Age 23, bought place and panic has hit!

fgdfgfgffd34

I’ve just bought a house and I buy today’s standards its not all that expensive.
Relative to my income what I have left on my mortgage over the next 30 years is 5 times my annual income.
Now, I realise that a lot of people are borrowing ten times their income and really what I’ve borrowed is not a whole lot in today’s crazy terms but the interest rate rise has me worried.
At the moment my income is 2k a month (+overtime of 350) and my mortgage repayments is 850, in a year its likely (with interest rates) that my mortgage will be up to 1k a month.
Rental income from the spare room will likely bring me 280 per month, it seems that what I’ll be paying out for the next few years Is going to be a crazy chunk of my income.
I bought the house on my own, IE raised deposit myself without doing the ‘please mammy and daddy route’, and I’m just wondering given my income/mortgage repayment ratio, interest rates and the fact that the values of property are likely to stagnate have I bought at the worst possible time? IE boom times were in the past.
Or are these money worries the same for everybody when they start out?

fgdfgfgffd34

fgdfgfgffd34 wrote:

Or are these money worries the same for everybody when they start out?

If you're that worried, find some rich old widow and cosy up for the inheritance...

Wouldn't worry too much if I were you. You're on the first rung of the ladder and far better off than trying to get on now.

Sleepy

Are you happy to live in your property for the next 5 - 10 years?

If so, it's nothing to worry about. Your mortgage payments will decrease in real terms as your career progresses.

If you've bought with the idea of "upgrading" in 2/3 years, personally I'd be worried.

godtabh

I'm in the same postion as well. But I look it at this way. Your on the bottom of the rung when it comes to your job. Hopefully the only way is up i.e increase in wages as you prgress in your job. So what looks like it could be expensive may not be when you get your next pay increase.

I plan to live in my new place for at least 5 years but probably closer to 10. At that stage then I should've built up enough equity in the house to afford to move up the rung if I want to

Cantab.

fgdfgfgffd34 wrote:

I’ve just bought a house and I buy today’s standards its not all that expensive.
Relative to my income what I have left on my mortgage over the next 30 years is 5 times my annual income.
Now, I realise that a lot of people are borrowing ten times their income and really what I’ve borrowed is not a whole lot in today’s crazy terms but the interest rate rise has me worried.
At the moment my income is 2k a month (+overtime of 350) and my mortgage repayments is 850, in a year its likely (with interest rates) that my mortgage will be up to 1k a month.
Rental income from the spare room will likely bring me 280 per month, it seems that what I’ll be paying out for the next few years Is going to be a crazy chunk of my income.
I bought the house on my own, IE raised deposit myself without doing the ‘please mammy and daddy route’, and I’m just wondering given my income/mortgage repayment ratio, interest rates and the fact that the values of property are likely to stagnate have I bought at the worst possible time? IE boom times were in the past.
Or are these money worries the same for everybody when they start out?

Eh I don't want to scare you but have you seen this thread?

It's over 65 pages long at this stage and is the most popular thread that askaboutmoney.com has ever had - i.e. it's had 60,000 hits over the last 4 weeks (the previous record being 48,000 hits over 7 months).

I'm convinced the game is up (for many of the reasons given on this thread) and I believe it should be mandatory for all first-time-buyers to read this thread before handing over the hard-earned for a shed in the back of Balivor.

Looking forward to the sunday papers this weekend - will be very interesting indeed to read some of the opinion.

No doubt it will just be passed off as silly-season scaremongering...

It's real this time chumps...

godtabh

Cantab. wrote:

Eh I don't want to scare you but have you seen this thread?

It's over 65 pages long at this stage and is the most popular thread that askaboutmoney.com has ever had - i.e. it's had 60,000 hits over the last 4 weeks (the previous record being 48,000 hits over 7 months).

I'm convinced the game is up (for many of the reasons given on this thread) and I believe it should be mandatory for all first-time-buyers to read this thread before handing over the hard-earned for a shed in the back of Balivor.

Looking forward to the sunday papers this weekend - will be very interesting indeed to read some of the opinion.

No doubt it will just be passed off as silly-season scaremongering...

It's real this time chumps...

What about the BOI predicting a 12% growth in the housing market? Every argumnet has a counter argumnet. Some people say renting is dead money some dont.

