New to the property market... what to do?

D!ve^Bomb!

Hello people

Wondering if I can get some advice, I’m thinking of entering the property market but I have no idea where to start...

I want to buy a house, preferably not in Dublin due to low prices (compared to Dublin) in the country... I was thinking of somewhere in Meath to make commuting to work (work in Blanch) a bit easier...

I wouldn't mind living in the house but I guess the main reason for buying is for an investment and I’ll *probably*, although not definitely, rent it out to cover the mortgage etc...

Now I don't know what kind of budget I would have, checking on daft.ie I see houses for up to 250,000 with a monthly repayment less than 1000, which seems great to me considering a 3 bedroom house *could* earn up to and over 1200e/month..

Now to my budget, I’ve heard that the bank will give you 10 times what you earn and you pay the 10% deposit, is this correct? Would a bank be less likely to give me that kind of loan considering my age etc (21yr old male, I’ll be buying on my own)

I really am a complete novice with regards to the property market so any tips/advice/do's and don'ts you can give me would be very helpful, it will be a year or so before I can come up with a deposit and I want to learn as much as possible before committing to anything..

Thanks

Andrew Duffy

You won't get ten times your salary. Some lenders use an income multiple calculation of, at most, 4.5 times salary. Others base the amount on the percentage of your after-tax income spent on servicing debts - any more than 40% after stress-testing based on a small interest rate rise will be a problem.

About the deposit, you normally can't borrow more than 92% of the purchase price of the house. You will need to pay for surveys, fees and stamp duty yourself, and note that a lot of solicitors like a 10% deposit to be paid on signing.

Dub13

D!ve^Bomb! wrote:

considering a 3 bedroom house *could* earn up to and over 1200e/month..

You will find it very very hard to rent a house out in Meath for 1200e/month.

skywalker_208

"I’ll be buying on my own"

You'll be lucky to get a mortgage on your own unless your earning some serious cash!

and you wont get 1200 for rent in Meath for a house... (if you rent it out) 850 - 950 tops is more realistic

D!ve^Bomb!

well i won't be buying in West Meath or anything, somethin close to Dublin, like Clonee etc.. You can easily rent 3 bedrooms in Clonee as it's close to Blanch, 2 double rooms @ 300/month and a single room for around 280/month.. (for some reason in my original post i said 1200/month.. i meant up to 1000)

as you say though it doesn't look like i'll be getting much of a loan:(

joejoem

Hey Dive, firstly best of luck in finding a place. I was looking at doing something simialar to you, I was looking in Drogheda though, there are houses just outside of drogheda in a development called silk park (3 beds about 1200 sqft I think) with beautiful interiors, 30 mins from Dublin city and 5 mins from drogheda town centre and they are about 235k. I would say that is the best you can get, since there is no stamp duty for first time buyers up as far as 317k this is where the highest appreciation will happen. I can see these house being worth up to 300k in a year to two years.

As for me I went into the stamp duty prices and I have a bid in on a house in Dun Laoghaire. I will find out tomorrow, stress..... I know Ive posted about this before, but I got a fantastic mortgage. 3.1% ECB tracker rate, legal fee's of only €690 (usually 1%) and they paid for my mortgage valuation. Its saving me somewhere along the lines of €4,500 on my mortgage at the start which is fantastic, for a while there I thought I would be sleeping in a sleeping bag on newspapers.

skywalker_208

thats a pretty good mortgage package!

must check out Silk Park because 1200 sqft for 235k is pretty good..

joejoem

I was wrong 230k Have a look at the link -

http://www3.myhome.ie/search/property.asp?id=215731&devid=14796

If your looking for the number for that mortgage broker its 284 5851

positron

joejoem wrote:

As for me I went into the stamp duty prices and I have a bid in on a house in Dun Laoghaire. I will find out tomorrow, stress..... I know Ive posted about this before, but I got a fantastic mortgage. 3.1% ECB tracker rate, legal fee's of only €690 (usually 1%) and they paid for my mortgage valuation. Its saving me somewhere along the lines of €4,500 on my mortgage at the start which is fantastic, for a while there I thought I would be sleeping in a sleeping bag on newspapers.

