A mortgage with small income - is this possible?

teetotaller

Hi
I've 2 questions

1 ) I heard a lot opinions that now it is bad time to buy a house
do you think that if we buy house now we can loose more than 14k that we pay every year for rent on price droppings?

it is a new 2bed house worth about 230k in Navan co Meath.

Should myself and my girl wait another year or two and expect that after 2 years price will drop more than 30k ?

2) we have small income but with look to get better money in coming years ( trainee accountant assistant and junior network technician)

it is about 49k per year at the moment. (~3700 per month in our hands)

I have also 6k loan for next 3 years (200 euro monthly)

In case that one of us will loose job we are both entitled to get unemployment benefit.

we pay rent~ 1200 euro per month since 2006 and have very small savings. (wedding, ACCA course, Cisco course, trips) but now we can save something

we both have pernament full time positions.

is this realistic in Bank of Scotland to get 230k mortgage?
(BoS gives 100% loan - u need to work in Ireland longer than 3 years)

If we take mortgage for 30 years with variable rates to pay it quicker than after 30 years we will have to pay around 1200 euro per month


what do u think about this ?

I want to apologise for my english - I was learning polish language for last 20few years.

Senna

On €49k a year you could get a mortgage for €230k, but not a 100% one. You would need savings as well. I'm not sure but you probably wont get a 100% mortgage from anywhere and with house prices decreasing, you really don't want one.

I'd try and save at least €15k before thinking about buying a house.
I would also pay off that loan a lot earlier, its only small, but it will have an effect on the amount of money you can borrow.

How Strange

I agree with Senna, fast track your loan repayments. Surely you can afford to pay more than €200 per month. If you consider how much you are paying on interest as opposed to what interest you receive on savings its better to get the loan paid off than save.

When the loan is gone then save the same amount every month.

johnnyskeleton

teetotaller wrote: »

Hi
I've 2 questions

1 ) I heard a lot opinions that now it is bad time to buy a house
do you think that if we buy house now we can loose more than 14k that we pay every year for rent on price droppings?

It's not a straight trade off between what you spend on rent and how much the price of the house decreases. Instead of rent you will be paying mortgage interest, water/waste/management charges and insurance/mrpp etc payments, and in many instances these will equal what you pay in rent.

If, for example, the mortgage repayment is 1,199 and your rent is 1,200 that does not mean that it is cheaper to buy. Also, if your rent is 14k per year, and the house price falls by 14k in the same year, that does not mean that it costs the same to rent as to buy.

confuzed

well, it depends how you take your life but if i were you-

1) mortgage is bloody 30 yrs. commitment, don't compare it with paying rent. You have no commitments.

2) you may be right in a sense that what ever you pay in mortgage will eventually accumulate as real asset but for initial few years, most part of your mor. will go for interest.

3) give some time to your career and relations (let them grow). Some times it is too early to stuck at one place just because you mortgage a house.

El Stuntman

teetotaller wrote: »

1 ) I heard a lot opinions that now it is bad time to buy a house
do you think that if we buy house now we can loose more than 14k that we pay every year for rent on price droppings?

it is a new 2bed house worth about 230k in Navan co Meath.

Should myself and my girl wait another year or two and expect that after 2 years price will drop more than 30k ?

please bear in mind that we are ~1 year into a 'bursting bubble' scenario.

these typically play out over 5-10 years, it's my opinion that you will lose a lot of money if you buy now

wait for prices to drop further (they will, by a lot) and save as much as you can. Reassess the situation in mid-2009, at the earliest.

your rental of 1200 a month will also come down soon (i.e. you will be able to move and rent similar for less) as the massive oversupply of rental properties now on the market will inevitably cause downward pressure on rents

teetotaller

thanks for advices
It was first offer I checked where I found new 2bed house for 235k ###close to Dublin###

Just today I found new add - new estate , 3 bed house for 239k so if I spend more time browsing internet I will find more interesting offers.

