100% Mortgage or use deposit

finlma

Hi,

I've seen a house that I like but it is being sold without any flooring, kitchen, etc. I qualify for a 100% mortgage and have savings of around €30k. The house certainly needs €20k worth of work before being liveable so here's my question. Should I used my savings as a deposit and get a 92% mortgage and then get a loan to do the work or am I better keeping my savings for doing up the house, getting a 100% mortgage. I'm a bit confused as to what is the best option to be honest.

Supercell

Every euro borrowed is 2 euro to be paid back over the life of mortgage roughly, why throw your hard earned cash down the drain like that? As the old saying goes - a penny saved is a penny earned.
Get the smaller mortgage and do up the house bit by by bit.

jimmycrackcorm

Or do the house up now and enjoy it as it will be your home, but create a plan to begin overpaying your mortgage over time and you more than save the money on reduced interest and a reduced term.

Mr. Presentable

Use 20k as deposit, get a 96% loan and use the 10k to get started on the work

jdivision

finlma wrote: »

Hi,

I've seen a house that I like but it is being sold without any flooring, kitchen, etc. I qualify for a 100% mortgage and have savings of around €30k. The house certainly needs €20k worth of work before being liveable so here's my question. Should I used my savings as a deposit and get a 92% mortgage and then get a loan to do the work or am I better keeping my savings for doing up the house, getting a 100% mortgage. I'm a bit confused as to what is the best option to be honest.

Offer at least 20k below the asking price. Likelihood is they'll accept in curent market

confuzed

OP, i am sorry but from where did you get 100% mortgage as most of banks/ lending companies are not doing it now a days.
Try negotiating with developer, they may not reduce price but may agree for some complementary stuff. And if it is your home you can do either way. Fix your priority, if you want a perfect home to live in (as i do), better do it now in a stretch. You can do bit by bit, but it will cost you more than doing in once. I would suggest rather do it before you shift there.

Colonel Sanders

confuzed wrote: »

OP, i am sorry but from where did you get 100% mortgage as most of banks/ lending companies are not doing it now a days.

I thought this too

sarahhurray

Definitely offer less than the asking because of the work or get the seller to do it. Tell the seller you are getting a 100% mortgage and you are worried the banks valuation will be less than the asking as the house is so unfinished.
If you do the work yourself definitely do it now, otherwise you will mean to do it for years. This is from someone who lived four years in her apt before changing the kitchen when I meant to do it straight away.
If you can't get a discount get the 100% mortgage and make extra payments. If you borrow separately you'll be paying a lot more in interest albeit over a shorter time.

finlma

confuzed wrote: »

OP, i am sorry but from where did you get 100% mortgage as most of banks/ lending companies are not doing it now a days.

Myself and the other half are in the public sector. No hassle getting a 100% mortgage off the majority of lenders.

silverharp

if you can get 100% then take it, if the market crashes you can walk away as you wont have any skin in the game. but buy a house you don't need to do up

gurramok

silverharp wrote: »

if you can get 100% then take it, if the market crashes you can walk away as you wont have any skin in the game. but buy a house you don't need to do up

A market crash will mean the OP will be in negative equity. Also certain public sector jobs ain't water tight anymore, the govt finances this year and subsequent years are\will be heavily in the red, might mean cutbacks.

They can't walk away if they want to sell, they still owe the difference between the future sale price(lower) and their 100% mortgage to the bank.

iguana

silverharp wrote: »

if you can get 100% then take it, if the market crashes you can walk away as you wont have any skin in the game. but buy a house you don't need to do up

Not in Ireland they can't. The creditor can garnish their wages for 12 years, take any pension they have and take any money, like inheritance or prize-money which they come into over the next 12 years.

The bankruptcy laws in Ireland really need to be widely publicised.

silverharp

iguana wrote: »

Not in Ireland they can't. The creditor can garnish their wages for 12 years, take any pension they have and take any money, like inheritance or prize-money which they come into over the next 12 years.