I am looking Drogheda myself, Silk Park is nice and I even had it booked, but cancelled it later (personal reasons). I am looking closer to the Drogheda station there (Bryanstown Manor, Wheaton Hall etc). There's a looooong thread in boards->Regional->NorthEast forum about drogheda - http://boards.ie/vbulletin/showthread.php?t=163909

Meanwhile, that a legal fee looks fantastic, how did you manage to get that? Any tips to share?

lomb

whats the rental market in drogeda like? do they rent easily?

joejoem

Its ok, you need to be close to transport and Dublin and amenities

seamus

D!ve^Bomb! wrote:

Now to my budget, I’ve heard that the bank will give you 10 times what you earn and you pay the 10% deposit, is this correct? Would a bank be less likely to give me that kind of loan considering my age etc (21yr old male, I’ll be buying on my own)

The bank can give you as much as they want, they're not tied by any regulations. However, they'll realistically only give you as much as you can afford to pay back, usually calculated from your salary. The bank wants you to be able to pay back their money, if you default on the loan, they won't make any money.

The maximum they can give you is 92% of the value of the house (afaik). However, the stamp duty on the house should not be paid using credit. That said, what many people do is apply for their mortgage, and cover the rest of the cost with a general-purpose, short-term loan. It's not strictly advised, but the bank tend to turn a blind eye to such things. If you get a €1000/month mortgage, and rent out the house for €800/month (In Meath, that how much you'll realistically get), then you have to pay €200/m on the mortgage from your own pocket, and however much on the short-term loan. Which shouldn't be an issue.

Let's say the house is €250,000. The bank are allowed give you €230,000, which you may pay off at around €12,000/year (€1,000/m) over 25 years. Figures here are very rough guesses. You then ask the bank for a 5-year €20,000 loan, and buy your house. Your total repayable on the €20,000 is €22,500 (for ease of calculation). So you rent out at €800/month. You then need to pay €200/month on your mortgage and €375 per month on your short-term loan.

So for the first 5 years, you'll be paying around €600/month on your combined loans. If you can get cheap rent (or live with your parents/girlfriend/brother), then you won't find yourself struggling to make ends meet. Not too shabby, considering the mortgage is €1000/month. Once those 5 years are up, you would (hopefully) find yourself in a place where you can afford €1000/month on a mortgage (and thus move into your own house), or even renegotiate to reduce your payments and/or the time it'll take you to pay it off.

A 25 year mortgage isn't a 25 year mortgage unless you don't plan on moving job/getting promoted for 25 years.

Note that I've no financial expertise, this is just the way I understand it (I've almost convinced myself ffs ).

Beruthiel

D!ve^Bomb! wrote:

Hello peopleNow to my budget, I’ve heard that the bank will give you 10 times what you earn

I believe it's actually 4 times what you earn, according to my mortgage broker anyways

gamer

with houses at 200k plus it no longer makes sense to buy to rent ,u get mortgage 190k u actually pay back bank 300k plus..and u have to pay taxs on rental income register as landlord nos dont add up. if u are afraid of being left off property ladder buy a 1 bed apartment secondhand 130k approx or else team up with friend to buy house live in it pay half mortgage . if u dont live in gaff u will be liable 20percent cgt tax when u sell it .if u sell it,capitalgains tax.max rent in dublin is now 1000e to be realistic even in castleknock.if u cant afford house get apartment 1 bed second hand.if u live in gaff u can rent out to cotenants upto 7200 tax free ,see revenue.ie website .i think prices in dublin still going up 10percent cos there is limited space left to build apart from blanchardstown area.which has a major traffic problem.u can get tax relief as a landlord though.

joejoem

positron wrote:

Meanwhile, that a legal fee looks fantastic, how did you manage to get that? Any tips to share?

