100% Mortgage Anyone

CiaranC

Bluehair wrote:

My advice to ftbs? Simply wait. Rent somewhere you'd like to live and enjoy it. You've missed out on the boom and have nothing to gain by getting on board the market right now

Uh, I might be missing something here, but paying back a mortgage is actually cheaper than renting in most places in Dublin. Also, If the ecomony looks like dive bombing overnight (which it doesnt btw), you could sell your property at a significant loss and still have a healthier bank balance than if you had been renting at 1200 euro a month for several years...

Also, while you are scoffing at the idea of 'starter homes', you are missing a vital piece of the picture. You seem to assume that peoples level of income will remain constant over the lifetime of their mortgage. This may be true in your case, in which case you were clever to take the money and run (even though you are giving it back piecemeal now), but for two college graduates, for example, an apartment could be sold on at the same price it was bought at, or even slightly less while their increased earning power would allow them to take out a bigger mortgage for a larger home.

garred

woody wrote:

Your are atypical of a landlord and will say anything to justify your greed again people like you have this country crippled.

Simple as that you may not agree but that is a fact and this so called republic of Ireland is rampant with greed and has been intensifying in the last ten years...

Greed. Whats your definition of greed? Is it greed if you leave your job for a better paying one? Is it greed if you buy a collectible in the hope that the price will go up in the future? Is it greed if you invest your money (stocks,SSIA, property) rather than letting it dwindle away in a bank?
I'd call it wise management.

Also investors are not the only reason for the price of property. Low interest rates, high employment, larger disposable income, changing views of society, etc are also some of the reasons.

Investors are taxed accordingly. They have stamp duty on second properties, taxed on rental income, ontop of having to pay mortgage, protection, insurance, maintenance fees, etc. The government don't give you hand outs, infact they always have their hands out. Well I suppose investors deserve it, they are scum afterall.

Sorry guys, this is actually an interesting thread with good points made on both sides. Will the bubble burst is the million dollar question. Personally I don't think so. The price increase is slowing down (possibly freezing in some cases) but I don't think they will fall, rather just level off. Without being patronising (did I spell that right) the new mindset when it comes to property is probably inherited from our parents. I know my father (before the boom) told me to get into it and if I have kids I'll certainly encourage them to buy their homes when they can. Also, I know there's a thread on it, but with the SSIA maturing soon and with people getting pissed of with pension policies, I think the demand will be there for a while to come.

ionapaul

Is renting in Dublin really more expensive than paying the mortgage if you bought the place yourself? I am paying less than €400 for a double bedroom in a 2 bedroom apartment in Rathmines...would the mortgage on this place be only €800 a month if bought today? Almost all of my friends who have bought places over the past year and are renting out rooms, etc...in Galway or Dublin are experiencing a negative return-on-investment with regard rental income. They are paying the shortfall themselves as i) they want somewhere to live and ii) they expect capital appreciation.

CiaranC

€800 a month for a two bed in Rathmines? Fair play to you if you can get it.

Im looking for a place in South West Dublin (family, work and friends are here) and rents start at 1100 now. A mortgage over 35 years for a similar priced place is around the 900 mark.

MorningStar

CiaranC wrote:

€800 a month for a two bed in Rathmines? Fair play to you if you can get it.

Im looking for a place in South West Dublin (family, work and friends are here) and rents start at 1100 now. A mortgage over 35 years for a similar priced place is around the 900 mark.

Except a mortgage does not include the months where nobody pays the way a land lord has to . Tax is also paid on rental income. Rent can be more expensive than a mortgage but that doesn't mean a profit for the landlord. The government make more money than the lanlord when all is considered. It's not as simple as
rent-mortgage=profit.
There are property speculators buying on interest only mortgages relying on the market increases but they are few an far between due to risks.

Bluehair

CiaranC wrote:

Uh, I might be missing something here...........

Yes, yes you are, quite a lot in fact.

"paying a mortgage is cheaper than renting"; Lets presume youre a ftb with no stamp duty requirement, lets presume youre going for the 100% mortgage so no deposit, lets even forget about things like house, life and mortgage insurance and use your figures of €900 a month mortgage versus €1100 a month rent. Lets even presume you get your new home furnished and decorated for free (otherwise you'd be way off right? :rolleyes: ) Lets even pretend that your best mate is a solicitor so no fees there too.

