Mortgages

Sappa · 22-04-2012 11:50am #1

After all the mess and continuing chaos around mortgages in Ireland,what are peoples genuine opinions of them.
I continually come across friends who are either snookered by a huge mortgage,a couple of them have just up sticks and legged it and others are just about managing.
I'm more of the opinion that I would rather rent than be slaved by a mortgage or save enough over time where I can buy outright or move to a cheaper country.
But I won't be getting a mortgage

galwayrush · 22-04-2012 11:51am

They help people buy houses...

girl2 · 22-04-2012 11:56am

http://www.irishtimes.com/newspaper/property/2011/1117/1224307694424.html

Here's one guy's opinion.

My opinion - they worked before everyone went cuckoo thinking they could actually afford that €450,000 house that they would NEVER have got a mortgage for ten years previous.

I have a mortgage, Ive alwys paid it. I entered it knowing what was I front of me. It worked for me because I couldn't have afforded a house without one. It will be paid soon and I'll be free of it. Will I look another mortgage. At this point in time - no.

Richard Hillman · 22-04-2012 12:15pm

It seems like a badge of honour for a lot of people, like you've achieved something by having a wife, a few kids and a mortgage

Its no different to getting a 200k loan for a Ferrari.

old_aussie · 22-04-2012 12:16pm

Op just be someones rent bitch for the rest of your life and be happy that you have helped other people pay off their mortgage.

true · 22-04-2012 12:17pm

The mortgage system works when the banks are responsible in selling them.

During the boom some building societies / banks here sold mortgages without care or prudence.....sometimes to a value 50 or 60 times the applicants annual income. No wonder the system crashed. Those responsible in the financial system should be taken out and shot, for ruining peoples lives.

eviltwin · 22-04-2012 12:18pm

Its an Irish thing. I remember being shocked at the numbers of people overseas who are content to rent. We were always told renting was "dead money"....guess who feels stupid for having bought a house now?

Milk & Honey · 22-04-2012 12:23pm

Sappa wrote: »

After all the mess and continuing chaos around mortgages in Ireland,what are peoples genuine opinions of them.
I continually come across friends who are either snookered by a huge mortgage,a couple of them have just up sticks and legged it and others are just about managing.
I'm more of the opinion that I would rather rent than be slaved by a mortgage or save enough over time where I can buy outright or move to a cheaper country.
But I won't be getting a mortgage

I know a guy who got a mortgage on a house in 1993 just after the interest rate crisis. He has been paying a mortgage of about €450 per month average since. There is now less than €10k outstanding. The house next door is identical and is let. The rent is €2k a month.
Which house would you prefer to be occupying? The one where the mortgage will be paid off completely next year or the one where the rent will inevitably rise in the future?

ted1 · 22-04-2012 12:30pm

Richard Hillman wrote: »

It seems like a badge of honour for a lot of people, like you've achieved something by having a wife, a few kids and a mortgage

Its no different to getting a 200k loan for a Ferrari.

A house doesn't deprecate like a car does. (with the exception if those bought during the boom)

Once you pay off the mortgage in x years you li e mortgawge and rent free. If your paying rent how on hell will you pay rent when you stop working.

Also i'm currently paying 1150 a month rent. I just bought a house in a slightly better estate and my mortgage will be 750. A no brainer if you ask me.

true · 22-04-2012 12:40pm

ted1 wrote: »

A house doesn't deprecate like a car does. (with the exception if those bought during the boom)

Once you pay off the mortgage in x years you li e mortgawge and rent free. If your paying rent how on hell will you pay rent when you stop working.

Also i'm currently paying 1150 a month rent. I just bought a house in a slightly better estate and my mortgage will be 750. A no brainer if you ask me.

wait until interest rates increase. They are historically at rock bottom now. Plus welcome to the world of paying for property repairs,maintenance, property insurance, property tax etc.

smallerthanyou · 22-04-2012 12:41pm

Aaarrrggghhh! Cant believe people are still trotting out the rent is dead money line. When any friends say this to me I have the urge to punch sense into them. A mortgage in the first few years is primarily "dead money". Very little is capital repayment. Renting can be the best decision for a lot of people. It is currently for me. But in the future may not be.

ted1 wrote: »

Also i'm currently paying 1150 a month rent. I just bought a house in a slightly better estate and my mortgage will be 750. A no brainer if you ask me.

Congrats on your new home! Out of interest how much would interest rates have to rise for your repayment to hit 1,150?

