a month, just for context. You've a great advantage in that you've been gifted a small lump sum, so maybe aim for €300-350?

If you have this freelance work, I'd try to bank as much of that as possible also and get used to living on your regular income as a form of discipline.

Others can correct me on this but I think there is some sort of relief on DIRT for people saving for a mortgage that might be worth a few €€€ to you.

sbsquarepants

theredletter wrote: »

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!

If you're earning 5 - 6k a month on top of your wages, why are you only saving 2k a year? Why not 2 - 3k a month or more? You could easily save 200k plus in 7 years!
Any money you can pay up front rather than borrow will save you an absolute fortune in the long run.
Put your head down for a few years and you may not even need a mortgage at all??

intheclouds

theredletter wrote: »

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).

Is the above a typo?

If the freelance work brings in 5-6k a month (60-72k per year), then surely after just a few years you could buy a house for cash?

SarahMollie

intheclouds wrote: »

Is the above a typo?

If the freelance work brings in 5-6k a month (60-72k per year), then surely after just a few years you could buy a house for cash?

I think the OP was saying that some months it can be very lucrative but some months its not there at all.

If it was reliable income, then yes, it would be a serious amount of money.

theredletter

SarahMollie wrote: »

I think the OP was saying that some months it can be very lucrative but some months its not there at all.

If it was reliable income, then yes, it would be a serious amount of money.

I wish. Sorry about the typo - 5-6k a year! Though I have been meaning to sell my body.......

intheclouds

theredletter wrote: »

I wish. Sorry about the typo - 5-6k a year! Though I have been meaning to sell my body.......

So could you not be saving this 5-6k a year rather than 2k a year?

theredletter

intheclouds wrote: »

So could you not be saving this 5-6k a year rather than 2k a year?

Currently, I'm saving €150 a year for house, €100 for car insurance etc, and €180 for pension. I am going to continue with this although my new salary will be less but any additional payments (such as from freelance work) I will put in the deposit savings account!

Mrs OBumble

OP, I know this isn't what you wanted to hear, but a salary of 35k is very low for someone considering house-ownership.

So low, in fact, that you could apply for council housing in most parts of the country. (fyi, figures are here - note that they are nett, ie after tax).

You likely wouldn't get allocated council housing for about a zillion years. But the very fact that the government considers your income low enough that you're eligible for it should make you think twice about whether ownership is realistic.

I know you have a side-gig. But it's free-lance so likely to come and go. Tax rates mean that even if you earn 6k per year from it, you only nett about 3k of that.

Unless your salary has the potential to grow substantially, I'd be concerned that you may get together enough to get a mortgage - but then not be able to afford to maintain the house properly. Long term this can leave you worse off, because if the house isn't maintained its value falls, and it can even become uninhabitable (but you'd then be ineligible for council housing, because you'd owned a house.)

Also, there's a risk you may not have considered: with a side-gig like that, if you became unemployed you would not be eligible for Jobseekers benefit. You can apply for Job-seekers allowance, but that takes longer to assess, and you would get a reduced rate (if any) due to the side-gig. So you need enough cash to live on for longer, in the bank and available to you. Similarly, if you were to get sick and not be able to work - I don't know about the benefit rules for this situation, but suspect they're similar.

theredletter

Mrs OBumble wrote: »

OP, I know this isn't what you wanted to hear, but a salary of 35k is very low for someone considering house-ownership.

So low, in fact, that you could apply for council housing in most parts of the country. (fyi, figures are here - note that they are nett, ie after tax).

You likely wouldn't get allocated council housing for about a zillion years. But the very fact that the government considers your income low enough that you're eligible for it should make you think twice about whether ownership is realistic.

I know you have a side-gig. But it's free-lance so likely to come and go. Tax rates mean that even if you earn 6k per year from it, you only nett about 3k of that.

Unless your salary has the potential to grow substantially, I'd be concerned that you may get together enough to get a mortgage - but then not be able to afford to maintain the house properly. Long term this can leave you worse off, because if the house isn't maintained its value falls, and it can even become uninhabitable (but you'd then be ineligible for council housing, because you'd owned a house.)

Also, there's a risk you may not have considered: with a side-gig like that, if you became unemployed you would not be eligible for Jobseekers benefit. You can apply for Job-seekers allowance, but that takes longer to assess, and you would get a reduced rate (if any) due to the side-gig. So you need enough cash to live on for longer, in the bank and available to you. Similarly, if you were to get sick and not be able to work - I don't know about the benefit rules for this situation, but suspect they're similar.

Oh god........ I don't even know how to respond to this.

messy tessy

theredletter wrote: »

Oh god........ I don't even know how to respond to this.