I've read alot of threads on forum from you and to be honest I dont agree with most things you say.

At this stage investors would be worried but people who are buying a house to live in for the next 5-10 years shouldnt havent have alot to worry about if they used there heads before buying.

When I bought my home I did a lot of research. I took into account the possible implications of rate rises and other items that my affect me while trying to pay for my house.

I then came up with the amount of money I can afford to borrow and looked at what kind of property I could buy. I knew my limits and bought accordinlgy.

You on the other hand want more for less money and as far as I can remember you almost expected that what you want you should be able to get.

Each person is different. The rich can afforod luxury houses and buy them. The working class can afford a 3 bed €500,000 house and buy them. Other people can only afford "a shed in the back of Balivor" and buy them.

Before people buy a home they should make sure they dont over strecth themselfs if rates do rise. If they dont do this. Its there own fault.

Cantab.

kearnsr wrote:

What about the BOI predicting a 12% growth in the housing market?

Yeah, cos BOI are such an unbiased source of market information and everything they say, we should take as read. What about the fact that 100,000 houses are being built this year alone?

kearnsr wrote:

Every argumnet has a counter argumnet. Some people say renting is dead - money some dont.

Aside from all the dogmatic mantra that I've heard before ("rent is dead money", "safe as houses", "property will always go up" etc.), what's your counter-argument to:
- interest rate rises
- rising energy costs
- change of government in 2007
- stagnant rental market
- poor infrastructure
- land corruption
- rapidly increasing inventory
- media hype
- availability of cheap money from the european banks
- Irish economic threats
- economic reliance on house-builing and cheap imported labour
- transient immigrant population
- Irish obsession with land-owning

kearnsr wrote:

I've read alot of threads on forum from you and to be honest I dont agree with most things you say.

Well time will tell who's right and who's wrong. (I'm quite prepared to put my neck on the line here). Others unfortunately really put their necks on the line by signing up to 400k, 40 year mortgages in the middle of nowhere!

kearnsr wrote:

At this stage investors would be worried but people who are buying a house to live in for the next 5-10 years shouldnt havent have alot to worry about if they used there heads before buying.

Do you not agree that there is a huge amount of so-called "investment" property all over the country? And you say that "investors would be worried", but that people buying houses to live in "shouldn't have a lot to worry about"? What effect do you think a large-scale off-loading of property by investors will have on house prices?

kearnsr wrote:

When I bought my home I did a lot of research. I took into account the possible implications of rate rises and other items that my affect me while trying to pay for my house.

That was then, this is now. There's no doubt anyone who bought years ago has done very well. I do have a problem though with people who use history as an example to encourage people to go out and buy crap over-priced houses in legoland.

kearnsr wrote:

I then came up with the amount of money I can afford to borrow and looked at what kind of property I could buy. I knew my limits and bought accordinlgy.

Fair play to ye'.

kearnsr wrote:

You on the other hand want more for less money and as far as I can remember you almost expected that what you want you should be able to get.

No actually. There's no such thing as a house fairy. I currently live in a €1m+ town-house in Dartry and am paying about 25% in rent for an equivalent mortgage. I pay no stamp duty, no complex management fees, pay for no furniture and don't even put my hand in my pocket for a light bulb (I just ring the landlord if anything is broken).

kearnsr wrote:

Each person is different. The rich can afforod luxury houses and buy them. The working class can afford a 3 bed €500,000 house and buy them. Other people can only afford "a shed in the back of Balivor" and buy them.

Lol, you're response just typifies the mania in the Irish property market when you come out with stuff about "working class" people buying houses for 500k. By definition, working class people would earn below average wages (i.e. ~30k), so that would be what, about 20 times their annual salary? Or maybe we've just entered a "new economic paradigm" (more bull-speak - or as I like to say, bullsh*t-speak).

kearnsr wrote:

Before people buy a home they should make sure they dont over strecth themselfs if rates do rise. If they dont do this. Its there own fault.

