Am I mad stretching the finances?

Xterminator

offalyandroid wrote: »

We are very lucky at the moment in that the rent we pay for a 1 bed apt is 639 a month. We are saving €1000 a month but this is by being careful. I'm driving a very old car which needs replacing once we draw down a mortgage. Our outgoings right now are very minimal and we have no dependents or loans of any kind.

this means at current income levels you can pay mortgage and still save about 400 euro a month without even changing your habits, giving up any existing luxuries, or subscriptions etc.

That 400 euro can be a buffer, so that if things do tighten financially you could stop saving, and put that 400 towards expenses. Not to mention have a few bob in case of unexpected expenses etc.

For me that would be more than sufficient 'head room' . I appreciate everyone is different, but i wonder if you might just be overly nervous as opposed to financially prudent in your worries.

Thats a rhetorical question BTW!

Leprechaun77

offalyandroid wrote: »

Bills are done as so:

I pay 439 toward th rent
Partner pays 200 toward the rent
I put 300 into joint acc
Partner puts 700 into join acc
Partner pays for netflix
I pay for broadband
We both pay electricity evenly
Food bill paid evenly

No other bills other than that. Frugality this last 2 years has allowed saved us 24k in 24 months.

Apologies if I have missed something...

If you earn €25k and your partner earns €67k, that should be about €5k+ per month after tax, no? You mention that you (or both?) have been frugal for 24 months and saved €1k per month.

Where is the unaccounted €2k approx per month going?

Bass Reeves

Leprechaun77 wrote: »

Apologies if I have missed something...

If you earn €25k and your partner earns €67k, that should be about €5k+ per month after tax, no? You mention that you (or both?) have been frugal for 24 months and saved €1k per month.

Where is the unaccounted €2k approx per month going?

I expect that partner has other financial commitments

Leprechaun77

Bass Reeves wrote: »

I expect that partner has other financial commitments

Indeed...as with everything, I am trying to lay some breadcrumbs here to get the other pieces of the jigsaw, without which a lot of the advice will be inaccurate. The OP may not want to discuss their partner’s personal circumstances, but about 40% of household income is yet unaccounted for until further clarification is given.

Sarn

If you look at about €1350 to cover mortgage, mortgage protection and home insurance you are looking at about 26% of household income (€1830 + 3460ish). That should leave plenty of wriggle room. Obviously any additional loans will affect this.

Based on the figures you provided in the original post it looks like the ratio each pays would need to be adjusted.

Smee_Again

Leprechaun77 wrote: »

Indeed...as with everything, I am trying to lay some breadcrumbs here to get the other pieces of the jigsaw, without which a lot of the advice will be inaccurate. The OP may not want to discuss their partner’s personal circumstances, but about 40% of household income is yet unaccounted for until further clarification is given.

OP said they have no loans or dependents so there’s a lot of money unaccounted for.

Also, I think the OP is over contributing to the household based on their income.

39% of rent & savings and 50% of all other bills. What does the partner spend his money on?

Smee_Again

Smee_Again wrote: »

OP said they have no loans or dependents so there’s a lot of money unaccounted for.

Also, I think the OP is over contributing to the household based on their income.

39% of rent & savings and 50% of all other bills. What does the partner spend his money on?

Partner is doing another part time degree so there is fees with that, he has higher diesel costs and saves money with credit union, also has health insurance and subscriptions to Spotify etc .

As for me I usually have couple of hundred left in my current acc each month after I pay everything from my end so there is always a bit there for me as a backup. Plus I have my own savings account seperate to the joint account where I put in 300 a month, but that account is there for when when I buy a better car at some stage, my deposit for that if you will. It's obvious I'm paying a bit more than I should given the wage difference

offalyandroid

offalyandroid wrote: »

It's obvious I'm paying a bit more than I should given the wage difference

"Should" is not really imo an appropriate word here, unless you've discussed this openly as a couple.

Also there's a load of monthly income not at all covered here as a couple.