Logical Fallacy · 22-04-2012 12:42pm

Sappa wrote: »

After all the mess and continuing chaos around mortgages in Ireland,what are peoples genuine opinions of them.
I continually come across friends who are either snookered by a huge mortgage,a couple of them have just up sticks and legged it and others are just about managing.
I'm more of the opinion that I would rather rent than be slaved by a mortgage or save enough over time where I can buy outright or move to a cheaper country.
But I won't be getting a mortgage

I won't get a mortgage but I just bought a house.

Pretty ****ing sweet.

ted1 · 22-04-2012 12:42pm

About 3.5%, but rent could easily rise too.

smallerthanyou · 22-04-2012 12:50pm

ted1 wrote: »

About 3.5%, but rent could easily rise too.

Very true but I'll just move somewhere cheaper and lose nothing. A mortgage holder can't be sure of doing that.

I'm not saying mortgages are wrong for everyone and renting is right. Every case is different but this rent is always dead money argument wrecks my head. I know you didn't say that but just trying to make a point.

ted1 · 22-04-2012 12:53pm

I've rented for the past years and bought the house for less than a third of the peak price. Very happy with the area couldn't see myself wanting to move.

eviltwin · 22-04-2012 12:55pm

Pros and cons to both. Hard to say if either is the "best" option. We can all make statements based on the hindsight of the last few years but none of us know what is going to happen in the future. Its all chance really.

smallerthanyou · 22-04-2012 12:55pm

ted1 wrote: »

I've rented for the past years and bought the house for less than a third of the peak price. Very happy with the area couldn't see myself wanting to move.

Congratulations. Exactly what I intend to do in time. A perfect example of the 3 years rent you paid not being dead money.

stovelid · 22-04-2012 12:56pm

Have one and the payments are still in and around the cost of renting the place. Can easily afford the payments at the moment and could also cover them with one wage if needed. It's fixed for another 5 or 6 years and by the time that's over, the kids will be out of creche thankfully. The house is big enough for us and while I would prefer a different house (typical Celtic tiger design),I really like the area and would stay here if I won to lotto, albeit I would buy land and build a place.

Each to their own if they rent or own. Problem with this forum - and this country - is that far too many people care about what others do.

I doubt very much a mortgage is a status symbol as said here?

09-05-2012 10:56am

I fully intend on getting one when I can get a job back near home.

I hate handing money over in rent when I know it could be going towards owning the place instead also the thought of renting all my life is awful.

foxyboxer · 09-05-2012 11:10am

Hayden Gorgeous Silencer wrote: »

I fully intend on getting one when I can get a job back near home.

I hate handing money over in rent when I know it could be going towards owning the place instead also the thought of renting all my life is awful.

Aren't you getting shelter when you pay rent?
And paying a mortgage is essentially renting (plus interest) from a lender anyway?

09-05-2012 11:19am

foxyboxer wrote: »

Aren't you getting shelter when you pay rent?
And paying a mortgage is essentially renting (plus interest) from a lender anyway?

Your getting shelter but your never getting a place thats your own and that means a lot to some people. Like I couldn't imagine my home house not being owned by my parents, its the place I have lived all my life and even though I'm living away now I'm still home every 2nd weekend.

The thought that at some point this house would no longer be ours due to having to move out or whatever is almost unthinkable.

Its not renting plus interest as with every repayment you are closer to owing the house/apartment and at some point you will no longer have to pay but still be living in the place, also mortgage repayments are less than the equivalent rent in a lot of cases now so it actually makes more since to buy if you plan on staying living in the area.

not yet · 09-05-2012 11:29am

true wrote: »

The mortgage system works when the banks are responsible in selling them.

During the boom some building societies / banks here sold mortgages without care or prudence.....sometimes to a value 50 or 60 times the applicants annual income. No wonder the system crashed. Those responsible in the financial system should be taken out and shot, for ruining peoples lives.

And their's you talking about care and prudence...you do realise the absurded content of your post....

60 x the average income would be 1.8 million. I personally don't know anyone who got 60x their salary.

Fizzlesque · 09-05-2012 11:41am

Sappa wrote: »

After all the mess and continuing chaos around mortgages in Ireland,what are peoples genuine opinions of them.

I think it varies hugely from person to person, and where they are in their lives at a given time. For years I rented, and it suited me very well to rent, as I was young and didn't want the responsibility of a house/mortgage. Plus, at that time I was always losing jobs (being let go, getting fired, or deciding to leave), and was far from stable enough (financially and emotionally)to take on a mortgage. That finally changed, thank goodness.