With all those presumptions you're €200 a month better off. Lets round it up and call that €2500 a year "better off". Explain to me how you could then sell your property at a significant loss and still "have a healthier bank balance than if you had been renting".

Btw I make no assumption what so ever about peoples incomes remaining the same. Inflation alone eats into a mortgage thankfully. However are you guilty of assuming that interest rates will never go up? If interest rates rose to close to closer to 5% from roughly 3% today you'd find that €900pm going upto almost €1200pm! It may not happen tomorrow but that is not exactly a huge interest rate anyway (the British have slowly risen to 4.75% base) but are you prepared for it?

CiaranC

If you dont see how paying 10800 off your own mortgage leaves you better off than paying 12000 to a private landlord then theres not much I can really do to explain it.

woody

MorningStar wrote:

Except a mortgage does not include the months where nobody pays the way a land lord has to . Tax is also paid on rental income. Rent can be more expensive than a mortgage but that doesn't mean a profit for the landlord. The government make more money than the lanlord when all is considered. It's not as simple as
rent-mortgage=profit.
There are property speculators buying on interest only mortgages relying on the market increases but they are few an far between due to risks.

Your such a social worker are'nt you, your not in it for loss just profit, although your making a loss or breaking even are'nt you :rolleyes:

Lambsbread

CiaranC wrote:

If you dont see how paying 10800 off your own mortgage leaves you better off than paying 12000 to a private landlord then theres not much I can really do to explain it.

Mortgage payments in the first couple of years are largely interest. So you can either pay 12000 to a private landlord or 10800 interest.

lomb

woody wrote:

Your such a social worker are'nt you, your not in it for loss just profit, although your making a loss or breaking even are'nt you :rolleyes:

do u have an objection to people making money? this is a free market not a communist state. there is alot of work involved with being a landlord and responsibility as well and the yields are 3.5% vs 3% to borrow money so indeed if a 200 year mortgage was taken out and a unit was let 100% of the time and there were no maintainence indeed the tenent would pay for it.

the fact that inflation eats a mortgage is something that wise investors have always known, and why property is still a good bet.

parsi

Zaph0d wrote:

Were you alive in the 80's? Do you remember
interest rates @15% ?
inflation @ 25% ?
unemployment @ 17% ?
mass emigration ?

I remember rates being much higher than that - at one stage they were offering well over 20% for 30-day money.

We bought our house 8 years ago, 20yr 92% mortgage. Now the banks share is less than 25% and we have 12 years left.

I worry for people who sign up to a 30 year mortgage- you'll still be paying when the kids hit college and at an age when these things should be less worry.

But I often wish we had a system like Denmark where tenants are encouraged to treat rented property as their home and if they invest in the property (eg new kitchen) then if they are chicked out during the next 5 years the landlord has to pay for the investment on a sliding scale. This seems to be a win-win - the landlord has tenants who look after the property and the tenants have security.

Victor

MorningStar wrote:

The government make more money than the lanlord when all is considered.

Actually the bank makes most of the money.

lomb wrote:

this is a free market not a communist state.

Not quite. Its an overheated market with a distinct taste of oligopoly, especially when it comes to zoned land.

Bluehair

Victor wrote:

Its an overheated market with a distinct taste of oligopoly, especially when it comes to zoned land.

Quite correct. Prediction: new tribunals in 4 or 5 years time investigating the whole torid affair. It's preposteous to be stuffing people into apartments and townhouses in the arse end of outer Dublin when we've one of the lowest densities of people per square mile in western Europe.

skywalker_208

Welli just spent the last 45 mins reading this thread..quite interesting too....

the thought of being able to buy your own house with a 100% mortgage does sounds nice. Dont have to save a deposit, if you have been doing this already you can use the money for some other purpose... furniture etc... Id imagine there are alot of ppl in this boat reading about this at the moment..

But someone earlier mentioned a catch? theres always a catch... it just doesnt feel right... someone else mentioned First Active are not doing this for the good of their health.. Damn right!!!