Well I work in property so i had heard of them. The only tip I would have is to ring them and have approval in priniciple. They will do all the work & searching for you and if you find a house you really like, you can bid on it straight away. If you are succesful they can get you loan approval in 24 hours. I was very happy with there service.

delly

I've been told that nowadays they work out how much you can afford by your net monthly pay, or rather 35% of it.

i.e. you earn €3000 net a month including rent, therefore you can afford to pay €1000 back to your lender. The obvious thing about this is that the lower your interest rate and the longer term of your mortgage, means that you can borrow more.

I've just bought my second house before Christmas and i can honestly say that no matter how stressful buying is, buying and selling is whole lot worse. Between trying to keep your buyer/seller/mortgage lender happy and maintaining sanity, its a rough ride. I found www.permanenttsb.ie great because i could put in different combinations of earnings and see what was accepted and what wasn't. It was also good at forecasting insurance costs as well as mortgage tax relief.

One last tip, remember that credit union loans don't appear on credit checks

RainyDay

delly wrote:

One last tip, remember that credit union loans don't appear on credit checks

Most credit unions don't appear - but at least 4 of the larger CU's were planning on participating in the Irish Credit Bureau, so tread carefully here.

If you are considering renting out the property, this will have implications for your stamp duty, your income tax, your insurance etc. You need to check this out very carefully before your proceed. Don't plan to have tenants in 12 months of the year - you will have vacant periods to cover. Check out the FAQs in the Property Investment forum over at Askaboutmoney.com for more details if this is something you are seriously considering.

gamer

u cud get 3bed house in private estate blanchardstown round 220k if u look hard thru papers ads websites herald ads,prices seem static in blanch cos of traffic congestion and dublin west has loads of new houses being built secondhand houses cheaper ,prices dont seem to rising there since 2003, 4 various reasons.u,d be lucky to get 1000rent for standard house now in dublin rents are going down in suburds or outside city centre landlords have to take single parents rentallowance inorder to gaurantee 1000 permonth rent.

pablo21

Yis are mad lad's! I just bought a new three bed in Mullingar for €160,000, right beside a Gael scoil, across the way from tesco and linked to the motorway! It takes me 50 minutes to commute to Dublin and that will drop when the new motorway is opened (they're 8 months ahead of schedule!).
Now thats affordable! And Mullingar is a great town to boot!! (I know I'm biased before the whole of Dublin replies in anger!! LOL)


P.S. What about Longford? You actually get a grant to live there!!!

Gurgle

gamer wrote:

u cud get 3bed house in private estate blanchardstown round 220k if u look hard thru papers ads websites herald ads,prices seem static in blanch cos of traffic congestion and dublin west has loads of new houses being built secondhand houses cheaper ,prices dont seem to rising there since 2003, 4 various reasons.u,d be lucky to get 1000rent for standard house now in dublin rents are going down in suburds or outside city centre landlords have to take single parents rentallowance inorder to gaurantee 1000 permonth rent.

You need a new keyboard, some of the keys aren't working.

Buy one here

gamer

yeah i recommend mullingar its got everything dublin has except hicrime rates loads of new shops cinemas opening lovely place to live i lived there 4 ten years,u cud get house 4 150k private estate ,i dont know how long it takes to commute in mornings though .in daytime it takes me about an hour to get from arran quay to my familys house leaving dublin at 2pm .people are very friendly and crime rate is very low as long as ur in a private non council estate.

zac

Anyont living in kildare town or Athy or monasterevin? Whats the commuting time like to dublin and to saggart/rathcoole area? Whats its like to live there.

JDxtra

Gurgle wrote:

You need a new keyboard, some of the keys aren't working.

Buy one here

hee hee!

He's right though... this is not the place for text message style conversations. Please try to use proper words and punctuation (not to mention spelling) - this makes understanding your posts so much easier (right, Gamer?).

joejoem

pablo21 wrote:

P.S. What about Longford? You actually get a grant to live there!!!

Explain???? Are they are trying to dilute the ugly people?