After being asked to leave a flat I absolutely loved, because the landlord's daughter wanted to live there, I ended up constantly having to move home (leases not being renewed, house mates moving out, rents going up too much etc) and finally I moved into a bedsit, and there I stayed for 3 years.

At this stage I was in my late 30s, and had no desire to house-share with strangers, so the bedsit was the lesser of two evils. Eventually, living in a tiny room was severely negatively affecting me, so I decided to look into buying a house. I was very fortunate as my father helped me with a decent deposit and the mortgage company didn't offer me an outrageous mortgage (in fact, it was because what they offered wouldn't buy anything, my father made up the shortfall) and to my great surprise, and delight, when I moved into my house, I was only paying €100 more per month.

For me, the psychological benefits of moving from one tiny room, to a house with rooms and a garden and bath and open fire, were (and still are) completely priceless. I love knowing I can make any changes I like to my home, and that one day I won't have to pay a large monthly amount to live there, and that (as long as I keep paying the mortgage) I'll never be at the mercy of someone else's timetable/plans and be told I have to move out.

I love my house. Seven years later I'm still as enamoured with it as I was the day I moved in. A true love affair. I'm no more broke now than I was when I rented, but I'm a much, much happier. Horses for courses, I reckon.

analucija · 09-05-2012 11:42am

Mortgage is perfectly fine if you can afford it and if you plan to stay somewhere for a long period of time. We have mortgage, we built our house at the end of boom times. We are not in negative equity, have the house we wanted and big misbehaving dog who can occupy his own farmchair, without anybody but us complaining and we live in a nice area.

But if you are not settled somewhere and plan to stay there for decades and if you can't afford it, then taking mortgage out and buying a house is very risky or even stupid.

golden lane · 09-05-2012 11:47am

paying rent......is an investment for somebody's family.........paying a mortgage is an investment for your own family.......

but having a miserable life, is not good for your family.........

Agent J · 09-05-2012 12:08pm

If there is one thing to learn from the last few years.

Rent is not dead money.

Can we get that crystal clear?

Mortgages have their place as well but Ireland seems to be obsessed with property ownership. Getting a Mortgage at all costs is not a good thing.

Mink · 09-05-2012 12:09pm

I rent and one of the big benefits is that rentals are nearly always furnished and you don't have to pay for maintenance/repairs of washing machines & the like. Something goes wrong, the landlord is entitled to pay for it.

However, there's LOADS of home improvement things I would love to do to make it more liveable and comfortable but I don't want to put money into something I don't own.

But I won't be able to get a mortgage for at least another 2 years (debts & little savings) so I have to live with it.

I do want to get a mortgage BUT only an affordable one - ie; I'll have a fair bit of expendable income left over to cover emergencies and interest rate hikes. And it would have to be for a home that I would be okay with living in for the foreseeable future with chislers and so on.

They key as to whether getting a mortgage is a good idea or not is if the person is looking realistically at its affordability and not just "ah we'll manage with that repayment".

09-05-2012 12:11pm

I have zero interest in getting a mortgage
I don't know if I'll even stay in ireland long term anyway so I don't mind
renting suits me just fine

Gurgle · 09-05-2012 12:14pm

ted1 wrote: »

A house doesn't deprecate like a car does. (with the exception if those bought during the boom

50% depreciation in 3 years, 80% depreciation in 8 years.
The worst property decision at the height of the boom barely even come close.

foxyboxer · 09-05-2012 12:18pm

Mink wrote: »

I rent and one of the big benefits is that rentals are nearly always furnished and you don't have to pay for maintenance/repairs of washing machines & the like. Something goes wrong, the landlord is entitled to pay for it.

However, there's LOADS of home improvement things I would love to do to make it more liveable and comfortable but I don't want to put money into something I don't own.

But I won't be able to get a mortgage for at least another 2 years (debts & little savings) so I have to live with it.

I do want to get a mortgage BUT only an affordable one - ie; I'll have a fair bit of expendable income left over to cover emergencies and interest rate hikes. And it would have to be for a home that I would be okay with living in for the foreseeable future with chislers and so on.

They key as to whether getting a mortgage is a good idea or not is if the person is looking realistically at its affordability and not just "ah we'll manage with that repayment".

That's a good point. If you look at any contract e.g. an iPhone contract. They don't say that it's only €1000, they say it's only €45 per month.

