Would you spend every penny you have to buy a house?

Owning a house in Ireland is damn espensive. Wish i hadn't bought it now. So, putting all your money on the purchase is a terrible idea. The costs in tax, services, and maintainance are just nasty. Keep a reasonable reserve.

76544567

I was always advised by my Dad to go for the best you can afford.
10 or 20 years down the line that value of it will be multiplied over going for the cheaper option.
Advice that worked out well for myself and my siblings to be fair.Now im not saying take a 100% mortgage or anything.

example
In 1998 a 4 bed detached in the estate I lived in was €20k more than the mid terraces in the same estate. It seemed like a lot at the time and would have been a hard step up. Looking nback now, it was nothing.
Roll on today and that price difference between those same two houses is immense.

April 73

Gebgbegb wrote: »

Depends on your location too... I'm originally from the shticks and most of my secondary school buddies got a massive house and a plot under em in their early twenties. House for life. If you're making yeer own way in Dublin/Cork city etc then it's the ladder yer on

This is totally true. I moved away from the country hometown & have bought three & sold three houses to get to the house & location that I always wanted to get to.
If I'd stayed at home I could have built this house for half nothing if I'd had access to family land. It wouldn't have been the right location for me.
Some people can buy/build once depending on the area they live in. Dublin & the big cities generally mean a couple of moves to get to where you want to be.

JustAThought

Perhaps OP the answer at the miment is neither house?

If the cost difference means boreowing from your parents I would consider it - depending on how low (20k?) the amount was & how you planned to pay it back. The long run of having the dream house or something ok in an undesirable (skangers?) area WILL matter over time . What would the difference in repayments per month be? An extra 4Ok over a 20 or 30 year mortgage is not a huge thing - the sum might be very managable when you look at it over the long term. Have you used the BofI relayments calculator from their website? It 's a great tool for getting the head straight.

I agonised when buying over 2 houses ( & a third I discarded perhaps very wrongly) but in hindsight in my desire to buy was really not looking as deeply as I should - for such a huge lifechanging spend I should have really not been so whirlwinded - even though I made very good decisions & compromised on a few things.

The cost of moving is high - not to mention that as your situation changes the bank may not loan to you again ( time left to pay) or as much ( reduce by 20% for children) or at all.
Plus - have you considered the 30k or so government tax on moving you will pay - no longer getting the golden first time buyer benefits - as well as the capital gains tax on any profit - as well as the 1k or more sight only surveyors free, solucitors buying fee of 1% of the value of the oroperty or 3.5k, etc. Its not a cheap decision.

Lumen

76544567 wrote: »

In 1998 a 4 bed detached in the estate I lived in was €20k more than the mid terraces in the same estate. It seemed like a lot at the time and would have been a hard step up. Looking back now, it was nothing.
Roll on today and that price difference between those same two houses is immense.

That's mostly the power of the massive leveraged bet that is a mortgage. It can work out very well or very badly (e.g. people stuck in 500k apartments bought in the boom).

Ireland has amongst the most lax lending enforcement in the world. It's almost impossible to have a family home repossessed. So there's very little risk of destitution under the current regime; the worst that can happen if circumstances change is that you live with the feeling of having overpaid but get a home for life which gets repoed when you die.

That said, I'm not saying I'd want to live with the perpetual threat of repossession hanging over me.

Deleted User

Deleted User wrote: »

My intention isn't to drag this off topic, but am I right in saying that i'd be in the minority - My mindset being that you should buy a total of 1 houses in your life.

I don't think I fully understand this craic of buying a temporary home, or buying with the intent of selling etc. (especially seeing how that went in the last decade!?).

I'm hoping to buy a house this year, but it'll be the first and last house I buy.

I also don't understand people saying they wouldn't spend money on a house that they wouldn't get back when selling? Someone on the previous page said their friend or sister or such had a house, wanted an extension and won't get it because they won't recoup the money? I am bewildered at that? Surely getting an extension on to the house is the money being put to good use anyway? (ie; it's not money that has been bet on a horse, you are actually getting a better quality of home life from it for the time you live there)?