[/QUOTE]
This is true. I wouldn't like to be in your shoes "fgdfgfgffd34".

godtabh

Cantab. wrote:

Aside from all the dogmatic mantra that I've heard before ("rent is dead money", "safe as houses", "property will always go up" etc.), what's your counter-argument to:
- interest rate rises
- rising energy costs
- change of government in 2007
- stagnant rental market
- poor infrastructure
- land corruption
- rapidly increasing inventory
- media hype
- availability of cheap money from the european banks
- Irish economic threats
- economic reliance on house-builing and cheap imported labour
- transient immigrant population
- Irish obsession with land-owning

Interest rates will always rise and fall.

Engery cost are always gona rise. With our depdance on fosil fuels and no real alternatives thats a fact of life.

Goverments change all the time. Its called a democracy.

I dont know about the renting market so I cant answer that. I would assume the prices for renting would depend on demand like most services.

Irelands infrastructe is improving all the time. There are more and more roads being built. The planning process now sees that infrastructure has to be there first. Most areas have L.A.P which dictate what has to be done inorder to areas to prospeer.

You probably mean planng corruption rather than land corruption. That has left some places in a poor state. With the planning process is now more accesses able so thinks like this hopefully wont be a problem.

Not sure what you mean by rapidly increasing inventory.

Media hype is every where. Look what happend with the sale of Eircom. People have to research there decisions and then decide wether or not to do it. Just because joe blogs from the Indo says its time for every one should sell there house now doesnt mean its true. Information is power and people should use it more often.

There is no such thing as cheap money. It just means money is more accessable. The more expensive it gets the less accesable it gets.

What do you mean by irish Irish economic threats?

Economic reliance on house-builing and cheap imported labour? Thats not true. The housing boom started in the 90's with irish workers. Its only been in the last 5 years that forgein labour has been used in construction sites. A lot of this "imported labour" as you put are unskilled and the irish construction industry is larger dependant on skilled labour such as plumbers brick layers etc.

Transient immigrant population is down to the people of Ireland. We voted these laws in. If you are not happy with this there is some thing you can do about it.

I wouldnt call myself obsseed about owning property. My choice was based on econmic factors. I could afford to buy so I did.

Cantab. wrote:

Do you not agree that there is a huge amount of so-called "investment" property all over the country? And you say that "investors would be worried", but that people buying houses to live in "shouldn't have a lot to worry about"? What effect do you think a large-scale off-loading of property by investors will have on house prices?

THings go through cycles. People who live will be living in there house for the next 10 years wont be affect as much as people who are thrying to make a quick buck. If the property market crashed tomorrow in 10 years time we'll be in the same postion we are now.

Cantab. wrote:

That was then, this is now. There's no doubt anyone who bought years ago has done very well. I do have a problem though with people who use history as an example to encourage people to go out and buy crap over-priced houses in legoland.

How do you know they are crap over priced houses. I assume the people who buy these houses dont think the same. No one forces them to buy them.

Cantab. wrote:

Fair play to ye'.

As I said once you base it on an infromed choice.

Cantab. wrote:

No actually. There's no such thing as a house fairy. I currently live in a €1m+ town-house in Dartry and am paying about 25% in rent for an equivalent mortgage. I pay no stamp duty, no complex management fees, pay for no furniture and don't even put my hand in my pocket for a light bulb (I just ring the landlord if anything is broken).

While I'm waiting for my place to built I live in a €500,000 house that my parents bought years about for £120,000. They now own their house i.e all loans have been cleared. I'd rather do what they did that what you are doing. There is no gurantee that my house will go up or down in value but it will be mine.

Cantab. wrote:

Lol, you're response just typifies the mania in the Irish property market when you come out with stuff about "working class" people buying houses for 500k. By definition, working class people would earn below average wages (i.e. ~30k), so that would be what, about 20 times their annual salary? Or maybe we've just entered a "new economic paradigm" (more bull-speak - or as I like to say, bullsh*t-speak).

This is true. I wouldn't like to be in your shoes "fgdfgfgffd34".[/QUOTE]

I'm a working class person and I bout an aparment for €300,000 and earn approx €30k per year and can afford it. My friends from college bout a house together for €500,000 and they can easily afford it.

Why by definition does a working class person have to earn below the average wage of €30k?

Cantab. wrote:

I wouldn't like to be in your shoes "fgdfgfgffd34".

I wouldnt like to be in your shoes in 40 years time when you are on a pension still paying rent with nothing to show for the €500,000 you'll probably spend on rent.