Also you have a few hundred quid savings and a few hundred quid a month not used which you know of.

TBH OP im very very unclear as to what you're looking for from the thread- is this about the affordability of this proposed mortgage for ye as a couple (easily) or you as an individual if ye split it halfways (easily enough) or about the way ye as a couple split bills?

[Deleted User]

[Deleted User] wrote: »

"Should" is not really imo an appropriate word here, unless you've discussed this openly as a couple.

Also there's a load of monthly income not at all covered here as a couple.

Also you have a few hundred quid savings and a few hundred quid a month not used which you know of.

TBH OP im very very unclear as to what you're looking for from the thread- is this about the affordability of this proposed mortgage for ye as a couple (easily) or you as an individual if ye split it halfways (easily enough) or about the way ye as a couple split bills?

I'm just looking for opinions on what other people think overall for my individual financial situation for when I commit to the mortgage. I've gotten some good feedback from posters here and it's made me feel better about the situation tbh.

fliball123

I would be asking your partner to pay more than half if your in a relationship it should be a combined thing, maybe I am old fashioned. It sounds like you wont be having kids. Also just on the financial side you are used to a 1 bed apartment and are getting 2 beds, you could for a year or a few years rent a room out under the rent a room scheme and you could supplement both of your incomes that way tax free .

DubLad69

From the thread title. I personally think that it's fine to stretch yourself for a house/mortgage. Especially if your in public service or a secure job that would likely only have pay increases in the future.

For the splitting of the bills. For me I think that it should be in proportion to your income just to make sure that you both have a reasonable amount of disposable income.

ted1

offalyandroid wrote: »

I should mention that the rate is with AIB fixed for 5 years at 2.5% and the other 10 years fixed at 2.95. its a special "green rate" for houses between A1 and B3 ber rating

Try Avant you can get 1.95%

I’d say it’s very doable on your incomes.

Also don’t write off houses with a lower BER, the system has its flaws.

Finally , can you avail of the help 2 buy grant ?

https://www.revenue.ie/en/property/help-to-buy-incentive/index.aspx

Bass Reeves

offalyandroid wrote: »

Partner is doing another part time degree so there is fees with that, he has higher diesel costs and saves money with credit union, also has health insurance and subscriptions to Spotify etc .

As for me I usually have couple of hundred left in my current acc each month after I pay everything from my end so there is always a bit there for me as a backup. Plus I have my own savings account seperate to the joint account where I put in 300 a month, but that account is there for when when I buy a better car at some stage, my deposit for that if you will. It's obvious I'm paying a bit more than I should given the wage difference

These figures change it more in your favor. All you need do is rearrage finances if you come under pressure. HTB at present for this year is 10%. On a 250K new house you can reclaim up to 25K over last three years tax. I would not discount older houses either but 25K would be achievable in you and your partner case. That would bring your mortgage requirement back to 160K. This would bring repayments below 1100/month. As well the renta a room for 2-3 years if you so decided would bring 3-500/month

Bass Reeves

Bass Reeves wrote: »

These figures change it more in your favor. All you need do is rearrage finances if you come under pressure. HTB at present for this year is 10%. On a 250K new house you can reclaim up to 25K over last three years tax. I would not discount older houses either but 25K would be achievable in you and your partner case. That would bring your mortgage requirement back to 160K. This would bring repayments below 1100/month. As well the renta a room for 2-3 years if you so decided would bring 3-500/month

I thought it was 5%. That's great if its 10%. We will be doing HTB as that's always been on the cards.

Bass Reeves

offalyandroid wrote: »

I thought it was 5%. That's great if its 10%. We will be doing HTB as that's always been on the cards.

Yes 10% for 2021

dubrov

What's the alternative OP?

Your cheap rent will continue to rise and may get much higher if you have to move.

Your partner then retires and you have to cover all your current bills on one salary with no home equity.

Also, 1k a month is not a lot of savings with no children on those salaries. Maybe you feel like you've lived frugally as you are spending a much higher percentage of your income than your partner