Im renting at the mo... in a situation where in a couple of months i can either renew the lease or go for this new mortgage... probably end up renting for another while... but it will be interesting to see how this pans out over the coming months...

and if any other banks follow suit (id imagine many will)

Zaph0d

the next logical step:

http://www.mortgagearrangers.co.uk/125mortgage.htm

Thomond Pk

Victor wrote:

Its an overheated market with a distinct taste of oligopoly, especially when it comes to zoned land.

Are you seriously suggesting that there will be only two guests in the tent this year?

MorningStar

Victor wrote:

Actually the bank makes most of the money.

I don't think so, the bank is taxed on the income as well as the landlord without any outlay. The govenrment get stamp duty,tenant registration,tax on rent, capital appreciation (if sold) and tax the banks on profit made on the mortgage.

Woody wrote:

Your such a social worker are'nt you, your not in it for loss just profit, although your making a loss or breaking even are'nt you

Will you at least give us so reason for your logic. You just go around saying lanlords are scum yet it seems to have no other basis than personal dislike. You can't seem to contribute any useful information. Did you ever do a job for money? Well that's what being a landlord is excapt you risk a lot more and the pay off is years later. If you weren't in the country when working you didn't pay tax here while we paid 54%, so maybe I actually contributed to the country more than you!

soma

A few people have (quite plausibly) suggested that the reason First Active have offered the 100% mortgage is that the number of mortgage applications have tailed off or dropped.

However, not that I'd place complete faith in stats, but I had thought any financial reports/articles I had read this year had said there has been an increase in mortgage applications this year..?

Lord Nikon

I rang First Active yesterday, they told me that the combined income of me and the missus, would qualify for a 287k mortgage. TBH, this is 25k shy of what we were expecting to make a house purchase for.

I want a 4bed to live in for a decent stretch of my life, not intended for "starter" home.

It would be resonable to assume that you would get pittance of a house for under 300k, even in the urban sprawl of Dublin.

In my opinion, the housing boom is at it's peak. As much as I want to have my own place to live, and a 100% mortgage making that chance even better, I would only be paying for a house that worth a lot less, when the bubble soon bursts.
Question is this, how long should I expect to wait for the bubble to burst, maybe 3 years? Even if it did, I'd be surprised if we see an overnight drop that's worth talking about.

What I think will happen is that property prices won't drop significantly, but it will merely hover at the position it is now, and everything will eventually catch up with it.

Lord Nikon

soma wrote:

... said there has been an increase in mortgage applications this year..?

Maybe because people were sitting it out waiting for the property market prices to drop, and got sick of waiting and getting old, and started applying.

lomb

neuromancer wrote:

I rang First Active yesterday, they told me that the combined income of me and the missus, would qualify for a 287k mortgage. TBH, this is 25k shy of what we were expecting to make a house purchase for.

I want a 4bed to live in for a decent stretch of my life, not intended for "starter" home.

what if u are wrong about the crash? there is massive immigration into this country and little emigration. i think they will keep rising personally at a rate of 5 % in dublin. much less or static in the countryside.

Imposter

neuromancer wrote:

What I think will happen is that property prices won't drop significantly, but it will merely hover at the position it is now, and everything will eventually catch up with it.

Enerything can't catch up with it. Ireland is tied to the euro and interest rates are going to stay low for a while yet. If inflation in Ireland continues to be so high something has to give. Employers cannot keep increasing salaries. The government has said it cannot reduce taxes anymore. So either jobs will start dissappearing at a faster rate or the entire economy has to cop on to itself and realise that this growth is not sustainable.

Of course Ireland could also pull out of the euro too but that's hardly likely.

When this realisation hits that something needs to be done then I can't see how house prices cannot be hit. It is a fake market that exists because of the numbers of new investors, the number of ftb's and the hype that surrounds 'getting on the ladder'. The last bit being the most worrying and imo mostly caused by investors who will also be the hardest hit when/if this correction hits.

Lord Nikon

lomb wrote:

...there is massive immigration into this country and little emigration.