That was our plan at the beginning - to buy something next year - so I won't change it and I'm going to pay back my loan and save some $$$$

Only thing I'm afraid of is fact that when prices will be low - thousands of people with cash will start to buy properties and a lot of interesting offers will go away.


is there any chance to save some money on prices of new houses ?
I read that when u are buing 2nd hand property - u offer 10 - 15% lower price - can I try to do the same with developers ?

jdivision

Some developers are accepting offers, some aren't. It really depends on when they bought the land. If they bought 18 months ago then they were working on a 33 per cent profit basis unless they stretched themselves to buy it. If they bought the land five years ago the profit level would be more than 50 per cent per unit, if the land was bought 10 years ago profits could be more than 80 per cent (depending on area obviously). Obviously those with higher profit levels will be more approachable for deals. Teetotaller you've got to remember though that just because the developer gives you 10-15 per cent off it doesn't mean you've saved that - it means that's what the properties are worth now. They might still go down another 20 per cent next year.

meesa

Dont buy now....thats my advice. Wait and see what happens as one of the biggest property bubbles ever created.... deflates. This point of view is argued over and over on many forums but at least if you are observing prices tumble you are gaining on what you would have bought. A much more pleasant position to be in than watching your house bleed into negative equity.

gurramok

teetotaller, 235k might sound attractive but check your area.
Cheapest properties in cities and commuter towns are usually set in the roughest areas. You don't say what town those 2bed and 3bed houses are in.

239k for a new 3bed sounds like it maybe a developer cutting prices in Navan. After all, Navan is 40miles from Dublin. Can you see yourself doing that nightmare commute for years mostly in a car? (as Navan has no train line despite promises and will take years to come)
Thousands of people will not be buying in Navan if thats your target area, i guarantee you that, its a commuter town and commuter towns fare badly pricewise with less demand in a bust.

Lifestyle is also an important factor when buying in a particular location and not to be overlooked.
Start saving big time now and clear that loan as its a buyers market if your dealing with developers or not!

Kintarō Hattori

teetotaller - My girlfriend is Polish and we wanted to buy somewhere rather than just keep renting. With all that's been happening we decided we'd buy somewhere in Poland first rather than committing ourselves to a 30+ mortage first.

We bought a one bedroom apartment in Plock for €45,000. We had savings of about €15,000 and took a 5 year mortage for the rest. While the repayments are high for Poland (€660pm), we hope to pay it off before the 5 years are up. It's more of an investment than anything else. Once it's ours we have the possibility of keeping it or selling it and using it as a deposit for somewhere over here as we hope it goes up in value rather than down!

Now's a bad time to buy here, I would reccomend you buy in Poland, continue to save what you can and look at the situation down the line.

jdivision

Personally I wouldn't think it's worth losing first time buyer status in order to buy an apartment in Poland

teetotaller

gurramok wrote: »

Cheapest properties in cities and commuter towns are usually set in the roughest areas. You don't say what town those 2bed and 3bed houses are in.
239k for a new 3bed sounds like it maybe a developer cutting prices in Navan. After all, Navan is 40miles from Dublin.

yes it is Navan. I work in Leixlip so distance is less than 40 miles. Fiance is looking for a job in north-west dublin ( we live in d15, she works in sandyford - she spend now up to 5 hours walking, travelling by bus and luas to get to work and from work so we are not afraid about distance. )

eo980 wrote: »

teetotaller - My girlfriend is Polish we decided we'd buy somewhere in Poland first rather than committing ourselves to a 30+ mortage first.

We bought a one bedroom apartment in Plock for €45,000.

I was thinking seriously about buing property in Poland, but cos we like Ireland and people over here we want to spend here "few" years and we don't want to pay for somebodys else mortgage.....
so that's the priority for us.

just one interesting thing about properties in Poland - my uncle bought 8 years ago apartment in old town of Gdansk (north of Poland ) - main tourists street ( like Grafton street in Dublin) he paid 25k for 70 square meters and renovation - now his placed is already fully paid from rent ( 500euro per month) and it is worth 330k !!!! what means that in 8 years time it is 13 times more expensive............... but boom in Poland has also finished -prices are high but they won't be bigger in big cities.

I read El stuntman's article from daft - thanks for that !