Maybe im the mad one, but if i had a house worth 10k, and an extension would cost 5k, but I knew i wouldnt ever get more than 11l for the house, if i wanted the extension, i'd still get it.. but i'd never be bothered on losing out on the 'dead money' as i'd be in the house til i'm dead, myself.

I keep hearing about 'starter' homes and that kinda thing. Is this really the common way that people are these days (buying and moving houses like they're trading in cars?) or is it just a boards member thing and doesn't really reflect the reality of day-to-day ireland?

You have to live somewhere and why waste money on rent if you are in a position to buy even if you know you are not going to stay in that house or stay in the area even for more than a few years. It can always be rented out or sold.

Samuel T. Cogley

Deleted User wrote: »

My intention isn't to drag this off topic, but am I right in saying that i'd be in the minority - My mindset being that you should buy a total of 1 houses in your life.

This is another one I find a bit odd, although not as odd as the location, location location nonsense. Incidentally it's quote that no one even knows who to attribute it too, but it was quite famously used by Conrad Hilton and he was talking about Hotels.

Anyway - One bed apartments aside it's a logical progression to purchase a smaller house when moving out of home, I did it when I went to Uni. You're then paying equity from almost day one. It's then not unusual to do two houses in your adult life, although I agree anything less than ten years you've both the wrong house. You may even then do a forth and final move into something more suitable for your old age.

You are however not in the minority from my experience in Ireland. It could also be a British generation X thing for me, it's the norm for the UK middle classes and people tended to buy much earlier in my generation there, partly because we don't travel as much. An added factor in Ireland is the boom bust cycle seems to be even worse than in the UK in relation to property, or at least that's the perception.

It beggars belief that we can have an entire thread laughing at the fact that developers lie about property locations and then have one where people are earnestly stating it's the most important factor.

Parchment

Not every penny but not everyone has the luxury of having a "nice cushion" as mentioned here. Thats not do-able for everyone.

Many people are left with a little amount to get them started and work from there. I think thats ok too - if owning a house is important to you...you do what you gotta do!

Personally we were left with some money - enough for what we needed and some savings too. That suited us - we got a house we liked and it was affordable to us in an area we liked.

Everyones situation is different and people make the decisions most suitable for their situation.

hytrogen

Gebgbegb wrote:

Better buy the worst house on the best street than the best on the worst Street. For the op... if you want the dream house now then just go for it ... but stop looking at property prices after and feeling remorse for 'paying too much'. We bought a doer upper and pumped a ton into it after.... should have just thrown it into a 'better house'. Although our mortgage is relatively small were now looking to move again .... and start with new mortgage, groan.

Depends also what age you're going into buying and how long you'll be repaying the mortgage. A lot of couples are setting up in their thirties and just scraping enough for a mortgage well into retirement which will have a knock-on effect on the overall economics too.

athtrasna

Can we get back on topic please!

Free-2-Flow

A millionaire once told me.

"Forget about savings, you can spend your whole life savings in one day, it's your income you must increse to be financially stabile".

Balmed Out

Audrina Uptight Tap-dancer wrote:

It can always be rented out or sold.

It can't be sold if it is in significant negative equity and the rent may not come close to covering the mortgage.

Personally of the buy one ever perauasion too or at least need to buy one ever. Didn't buy Till mid thirties when we both knew weren't going to be changing location, agreed on number of kids etc. Spent practically all savings in order to qualify for as low an ltv as possible.

76544567

Lumen wrote: »

That's mostly the power of the massive leveraged bet that is a mortgage. It can work out very well or very badly (e.g. people stuck in 500k apartments bought in the boom).