True, but as far as I know they would be renting, they have only moved here and probaly wouldn't have an Irish banking history that would qualify for a mortgage. Besides the immigration you speak of is mainly from newly joined EU countries. The reason they are here is because of the more money they can earn here, than from where they came from.

lomb

even if they only rent they are propping up the demand side by renting units that would be empty. also some may stay here and buy houses. that isnt that far fetched. basically dublin will be more of a hotspot than it is now even in time. fundamentals support that.
even in the backwaters of beyond in mid wales where i have worked, where land is plentiful, u cannot get a ex council house in a poor area for less than 200000 euros (machynlleth-look it up on a map) unemployment is very high there, incomes very low and mortgage interest rates are about 6% twice what they are here, makes u think that actually 330000 in lucan for a semi isnt really that bad considering it is dublin.
can u explain that nueromancer?

Civilian_Target

Imposter wrote:

It is a fake market that exists because of the numbers of new investors, the number of ftb's and the hype that surrounds 'getting on the ladder'. The last bit being the most worrying

Yes - WTF is the Irish obsession about owning a house. It makes no sense right now. You can rent a 3 bedroom house in Dublin for half the price you would pay in a mortgage if you were to buy it. Theres no way the current prices are sustainable, particularly in North Dublin, so I'd say rent while the going's good - put away your deposit, and when the housing market calms down (which will probably co-incide with a shortage of rental accommodation), buy one.

lomb

Civilian_Target wrote:

Yes - WTF is the Irish obsession about owning a house. It makes no sense right now. You can rent a 3 bedroom house in Dublin for half the price you would pay in a mortgage if you were to buy it. Theres no way the current prices are sustainable, particularly in North Dublin, so I'd say rent while the going's good - put away your deposit, and when the housing market calms down (which will probably co-incide with a shortage of rental accommodation), buy one.

renting is paying interest only, a mortgage is higher because it s interest and principal, simple maths. the rental yield is 3.5% and a mortgage can be had for 3%.

garred

Is this bubble going to burst. People are talking about price crashes, etc. Well look at whats happening now. The house prices are at a level that are too high so investment in overseas property is huge. Maybe wrong but I suspect every country are seeing house prices rise...France, S Africa, Turkey, Bulgaria, Italy, (even Iraq) etc all from foreign investors. So in essence what people seem to be doing now is stop buying here and buy elsewhere. This should cause prices here to stabilise while the problem of increasing prices moves to other countries. Obviously this does'nt apply to ftb's but certainly investors. Prices will stabilise and not fall. As with all the responses, its only my opinion.

CiaranC

Dont you think a 4 bed is a touch unrealistic? Do you plan to have loads of kids or what?

MorningStar

Imposter wrote:

When this realisation hits that something needs to be done then I can't see how house prices cannot be hit. It is a fake market that exists because of the numbers of new investors, the number of ftb's and the hype that surrounds 'getting on the ladder'. The last bit being the most worrying and imo mostly caused by investors who will also be the hardest hit when/if this correction hits.

What are you basing the number of investors in the market on? I don't see that many in the market and I live here and involved in the market. I think it is a myth as I have never seen any figures or indepedent reports.
Investors are people who have money to invest and know they run the risk of loosing it and most can take a loss. THe FTB who buy at the top of their limit and then the property devalues (where unemployment will probably be involved too) they will be in negative equity and possibly unemployed. That is a bad place to be and more likely than some investor loosing some savings.

You never commented on how great the 80's were compared to now.

TO ALL
The housing market is really complex and people are applying really simple logic to it. What's even more annoying people don't seem to basing it on anything other that rumour and belief. It's all speculation but what are people basing it on. I normlly say anybodies view is as valid as any others but if it's not based on any facts or even logic I really think it's getting to the point where you can say people don't know what they are talking about. Not directected at anybody in paticular but can we try to be a bit more open to discussion rather than just opinion stating. I am open to views and theories and want to discuss

MorningStar

CiaranC wrote:

Dont you think a 4 bed is a touch unrealistic? Do you plan to have loads of kids or what?

There is a guy about here who rents says he will buy €750k as his first property in a few years time! He doesn't think that is unrealitisc. People wanting bigger houses than they need is part of the problem. Instead of buying a house that suits their needs they buy more than they need further out as they don't want to buy a small house in a "bad" area. THe bad areas being created further out will come to fruit when the kids become teenagers ,have no services and the parents aren't about becasue they are at work. This will also increase the population