But each to their own. We both have made our minds up on what we want to do and as you said we'll have to see who is right.

Sorry but havent had a chance to look over the spellings. I'm heading out!

Dub13

kearnsr wrote:

Before people buy a home they should make sure they dont over strecth themselfs if rates do rise. If they dont do this. Its there own fault.

I agree but I think its more important the banks stress test applicants a lot more stringent.

Sponge Bob

If the OP is in a state job, 23 years old and with 2k a month and a big scale to climb (guaranteed) then the figures look pretty OK to me unless thats an Interest Only Mortgage ???

If they are not guaranteed a higher salary and are on an Interest Only mortgage I am afraid they will be stuck in that place for a long time because this is the top of the market and and they will be guaranteed negative equity what with an Interest only mortgage .

So it depends on a lot of things but I need some idea of their career prospects and mortgage type.

I know of people on 10x income interest only mortgages (big ones) on one bed apartments and not on a scale either . No room to let, etc. I think they are fecked basically, 3 months out of work for whatever reason and poof !

Where is the "Back Of Ballivor" BTW

JimmySmith

Cantab. wrote:

By definition, working class people would earn below average wages (i.e. ~30k),

I must tell all my mates who are teachers, bus drivers, guards, prison officers, managers in Aldi and McDonalds, road sweepers, fire men that they arent working class anymore. It'll make their days
I might get some free burgers and chips in McDs


To the OP.

Here's how it goes.

People are telling you they know better than anyone else and property prices are going to crash.

You scrape a deposit, borrow from the credit union etc and take the plunge despite all around you who are renting telling you you are mad. You may even think you're mad, because a mortgage is a massive step and its scary. You think to yourself, Oh God, i hope i havent bought just before a crash. (Seriously, everyone worries about that when they take the plunge you have taken.)

After a year or two you get a raise, get a new job for more money, get an SSIA, get married, rent a room, get more money in the budget .... the list goes on.

People are still telling you they know better than anyone else and property prices are going to crash. They still dont have a home of their own. Some do, but they no longer feel they have to talk down the market, because they are on the ladder.

Suddenly you find that though you thought you were paying a fortune, its pennies really after a few years of new jobs, salary scales etc.

People are still telling you they know better than anyone else and property prices are going to crash. They still dont have a home of their own. Some do, but they no longer feel they have to talk down the market, because they are on the ladder.

Another year or two passes and you figure, "wow relative to my income i really am not paying that much on a mortgage now as i earn much more than when i started with the mortgage. Interest rate rises are lower than my annual salary review. Ahhh, what was i worried about. Who cares if prices crash. I'm in my own house and my sprogs are out in the garden making their little house out of the garden shed. Life is good .... Bring on the crash .. see if i care. Sh1t cresh fees are more than the bloody mortgage now"

People are still telling you they know better than anyone else and property prices are going to crash. They still dont have a home of their own. Some do, but they no longer feel they have to talk down the market, because they are on the ladder.




Everyone who has ever bought a house in History started off in your position. It seems like you'll never be able to afford a house and then when you can its a scary jump to make. Your skint. Ask your parents and they'll tell you they went through the same thing when they paid €5000 for their house. Life gets easier very quickley. Surprisingly fast. In no time you'll be looking to pay extra money off the mortgage every month simply because you have the money and cant think of anything to do with it, so you might as well get the term down.

Really, if you can afford it now, chances are you can afford it next year. Bar a massive recession where there are massive job loses (in which case everyone is screwed anyway). Make sure you post here next year and let us know how you are.
Worst case scenario right now, If you cant live on €1K a month after rent/mortgage is paid you have other problems


Though it seems like you are paying out a massive amount now, In a few years it will seem like pennies. And you can come to boards and read the threads where, People are still telling you they know better than anyone else and property prices are going to crash. .....................

Bluehair

JimmySmith wrote:

And you can come to boards and read the threads where, People are still telling you they know better than anyone else and property prices are going to crash. .....................

Great thing about boards.ie is in a few years time we can indeed come back and quote this pearl of wisdom.

It's a great post and typifies exactly what most Irish think, it ignores a lot of pertinant facts about the global economy, interest rates, inflationary threats etc. etc. No point going into detail it's been done to death on these and other forums.

