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First time buyer

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  • 02-03-2010 9:44pm
    #1
    salmon7
    Closed Accounts Posts: 32 ✭


    Hi all.

    Total newbie to this.

    Looking for advice on buying 3 bed semi in the Louth/Drogheda/Termonfeckin area.

    An example I saw was in Termonfeckin. 3 bed semi for €225k.
    What should I offer for this? I'm in no rush either.

    Are house prices going to drop further?

    Many thanks in advance


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    #2
    Treehouse72
    Registered Users Posts: 1,003 ✭✭✭Treehouse72


    OP, what is your income or joint income?

    What savings/deposit do you have?

    How much are you paying now on shelter/rent?


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    #3
    salmon7
    Closed Accounts Posts: 32 ✭salmon7


    Hey Treehouse
    Income is €40k
    Current rent is €220pcm excluding heating and other bills. Have an outstanding car loan for €14k.
    Deposit of €18k.


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    #4
    Treehouse72
    Registered Users Posts: 1,003 ✭✭✭Treehouse72


    I also meant to ask whether you had mortgage approval. This is from today's Indo:
    A single person would need to have €1,500 left over each month after meeting their mortgage and other loan payments before being approved for a home loan.
    In addition: "Lenders are now using a number of key criteria before they will even consider a mortgage application":

    > All applicants must have a permanent employment contract.
    > Lenders desperately want to see a history of saving.
    > Generally, lenders are not keen to fund the purchase of apartments
    > Lenders are much more keen to lend in urban areas with better prospects for resale.
    > Any delinquencies showing up on a personal credit report will be a big reason for denial.

    http://www.independent.ie/business/personal-finance/home-truths-key-factors-when-trying-to-get-a-mortgage-2085250.html

    Your salary gives you about €2,500pm net. The car loan will take some more out of that (it might even be grounds for turning down the application if we believe the Indo). So as far as I can see the biggest monthly repayment they'll allow you take on is around €900pm - €1000pm.

    5 years fixed at 3.99% over 30 years on a €200,000 loan is c. €1,000pm. It is less on various starter deals, but 4% is very likely to be a good guideline over those 30 years. The BoI calculator also says €200,000 is the most you can borrow.

    All in all this does not stack up to me. If you have €1,000pm in mortgage repayments you are left with €1,400pm to spend on everything else: home maintenance/costs/insurance, bills, groceries, car, clothing etc. On top of which, 30 years is a long ol' time.

    My opinion would be that you should be waiting until this property has dropped another 30% in price and then the numbers will work much better. Thus, I don't think you should pay a penny over €150,000 on this (or any) property.

    I'm an amateur and this is just IMO. I am open to correction on any calculations.


    Calculators used for income and mortgage calcs:
    http://www.deloitte.ie/tc/
    http://www.bankofireland.ie/personal/borrowing/mortgages/repayments.html


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    #5
    salmon7
    Closed Accounts Posts: 32 ✭salmon7


    Many thanks Treehouse for the info.

    Incredible though....banks were breaking their necks to lend to anyone who had some money a few years ago and now it seems like you will have to persuade them that you don't need the money to actually get a mortgage.:D

    On another note €150k sounds affordable and more realistic.


    Is there anyone out there who is currently looking at property at the €200000 - €250000 bracket ( bearing in mind country/town/ setting and future resale ) and what is the consensus on how much to offer. These same price brackets were €300k+ a few years ago. Furthermore, I can't believe the website prices... they are not updated regularly...

    I know it is foolhardy to look at past prices ..... prices that i just couldn't fathom to begin with. How much more will they fall or do I just make an offer that will factor in a future price drop to the seller. Some estate agents said that there was sale approved, that subsequently fell through, on some of the houses I looked at...will they genuinely tell you what those offers were?

    I know i will have to get mortgage approval first etc but travelling down that road will be made more pleasant if I know that the house i'm going for wherever that may be, is realistically priced and I can actually feel I can afford it.

    Perhaps I will just keep paying off car loan and keep an eye on the houses.:confused:

    Thanks in advance


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    #6
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,283 Mod ✭✭✭✭The_Conductor


    Nobody knows how much further prices will fall- all you can really do is look at historic averages- which would indicate that 3.2 times average earnings, would be a good longterm average price for a 2-3 bed. This indicates prices may yet be almost double where they should be- I would imagine that prices will really start to fall once interest rates start to rise.

    Domestically all the major lenders have already announced their intentions to increase interest rates later this year, and of course, once the ECB starts to increase rates (now seen as more likely in the first half of next year, than the latter quarter of this year), then hair will really start to fly.

    Normalisation of interest rates infers a 3% rise above current levels, and domestically a further 1.2% to account for the erosion of lending margins.......

    Potentially interest rates could rise 4% from their current levels (but would be unlikely to rise further than this- and it may take some time e.g. 3-4 years, to get to these levels).


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    #7
    shoegirl
    Registered Users Posts: 2,018 ✭✭✭shoegirl


    If your current rent is only 220pcm, I am guessing you are saving like mad. Unless you really have to move, stay on another year and keep saving. To me that price seems a lot to pay for that area. I'd be inclined to wait another year and see what happens. If at worst prices rise a little, you've a bigger deposit and smaller borrowings, and at best, the prices could drop a lot further.

    I suspect you might see further discounting on that area as it was heavily developed and there is a lot available within a 20 mile radius. Would you consider Drogheda itself?


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    #8
    ei.sdraob
    Closed Accounts Posts: 9,376 ✭✭✭ei.sdraob


    start at about 20% less

    from the figures seen few months ago when comparing asking prices (daft) and that auctioneers union report

    theres about a 20% difference between asking and selling prices ;)


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    #9
    salmon7
    Closed Accounts Posts: 32 ✭salmon7


    Many thanks guys for the information
    :D:D:D:D


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