The bankruptcy laws in Ireland really need to be widely publicised.

that I didn't know, it seems to be easier in the US, I heard an example of someone buying in a development, by the time the final phase was finished the prices had dropped 30% so he bought a second home then walked away from the first. no real comeback except an impaired credit rating for a few years.
it would be interesting to see though if judges took a harder line with the banks in a serious downturn, given that the banks encouraged overborrowing in the good years

dugout16

Do teachers find it easy to get 100% mortgages?

Victor

silverharp wrote: »

that I didn't know, it seems to be easier in the US, I heard an example of someone buying in a development, by the time the final phase was finished the prices had dropped 30% so he bought a second home then walked away from the first. no real comeback except an impaired credit rating for a few years.

The difference in the US is that the bank will move for repossession much more quickly, perhaps even hastily in Irish eyes.

it would be interesting to see though if judges took a harder line with the banks in a serious downturn, given that the banks encouraged overborrowing in the good years

I'm not sure if they will. Judges tend to be easy on (personal) bad debtors.

finlma

dugout16 wrote: »

Do teachers find it easy to get 100% mortgages?

Yes, they do. As long as the price of the house is within your means EBS will give you 100%

Ginny

Most places are offering 100% mortgages still, I had banks throwing offers at me when I was looking into getting a mortgage.

Libby029

GinnyJo wrote: »

Most places are offering 100% mortgages still, I had banks throwing offers at me when I was looking into getting a mortgage.

From what I have heard on another forum. The 100% mortgage is gone except for the pilots, accountants, doctors etc etc.

I have heard that from the 7th March Bank of Scotland is stopping there 100% mortgage to non professionals. And as far as I was made aware they were the only bank to still provide it to non professionals.

I was hoping to use this... but obviously this is now not an option. Myself and my partner are hoping to buy in June, but we will only have 9k in savings. Anyone know where do people go about getting the deposit??? Is it still possible to to get the deposit from the credit union???

SimpleSam06

Libby029 wrote: »

I was hoping to use this... but obviously this is now not an option. Myself and my partner are hoping to buy in June, but we will only have 9k in savings. Anyone know where do people go about getting the deposit??? Is it still possible to to get the deposit from the credit union???

So you're going to take out a loan to enable you to take out a loan? Do you mind if I ask you, whats the hurry to buy now? Houses are dropping in price and will continue to do so for the next few years, in my opinion, so by waiting and saving a couple of years you will save a six figure sum over the lifetime of the mortgage. Thats a lot of holidays.

Libby029

SimpleSam06 wrote: »

So you're going to take out a loan to enable you to take out a loan? Do you mind if I ask you, whats the hurry to buy now? Houses are dropping in price and will continue to do so for the next few years, in my opinion, so by waiting and saving a couple of years you will save a six figure sum over the lifetime of the mortgage. Thats a lot of holidays.

Unfortunately Sam we are renting from my partner's brother and we need to move by the summer. Our rent is not too bad, but if we go to rent anywhere else, we are going to be paying massive rents, which doesn't make sense.

From what I have read, it is quite common for people to take out loans for deposits, and seemed to be the done thing before the 100% mortgage came along.

Cathmandooo

SimpleSam06 wrote: »

So you're going to take out a loan to enable you to take out a loan? Do you mind if I ask you, whats the hurry to buy now? Houses are dropping in price and will continue to do so for the next few years, in my opinion, so by waiting and saving a couple of years you will save a six figure sum over the lifetime of the mortgage. Thats a lot of holidays.

That all sounds well and good but it's impossible to see into the future and impossible to predict the market, particularly now with it being unstable. The most experienced valuers wouldn't attempt to predict the market past the short term now.

The market now is in a place where you have a great bargaining tool. If the OP has found a house that he/she loves then they should go for it once they can afford it. Drop your bid and try shave as much off the asking price as possible. Even if the house price does go down after you buy it, it can always go back up again in the future, it'll only affect you when you go to sell.