Ireland has amongst the most lax lending enforcement in the world. It's almost impossible to have a family home repossessed. So there's very little risk of destitution under the current regime; the worst that can happen if circumstances change is that you live with the feeling of having overpaid but get a home for life which gets repoed when you die.

That said, I'm not saying I'd want to live with the perpetual threat of repossession hanging over me.

You are right. They should have stumped up the extra for a house instead of a 500k apparent and they would probably be ok now.

Daisy78

I find that (in Dublin anyway) you are looking at spending more money for less house closer to the city versus a lower mortgage further out of town. I don't have a crystal ball so it's impossible to know if the smaller more expensive house will suit my needs in 5 years time. It may not be my forever house but as I'm allergic to commuting it might be my only option. The fact that you need a 20% deposit for second properties is a significant factor in your decision which is pushing me towards the larger house further out of town.

Balmed Out

Balmed Out wrote: »

It can't be sold if it is in significant negative equity and the rent may not come close to covering the mortgage.

That's why you have to buy smart if you will be looking to resell/rent. I'd buy a starter apartment or house in a city or subarbs as a starter home that would hopefully be easy enough to move on/rent. On the other hand the home I will settle down properly in will most likely be built in the rural area I come from and would have the potential to cost more to build that it could be sold for or be difficult to sell etc but it would be done as I wanted not with thoughts of resale etc.

To answer the ops question how much savings I'd be willing to eat up would depend on if the house was a short term thing or a place I'd plan to stay for good but I'd never use everything up as you need a little something to fall back on.

f@steddie

Free-2-Flow wrote: »

A millionaire once told me.

"Forget about savings, you can spend your whole life savings in one day, it's your income you must increse to be financially stabile".

Your friend isn't necessarily right. Behaviour is what determines financial stability. See millionaire athletes that lose all their money. Compare with those of more modest means that live within their means and are financially stable.

The country had a massive financial crisis brought on to a large degree by too much borrowing and again people are getting into as much debt as possible. Crazy.

wasabi

JustAThought wrote: »

The cost of moving is high - not to mention that as your situation changes the bank may not loan to you again ( time left to pay) or as much ( reduce by 20% for children) or at all.
Plus - have you considered the 30k or so government tax on moving you will pay - no longer getting the golden first time buyer benefits - as well as the capital gains tax on any profit - as well as the 1k or more sight only surveyors free, solucitors buying fee of 1% of the value of the oroperty or 3.5k, etc. Its not a cheap decision.

Aside from the 10% versus 20% deposit in the Central Bank lending rules there is no great benefit to being a FTB if you aren't buying a new house - the new scheme covers new builds only. And they all jumped in price after the announcement, so the whole thing was a wash, anyway, except for those lucky enough to have already bought and have the grant backdated.

So selling and later buying a second-hand place incurs an extra stamp duty, solicitors fee, valuation, moving costs, estate agents fees on sale. Likely 2-3 percent of the cost of the place. For me the hassle of the purchase process and the move would be more offputting than the financial implications.

There are some other trickier things to factor in, one would be risking negative equity in the 'starter' place and not being able to sell to move later. Another would be first time buyer benefits coming back in a broader form again. Interest rates or the lending environment changing is another. We're living through some incredibly unstable times from a property market point of view.

JustAThought

JustAThought wrote: »

The cost of moving is high - not to mention that as your situation changes the bank may not loan to you again ( time left to pay) or as much ( reduce by 20% for children) or at all.
Plus - have you considered the 30k or so government tax on moving you will pay - no longer getting the golden first time buyer benefits - as well as the capital gains tax on any profit - as well as the 1k or more sight only surveyors free, solucitors buying fee of 1% of the value of the oroperty or 3.5k, etc. Its not a cheap decision.

Where are you getting the 30k in tax from, aside from stamp duty which is a few thousand there aren't really other taxes to pay. If it's your PPR capital gains tax doesn't apply (exempt) so stamp duty and fees like solicitor etc are the costs which won't get anywhere near 30k.