Me neither :eek: Was following this thread as I am in a very similar position to you (minus the freelance money) Am saving between €500 - €800 a month in the hope of one day buying in Dublin... but that post, yikes! I think I will leave my head in the sand and keep the faith it will happen in a few years!

SarahMollie

I'll say this - yes it tough and the incomes are boarderline, but it doesnt mean you'll never get anything. I don't see either of you being able to buy a 3 bed house alone as competition from couples and families will be too strong, but an apartment (especially if you're not too prescriptive about area) should be an achievable goal with a few years of savings.

theredletter

SarahMollie wrote: »

I'll say this - yes it tough and the incomes are boarderline, but it doesnt mean you'll never get anything. I don't see either of you being able to buy a 3 bed house alone as competition from couples and families will be too strong, but an apartment (especially if you're not too prescriptive about area) should be an achievable goal with a few years of savings.

I know there are limitations about one bed apartments, which I would definitely buy but I hear you've to have 20% or more of the deposit saved. It's all and all a disaster. The thing is, if I was able to rent long term with proper policies in place and proper long term leasing that don't completely rip you off, I'd take it. I don't want to own property for the sake of it, I'm trying to get out of the very unfair rental market.

draiochtanois

This post has been deleted.

theredletter

draiochtanois wrote: »

This post has been deleted.

Did I say that the pension and car savings were deposit savings? No, I didn't. I was giving a clear indication of my outgoings.

messy tessy

theredletter wrote: »

I know there are limitations about one bed apartments, which I would definitely buy but I hear you've to have 20% or more of the deposit saved. It's all and all a disaster.

Think the deposit is fair enough, you should be able to prove you can save and can comfortably afford the mortgage. The salary multiplier however is quite restrictive on single applicants that aren't on massive salaries.

L1011

draiochtanois wrote: »

This post has been deleted.

Paying car insurance in one go can save a significant enough amount (if done cash/debit card not credit obviously) - there are APRs in excess of 10% on the direct debit options. But yes, that savings amount is far too low still.

Michael D Not Higgins

draiochtanois wrote: »

This post has been deleted.

Agreed, however if he's putting the entirety of his freelance work money into his saving also, it's more like €400 a month which is more like the level he needs.

The real problem I see is that he currently can afford 150k within the CBI rules and is aiming for 200k. However he is saving 4800 per year and that 200k property is increasing by 1-2% in Dublin Y-on-Y, or 2000-4000, meaning he's only closing the gap at most 3k a year and it would take a 10k bump in salary and 5 years saving to close that gap on his own.

Edit: and to make the proposed timeline of 2 years, he'll want that 10k salary bump within that time period and double his savings rate to 800/month.

BoatMad

Mrs OBumble wrote: »

OP, I know this isn't what you wanted to hear, but a salary of 35k is very low for someone considering house-ownership.

So low, in fact, that you could apply for council housing in most parts of the country. (fyi, figures are here - note that they are nett, ie after tax).

You likely wouldn't get allocated council housing for about a zillion years. But the very fact that the government considers your income low enough that you're eligible for it should make you think twice about whether ownership is realistic.

I know you have a side-gig. But it's free-lance so likely to come and go. Tax rates mean that even if you earn 6k per year from it, you only nett about 3k of that.

Unless your salary has the potential to grow substantially, I'd be concerned that you may get together enough to get a mortgage - but then not be able to afford to maintain the house properly. Long term this can leave you worse off, because if the house isn't maintained its value falls, and it can even become uninhabitable (but you'd then be ineligible for council housing, because you'd owned a house.)

Also, there's a risk you may not have considered: with a side-gig like that, if you became unemployed you would not be eligible for Jobseekers benefit. You can apply for Job-seekers allowance, but that takes longer to assess, and you would get a reduced rate (if any) due to the side-gig. So you need enough cash to live on for longer, in the bank and available to you. Similarly, if you were to get sick and not be able to work - I don't know about the benefit rules for this situation, but suspect they're similar.

This is a very realistic summation , if I was the OP I would continue to save and sit on my hands until my financial situation is clear, Banks will not listen to fairy stories of future earnings

riclad

The problem is you may save to buy a house in area x,
say you save 10k,in 2 years., houses in that area may go up by 30k or more in the same time period .
Houses go up by 10 per cent, you need a larger deposit to get a loan.
go to a mortgage broker,he,ll look at what you earn,your expenses etc
and give you free advice .
Banks expect you to earn x amount per month ,per year .
then they multiply that 3 times approx and expect you to have a deposit ,
say at least 10 per cent of house value.