As mortgage lenders won't mention the compound interest that you will pay them over the course of the mortgages lifetime. They will tell you the monthly repyaments and how manageable and easier it is psychologically.

"Buy a house for 200k, repay 280k!" doesn't appear as enticing as "From only €450 per month"

golden lane · 09-05-2012 12:21pm

Gurgle wrote: »

50% depreciation in 3 years, 80% depreciation in 8 years.
The worst property decision at the height of the boom barely even come close.

a very sad situation to be in.....if repossession is on the cards....

there has been a terrible lesson imposed on a lot of people..but not on everybody....

Monty Burnz · 09-05-2012 12:28pm

ted1 wrote: »

A house doesn't deprecate like a car does. (with the exception if those bought during the boom)

Once you pay off the mortgage in x years you li e mortgawge and rent free. If your paying rent how on hell will you pay rent when you stop working.

Also i'm currently paying 1150 a month rent. I just bought a house in a slightly better estate and my mortgage will be 750. A no brainer if you ask me.

Houses do depreciate, but perhaps not as fast as cars do.

Monty Burnz · 09-05-2012 12:30pm

Hayden Gorgeous Silencer wrote: »

I fully intend on getting one when I can get a job back near home.

I hate handing money over in rent when I know it could be going towards owning the place instead also the thought of renting all my life is awful.

You rent either way. You rent either the house or the money to buy the house. That's what mortgage interest is - rent on the money.

Bear in mind that - depending on interest rates - you can pay back a multiple of what the house costs. In the first few years, the overwhelming majority of your mortgage is paying the interest portion.

Gurgle · 09-05-2012 1:01pm

Monty Burnz wrote: »

Houses do depreciate, but perhaps not as fast as cars do.

Houses can, cars just do.

Monty Burnz · 09-05-2012 1:06pm

Gurgle wrote: »

Houses can, cars just do.

Well no, both do. You point me towards a house that doesn't depreciate, and I'll show you a car that doesn't.

Gurgle · 09-05-2012 1:13pm

Monty Burnz wrote: »

Well no, both do. You point me towards a house that doesn't depreciate, and I'll show you a car that doesn't.

Going to have to point you towards the 90s if you're comparing to the right now value.
Any house bought up to approx 2000 is worth more now than it was then. Any car bought up to 2000 is worth a small percentage of its original price.

Gurgle · 09-05-2012 1:45pm

Domo230 wrote: »

A very subtle form of slavery.

Yes, very subtle.

You decide to purchase, go looking for a mortgage, agree loan conditions, payment schedule, interest rates. At the end of it, if you stick to the deal then you own outright the house you want to live in. They're sneaky feckers alright.

foxyboxer · 09-05-2012 1:51pm

Renting provides shelter in one way, but it also buys flexibility.
Especially if you are not tied to one particular place.

You can't do that with a mortgage (or death contract :eek:)
Also renting, doesn't imply that you will be paying off some "smart, ballsy" persons mortgage. You can also rent with the councils, tenancy.

The only criteria for me to get a mortgage would be if I were getting married, intended to have a family, prices were sensible and future job prospects were solid.

Wile E. Coyote · 09-05-2012 1:54pm

foxyboxer wrote: »

You can't do that with a mortgage (or death contract :eek:)

Just a tad overdramatic don't you think? I'll have my mortgage paid long before I'm dead (hopefully). Where are all the people currently renting going to live when they only have a pension to live off? That €200 a week pension isn't going to go very far.

Wile E. Coyote · 09-05-2012 2:01pm

Domo230 wrote: »

That's the ideal but it doesn't go that way for many. If I lose my job, I can pack up and move somewhere else and rent there. Or I can switch careers if my career sucks and take a pay hit without worrying. People on Mortgages can't. They are very restricted compared to renters. My parents have lost a lot of freedoms due to their mortgage so yes I do think it is a subtle form of slavery.

There's nothing stopping me from packing up. I can rent my own house out, it'll more than cover the mortgage, and rent somewhere else if I wanted. I don't know very many people though, renting or with a mortgage, who could afford to take a hit in their pay without worrying. Bills still need to be paid.

Gurgle · 09-05-2012 2:01pm

Domo230 wrote: »

If I lose my job, I can pack up and move somewhere else and rent there.
I can switch careers if my career sucks and take a pay hit without worrying.

People who have such situations on the horizon would be stupid to buy a house at all, mortgage or otherwise.