I would caution against stretching one's finances to 'get on the ladder' (a concept that would be laughed at almost anywhere else in the world btw, along with 'starter homes'), and by any measure 50% of take home is an insane amount to be paying.

CiaranC

People in Ireland have always streched their finances to own their own home.

I dont know who these people are who find such a concept laughable, but they clearly have no idea of what most peoples normal experiences are.

OP, those figures look OK. Things will be tight for a year or two, which is perfectly normal. Relax.

Cantab.

kearnsr wrote:

Interest rates will always rise and fall.

And what is your conclusion in relation to the Irish property market? There's no point in coming out with all these maxims if you're not going to explain what you mean.

kearnsr wrote:

Engery cost are always gona rise. With our depdance on fosil fuels and no real alternatives thats a fact of life.

household bills are going up, less money to spend on a mortgage. You're only adding to my side of the argument coming out with stuff like this.

kearnsr wrote:

Goverments change all the time. Its called a democracy.

Again, what's your point. What effect on the economy will a non-FF government (with their pro-land-owner/building industry agenda) have on the economy do you think?

kearnsr wrote:

I dont know about the renting market so I cant answer that. I would assume the prices for renting would depend on demand like most services.

Well I'll tell you a little about the rental market - you won't find any new development in Ireland where rental income covers mortgage repayments (not even an interest only mortgage). I challenge you to find such a property. So what does this mean? Well, in effect, these buy-to-let wannabe amateur investors are subsidising their tenants and are relying on increasingly unlikely capital appreciation - there are now no investors (bar the idiots) buying Irish property in 2006, and with 100k+ houses being built this year alone, who's going to buy them?

kearnsr wrote:

Irelands infrastructe is improving all the time. There are more and more roads being built. The planning process now sees that infrastructure has to be there first. Most areas have L.A.P which dictate what has to be done inorder to areas to prospeer.

I disagree, Ireland's infrastructure is getting worse relative to our economic growth. Have you been on the M50 recently? I was on holidays in Slovenia and Croatia and I can tell you, their infrastructure is better than Ireland's. Why set up a company in Ireland if you can't even get to the airport without massive traffic jams? Infrastructure projects are a joke in this country.

kearnsr wrote:

You probably mean planng corruption rather than land corruption.

Both actually.

kearnsr wrote:

That has left some places in a poor state. With the planning process is now more accesses able so thinks like this hopefully wont be a problem.

People think that corruption was bad in the 80s what with all the tribunals, but it's nothing like the corruption that's going on here in Ireland in 2006.

kearnsr wrote:

Not sure what you mean by rapidly increasing inventory.

Well let me put it simply: 100,000 units being built this year alone - who's going to live in these developments? And with 300k being the average price, this equates to E30bn, a large part of which will enevitably be borrowed money from Europe. There's no economy that can sustain itself by selling houses to one another.

kearnsr wrote:

Media hype is every where.

Again, you're reinforcing my argument. Property hype that the saps read about in the Indo et. al. is utter rubbish. The last people to hear about troubles ahead will be those very saps reading publications such as the Sindo.

kearnsr wrote:

Look what happend with the sale of Eircom. People have to research there decisions and then decide wether or not to do it. Just because joe blogs from the Indo says its time for every one should sell there house now doesnt mean its true. Information is power and people should use it more often.

There is no such thing as cheap money. It just means money is more accessable. The more expensive it gets the less accesable it gets.

What does the Eircom sale have to do with this debate really? Again, your maxims ("information is power" etc.) don't make much sense to me.

kearnsr wrote:

What do you mean by irish Irish economic threats?

Well I'll give you 3 examples. Intel: profits down 57% last year, cutting 9000 middle-management jobs world-wide and the ESB are taking the piss having had two power cuts to the plant recently. Dell: currently building a huge facility in Eastern Europe and Irish employees in Limerick have been asked if they'd like to relocate to Poland. HP: they're outsourcing some of their operation out of Dublin to Bangalore and Eastern Europe. I can give you more examples of American multinats getting cold feet if you want. People are also forgetting that Irish workers in American multi-nats are paid in $, and with the strong Euro, the US parents are forking out more and more for what is becoming a very expensive country despite the corporation tax rates. Another massive threat to the economy is an over-reliance on the housing market with 1 in every 8 workers employed directly in construction (hugely disproportionate compared to our European counterparts).

kearnsr wrote:

Economic reliance on house-builing and cheap imported labour? Thats not true. The housing boom started in the 90's with irish workers. Its only been in the last 5 years that forgein labour has been used in construction sites. A lot of this "imported labour" as you put are unskilled and the irish construction industry is larger dependant on skilled labour such as plumbers brick layers etc.