BoatMad

riclad wrote: »

The problem is you may save to buy a house in area x,
say you save 10k,in 2 years., houses in that area may go up by 30k or more in the same time period .
Houses go up by 10 per cent, you need a larger deposit to get a loan.
.

if thats the case and you have no realistic ability to increase your ability to save, then you will have to accept that you need to focus on a cheaper house , perhaps having to commute

clothes and the cutting of them etc

Mrs OBumble

theredletter wrote: »

Oh god........ I don't even know how to respond to this.

That comment alone makes me think you aren't ready for property ownership.

You ARE paying tax on the income from that side-gig, aren't you? If not, then you need to address that situation before you even think about applying for loans.

morrga

theredletter wrote: »

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!

Open a mortgage saver account with BOI. 10% return on your savings guaranteed.

riclad

IF you want to get a loan from aib, tsb etc open a deposit account.
Save x amount per week , every week, one of the things they look at
is are you a reliable regular saver, can you save every month .
At least 50-100 euro per week.

sbsquarepants

morrga wrote: »

Open a mortgage saver account with BOI. 10% return on your savings guaranteed.

Really? Over how long?

CruelCoin

messy tessy wrote: »

Me neither :eek: Was following this thread as I am in a very similar position to you (minus the freelance money) Am saving between €500 - €800 a month in the hope of one day buying in Dublin... but that post, yikes! I think I will leave my head in the sand and keep the faith it will happen in a few years!

Are you renting? I hope you are because every bank in the land would refuse you if you cannot prove savings equal/in excess to the likely mortgage outgoings. The bank is going to want to see a savings/rent combo that would be at least equal to the likely mortgage repayments, and you need to prove this for at least 6 consecutive months.
Assuming you're not renting, then 500 a month would afford you something in leitrim and not much else.

A general tip also, they hate gambling. Paddy power/full tilt/etc? Cancel it now.

CruelCoin

theredletter wrote: »

Oh god........ I don't even know how to respond to this.

You're also going to need 10% as a deposit and 20% of any figure for a home worth above 220k.

Taken from Daft: "In terms of a deposit, for a property with a purchase price of €220,000, first-time buyers will need to supply a minimum 10% deposit and 20% on the excess over €220,000. For example if you would like to buy a house worth €250,000, your lender will lend you €222,000. This figure is made up of 90% of €220,000 plus 80% of €30,000 the excess over the threshold amount of €220,000). You will have to fund the remaining."

And you'll need these: Valuation Fees, Legal Fees, Stamp Duty, Surveyor Fees, Property Tax, Mortgage Protection, Home Insurance, bins.

Not to mention the cost of furnishing and small repairs that every house invariably needs. (5-10k)

It's not enough to just be able to afford to make a mortgage repayment.

Home ownership isn't always the golden egg its made out to be.

Michael D Not Higgins

sbsquarepants wrote: »

Really? Over how long?

Here's some details, it only applies if you get a BOI mortgage.

http://www.moneyguideireland.com/bank-of-ireland-mortgage-saver-account-the-details.html

riclad

Banks use a formula, you need 10-20 per cent deposit, then its maybe 3.5 times your salary ,and they work out what would happen in interest rates go up to say 5 per cent ,could you still pay the mortgage.
Say you earn an extra 5k in a side job, temp work, just use this to save extra money for the deposit.
IF you get paid in cash for temp work you cant put it down on a loan application form.
i,d prefer to pay 1200 per month on a house or a 1 bed apartment ,than pay 900 in rent every month.
In dublin the rents go up every few years and a landlord can give you notice even if you pay the rent every week.
you may need to buy a 1bed apartment ,or a small house in a working class area .
IF you want to buy anything in the next 3 years .
or buy a house near maynooth, an old cottage. and commute into dublin.

Greyian

theredletter wrote: »

- I will be on circa €35k
- 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).

theredletter wrote: »

Currently, I'm saving €150 a year for house, €100 for car insurance etc, and €180 for pension. I am going to continue with this although my new salary will be less but any additional payments (such as from freelance work) I will put in the deposit savings account!

Just working off those 2 posts, your take home pay (on €35k/gross, ignoring any freelance income) would be €2,150 per month (I'm assuming the €180 pension is net, so €300 monthly contribution pre-tax. If it's actually your gross contribution, your monthly net income would be €2,246 per month).

So you have a net income of €2,150, and you're saving €150 a month (I assume you meant month, not year) for your deposit.
That means you're spending €2,000/month, or €1,520/month after rent.
For someone saving for a deposit to purchase property, €1,520/month after rent is a huge amount to be spending every month (assuming no dependents).

If you're serious about buying a property, you need to find where all that spending is occurring.
Considering that you live/work in Dublin, if you're planning to buy in Dublin, it's unlikely that the property you want will have a monthly mortgage payment under €630/month (€480 rent + €150 savings), and that's before you factor in the extra expenses you'll be liable for as a property owner (property tax, management fees if in an apartment complex etc).