Domo230 wrote: »

I will have to go the long and difficult path towards saving for a house and paying upfront.

Sure you can, I assume you've done the calculations.
Good luck with that.

ocallagh · 09-05-2012 2:01pm

ted1 wrote: »

A house doesn't deprecate like a car does. (with the exception if those bought during the boom)

Once you pay off the mortgage in x years you li e mortgawge and rent free. If your paying rent how on hell will you pay rent when you stop working.

Also i'm currently paying 1150 a month rent. I just bought a house in a slightly better estate and my mortgage will be 750. A no brainer if you ask me.

Yes, 1150 is dead money
Interest is also dead money
A drop in your house price is dead money too

The latter turns it from a no brainer into a high stakes gamble. The 12k you blow in rent each year is pittance if your property drops by 10% in the same period not to mention the money you wasted on maintenance, interest etc.

09-05-2012 2:02pm

Monty Burnz wrote: »

You rent either way. You rent either the house or the money to buy the house. That's what mortgage interest is - rent on the money.

Bear in mind that - depending on interest rates - you can pay back a multiple of what the house costs. In the first few years, the overwhelming majority of your mortgage is paying the interest portion.

Its still your house from day one though, you can decorate it, change it around, not worry about renewing a lease, getting thrown moved on when the landlords son/daughter wants to move in.

Even better (and what my plan is) is you can build your own house exactly as you want if you chose.

and as I said before in a lot of cases now, rent is more than the mortgage repayments. I cant understand people not wanting to own their own house and own it when they are fairly young too not when they are married with children. I have 3 close friends all under 26 building houses at the moment.

foxyboxer · 09-05-2012 2:02pm

Wile E. Coyote wrote: »

Just a tad overdramatic don't you think? I'll have my mortgage paid long before I'm dead (hopefully). Where are all the people currently renting going to live when they only have a pension to live off? That €200 a week pension isn't going to go very far.

The word mortgage is a Law French term meaning "death contract," meaning that the pledge ends (dies) when either the obligation is fulfilled or the property is taken through foreclosure.

Monty Burnz · 09-05-2012 2:05pm

Gurgle wrote: »

Going to have to point you towards the 90s if you're comparing to the right now value.
Any house bought up to approx 2000 is worth more now than it was then. Any car bought up to 2000 is worth a small percentage of its original price.

Now you are referring to the rate of depreciation. Of course they are different.

foxyboxer · 09-05-2012 2:06pm

Hayden Gorgeous Silencer wrote: »

Its still your house from day one though, you can repaint it, change it around, not worry about renewing a lease, getting thrown moved on when the landlords son/daughter wants to move in.

Even better (and what my plan is) is you can build your own house exactly as you want if you chose.

and as I said before in a lot of cases now, rent is more than the mortgage repayments.

Ah now there are tenancy laws after all.

And if you have a mortgage, you don't own the house and it's not an asset. Anything that takes money out of your pocket is not an asset.

It is an asset for the bank and it's market value is the collateral for them in giving you the money in the first place. You own it when you get the deeds.

You default? They take the house.
You die? They cash in the life assurance they made sure you took out.

I don't recall giving life assurance details when renting?

Stiffler2 · 09-05-2012 2:06pm

RENTING IS DEAD MONEY

THERE - I SAID IT IN CAPS

golden lane · 09-05-2012 2:06pm

ocallagh wrote: »

Yes, 1150 is dead money
Interest is also dead money
A drop in your house price is dead money too

The latter turns it from a no brainer into a high stakes gamble. The 12k you blow in rent each year is pittance if your property drops by 10% in the same period not to mention the money you wasted on maintenance, interest etc.

you pay your mortgage.....you live in the house......you die...and you leave the house to your children.......

how on earth is that not a good idea........????

Monty Burnz · 09-05-2012 2:08pm

Stiffler2 wrote: »

RENTING IS DEAD MONEY

THERE - I SAID IT IN CAPS

MORTGAGE INTEREST IS ALSO DEAD MONEY.

I said it in italicised caps.

Wile E. Coyote · 09-05-2012 2:08pm

Domo230 wrote: »

I will go the longer and more difficult path towards saving for a house and paying for it upfront.

How do you see that working out for you?

c_man · 09-05-2012 2:10pm

People with mortgages should be forced to wear a big 'M' on their person so that we may all deride them for being such fools. We can attach the Stone of Shame to special cases. "Rent is dead money? Well this is dead weight!"

Mortgages

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