Yes, economic reliance on house-builing and cheap imported labour. It is true. You're right when you say that the boom in the 90s started with Irish workers, but now foreign labour is being used because the Irish ladz have moved up the food-chain so to speak. Now what happens if the bottom falls out of the market and these immigrants have no work? They'll jump on a low-cost flight out of this country leaving 1000s of vacant buy-to-let property behind them so they will. Where will that leave all the skilled Irish workers when there's no property to be built because there's a huge excess supply?

kearnsr wrote:

Transient immigrant population is down to the people of Ireland. We voted these laws in. If you are not happy with this there is some thing you can do about it.

Not sure what you're on about here. By transient I mean, immigrants (and indeed young people) are highly mobile, have access to the internet, email, low-cost flights and will jump ship at short notice and move to where the work is. I'm on a month's notice out of this country should things go pear-shaped.

kearnsr wrote:

I wouldnt call myself obsseed about owning property. My choice was based on econmic factors. I could afford to buy so I did.

Ok, well good luck to you in the Irish market (AFAIK, you'll need it). Personally, I wouldn't go near it with a barge pole considering you get way more for your money elsewhere in Europe with much larger, more conservative economies and government prudence (unlike here in Ireland).

kearnsr wrote:

THings go through cycles. People who live will be living in there house for the next 10 years wont be affect as much as people who are thrying to make a quick buck. If the property market crashed tomorrow in 10 years time we'll be in the same postion we are now.

Japan still hasn't recovered from it's crash in the 80s. It'll be a long cycle.

kearnsr wrote:

How do you know they are crap over priced houses. I assume the people who buy these houses dont think the same. No one forces them to buy them.

Well I wouldn't like to like in an edward scissor hands picket fence estate with no trains, poor roads, no social facilities miles away from my work - this is crap. Some of the flats going up are literally slapped up and I was in a flat in Ratoath that an acquaintence of mine just bought and already the screws on his balcony are rusting and there's rust marking coming down his windows. There's also a crack in his wall and the plumbing is seriously dodgy. Plus, he's had no broadband and Eircom will get around to it any year now.

kearnsr wrote:

As I said once you base it on an infromed choice.

While I'm waiting for my place to built I live in a €500,000 house that my parents bought years about for £120,000. They now own their house i.e all loans have been cleared. I'd rather do what they did that what you are doing. There is no gurantee that my house will go up or down in value but it will be mine.

So you're using your parents house? Well good for you. Your logic to me seems to be that because an asset performed well in the past, that it will perform well in the future. This is flawed logic.

kearnsr wrote:

I'm a working class person and I bout an aparment for €300,000 and earn approx €30k per year and can afford it. My friends from college bout a house together for €500,000 and they can easily afford it.

Why by definition does a working class person have to earn below the average wage of €30k?

Let's not get into sociology here. The class system has changed massively. Out of interest, why do you categorise yourself as being 'working class'?

kearnsr wrote:

I wouldnt like to be in your shoes in 40 years time when you are on a pension still paying rent with nothing to show for the €500,000 you'll probably spend on rent.

See you in 40 year's time pal. I'm trousering over 1500 a month into an equity portfolio and will soon be buying a flat in central Berlin where I'm moving to. I was over with my job recently and I was looking at 3-bed flats in classic architecture buildings in central Berlin for 250k. My assests are liquid and are yielding far better return than Irish property (currently less than 2% in Dublin) I can tell you.

kearnsr wrote:

But each to their own. We both have made our minds up on what we want to do and as you said we'll have to see who is right.

Sorry but havent had a chance to look over the spellings. I'm heading out!

I wish you well on the Irish property wave. The tsunami is about to come ashore my friend.