Also being a FTB has very little advantage aside from the despot being less bet a lot of people go in with 20% deposit or more anyway.

Delphinium

Buy in an area where the residents have the same values as you. Read all the threads where people are singled out for abuse because they don't fit in. A house ticking main points in an area which suits you should win over a perfect house in an unsuitable area. If you have children consider the ethos of the schools and pupils.

Sarn

This is something that I am thinking about at the moment. Ideally I would like to buy a 3-bed near to the city centre that would allow me to walk to work, this would probably require every penny of my savings. The cons are that it would cost more than further out, would be smaller and have limited parking. Mortgage repayments would be about €100-300 more with this option. Fortunately, the safety net would be built back up relatively quickly which makes it an easier option. Buying a bit further out would put the mortgage repayments to that typically paid to rent a 1-bed apartment in Dublin and something that I could do with my salary, for a better house, without taking into account the other half's salary.

However, in relation to monthly repayments, I would not spend every penny to get the house, the aim would be to pay out about a third of my monthly net pay. This would allow the inevitable interest rate rises to remain affordable.

LostHiigaran

I'll be sinking all of my savings into a one-bedroom to escape the high rent.

allibastor

[Deleted User] wrote: »

My intention isn't to drag this off topic, but am I right in saying that i'd be in the minority - My mindset being that you should buy a total of 1 houses in your life.

I don't think I fully understand this craic of buying a temporary home, or buying with the intent of selling etc. (especially seeing how that went in the last decade!?).

I'm hoping to buy a house this year, but it'll be the first and last house I buy.

I also don't understand people saying they wouldn't spend money on a house that they wouldn't get back when selling? Someone on the previous page said their friend or sister or such had a house, wanted an extension and won't get it because they won't recoup the money? I am bewildered at that? Surely getting an extension on to the house is the money being put to good use anyway? (ie; it's not money that has been bet on a horse, you are actually getting a better quality of home life from it for the time you live there)?


Maybe im the mad one, but if i had a house worth 10k, and an extension would cost 5k, but I knew i wouldnt ever get more than 11l for the house, if i wanted the extension, i'd still get it.. but i'd never be bothered on losing out on the 'dead money' as i'd be in the house til i'm dead, myself.

I keep hearing about 'starter' homes and that kinda thing. Is this really the common way that people are these days (buying and moving houses like they're trading in cars?) or is it just a boards member thing and doesn't really reflect the reality of day-to-day ireland?

I agree with you, if you put money into a house you will end up getting most or more back.

Good example, Chap i know is sellling a house in an area which are all three bed ex council.
He has his house with Extension , four bed two sitting rooms. Usual house is 1300sq ft, his is 1800.

Price for normal house is about 130. He had two offers of 200k, considering his extension was 40k

JustAThought

You can buy in and build extensions but 'ex council' still often means 'with council neighbours' still living in them. Attitudes & values mean a lot . I wouldn't touch one with abargepole.

The moving tax I refered to was stampduty - trading up means paying a moving tax. If you know now you will be moving on why plan to pay tax that might be a tear or two years hard saving?

JustAThought

JustAThought wrote: »

You can buy in and build extensions but 'ex council' still often means 'with council neighbours' still living in them. Attitudes & values mean a lot . I wouldn't touch one with abargepole.

The moving tax I refered to was stampduty - trading up means paying a moving tax. If you know now you will be moving on why plan to pay tax that might be a tear or two years hard saving?

Even on a house worth 1 million the stamp duty is only 10k. You could easily make that back with an increased sale price never mind if your mortgage is much less than the equivalent rent in the area which is almost always the case nowadays.

76544567

Maxwell Victorious Tennis wrote: »

Even on a house worth 1 million the stamp duty is only 10k. You could easily make that back with an increased sale price never mind if your mortgage is much less than the equivalent rent in the area which is almost always the case nowadays.

There are times, as we have seen, where stamp duty goes up and down like a yo-yo though.