RainyDay

The big difference for those buying now compared to when I bought my house (13 years ago) is duration of mortgage. In the good old days, a 20 year mortgage was typical and 15 years was possible, meaning that even without increasing repayments, buyers would be mortgage free in their fifties. Today, with buyers in their 30's and 30-35 year mortgages, buyers will have these millstone mortgages hanging round their neck until they retire, which is not a very nice prospect.

is_that_so

OP what proportion of the value of the house is your mortgage currently?
As regards some of the rest of what's going on here well yes there is always that possibility . We are looking at at least 1/2% increase within the next 3-6 months. The people most exposed are those at 130% of current costs. They are also the most likely ones to have credit card debt as well. IMHO this is where the most likely danger will come. I am no soothsayer as far as prices go but common sense suggests a correction.
Reasons for corrections are myriad. Some driven by those "willing" it to happen so that they can take advantage.
Some are due to adverse economic circumstances and some come from supply and demand.
OP if you can manage the payments (even at a further 1% increase) then there is no panic at all. Lying awake in bed worrying about things that may never happen or reading threads like this (:p) will just upset you.
If you are genuinely experiencing problems then go to the bank and talk to them. Financial institutions do not want is to be landed with repossessed properties.

iguana

Op, if you are genuinely worried and not too over-stretched why don't you investigate the different insurance options which are available to you. For example I have insurance which will pay my mortgage payments if I or my partner is out of work due to illness. It will pay the entire mortgage in the event of not only one of our deaths or getting an illness or disability which forces one of us into early retirement. But if one of us got cancer, had a heart attack, a stroke or anything on a long list of illnesses, even if we made a complete recovery the whole mortgage is paid off.

We also have payment protection which pays us a full salary each month if either of us is out of work for almost any reason. Quitting because we hated our bitch of a boss is unfortunately not covered.;)

And while the insurance is an additional cost each month, it seems to me to be worth it for the peace of mind. Especially as my partner runs his own business and as such has no other protection in the event of an illness.

Moonbeam

you can always sell it ,the way I look at it my house has gone up alot in the last 2 years,(I bought from plans)and if I was to sell it now I could go travelling or have a nice life for a few years on the profits.

It is an easier way to look at things,you depress yourself otherwise thinking how much u pay in mortgage and bills every month!

and also having your own house is a hppy thought:)

RainyDay

iguana wrote:

For example I have insurance which will pay my mortgage payments if I or my partner is out of work due to illness. It will pay the entire mortgage in the event of not only one of our deaths or getting an illness or disability which forces one of us into early retirement. But if one of us got cancer, had a heart attack, a stroke or anything on a long list of illnesses, even if we made a complete recovery the whole mortgage is paid off.

[...]

And while the insurance is an additional cost each month, it seems to me to be worth it for the peace of mind. Especially as my partner runs his own business and as such has no other protection in the event of an illness.

Note that mortgage repayment protection is not normally available to self-employed persons. See this Askaboutmoney.com posting for more details. Also,k repayment protection will normaly only cover your payments for a 12 month period.

iguana

RainyDay wrote:

Note that mortgage repayment protection is not normally available to self-employed persons. See this Askaboutmoney.com posting for more details.

We're in the UK so probably have a few more insurance options. Things are definitely easier for the self-employed here.

Oral Slang

I'm sale agreed on a property that will cost €1500 a month between 2 of us.

While I'm really nervous because our previous mortgage was only €820, I think of it this way. We're moving to a better area (same size house unfortunately), so should be happier, which really is my main priority. We can afford the mortgage between the 2 of us, so thats fine.

The only thing that would affect this is if we broke up, but even if we did, we'd both get about €40k each, which is a good enough nest egg to start again. Would be a pisser though, due to the amount of stamp duty we're paying.

Yeah, its worrying when you hear all of the different scare stories out there, but in reality it mightn't happen for a long time, if at all! Once you can manage the mortgage, thats the main thing. I still know so many people that have been renting for years with nothing to show for it..

Sponge Bob

You could always sell and rent a while as you see what happens. Maybe your new gaff will drop saving you money upfront and stamp duty too. It strikes me that the number of properties for sale for long periods has gone up a lot since the spring.

I am sure you could rent in the better area for less than the mortgage.

There is a huge overhang of empty properties out there , if your 'better' area has lots of investor owned empties I would hang around and chill.

If not then prices will not drop so much so you may as well buy.