Best of luck OP

SimpleSam06

Libby029 wrote: »

Unfortunately Sam we are renting from my partner's brother and we need to move by the summer. Our rent is not too bad, but if we go to rent anywhere else, we are going to be paying massive rents, which doesn't make sense.

Thats fairly surprising, especially since rental prices as a rule don't come anywhere near mortgage repayments, and there are a lot more rental properties on the market in the last few months. Maybe its different in your area.

Libby029 wrote: »

From what I have read, it is quite common for people to take out loans for deposits, and seemed to be the done thing before the 100% mortgage came along.

It certainly was quite common, but that doesn't mean its in any way advisable. A lot of people mortgaged themselves up to the teeth over the last few years in a desperate attempt to get on the "ladder", and are now stuck in unsuitable accommodation for the next quarter of a century while the price of their abode drops and interest rates climb.

Basically if you need a loan just to get a deposit, you should take a long hard look at your finances and think carefully about whether or not this is the best time to buy. I mean you might be able to afford the repayments, but could you afford them if either of you falls sick, or you have children, or become unemployed? And you should definetely not make that lifetime decision based ont he fact that you have to look for a new place to rent in the short term.

Its your money and your decision but be very, very aware of what you are getting into.

Cathooo wrote:

The most experienced valuers wouldn't attempt to predict the market past the short term now.

The banks themselves sold up their prime properties and leased them back last year. That should tell you all you need to know about what the most experienced valuers think.

Cathooo wrote:

The market now is in a place where you have a great bargaining tool.

The market is also on a slide downwards. Why buy now when you can get a kickass holiday every year for the next twenty years by waiting for 2? Or buy a couple of luxury cars with the balance? Remember its not just the price of the house you are saving, its the interest payments as well, which come to a lot more.

look at the numbers.........

you will rent a far nicer property in a better area, than you can afford to buy,

you could be stuck with negative equity for a long time, in a place where you're not too happy with, wanting to move,
circumstances change, and a place where it's ok to live might not be a place where you want to send your kids to school.
what if the prices drop another 100k?.
how long will it take to make it back?
this has already happened in various places in Dublin.

house prices are dropping, and no commentator has said that prices will rise in 2008.

Ginny

Libby029 wrote: »

From what I have heard on another forum. The 100% mortgage is gone except for the pilots, accountants, doctors etc etc.

I have heard that from the 7th March Bank of Scotland is stopping there 100% mortgage to non professionals. And as far as I was made aware they were the only bank to still provide it to non professionals.

I was hoping to use this... but obviously this is now not an option. Myself and my partner are hoping to buy in June, but we will only have 9k in savings. Anyone know where do people go about getting the deposit??? Is it still possible to to get the deposit from the credit union???

I'm none of them and I was offered a few from different banks in the last month.
PTSB offers it still to couples/two people making over €75k or €80k, BoS were actually the hardest to deal with when looking for a mortgage.

Ginny

Deleted User wrote: »

house prices are dropping, and no commentator has said that prices will rise in 2008.

Thats all well and good if you're buying for investment, some people myself included are buying for a home and will not be looking to move in the next 7-10 years.

SimpleSam06

GinnyJo wrote: »

Thats all well and good if you're buying for investment, some people myself included are buying for a home and will not be looking to move in the next 7-10 years.

Doesn't change the fact that waiting for a few years will save you six figures...

so you would be happy to buy a house now, that if you wait 6 months, could be worth 50k less?

Ginny

Deleted User wrote: »

so you would be happy to buy a house now, that if you wait 6 months, could be worth 50k less?

Could is the word, and in 6 months I'll have hardly moved in so no I wouldn't care if it was worth 50k less, because if I ever move by the time I do with the work going into the house it will be worth twice what I will pay for it.
Peoples situations are different, its all well and good saying wait a couple of years, some people can't.

SimpleSam06

GinnyJo wrote: »

Could is the word, and in 6 months I'll have hardly moved in so no I wouldn't care if it was worth 50k less,

Hold on there a second. That 50k is around 150k if you factor in interest repayments. Have you thought about what you could do with that extra money?

well I can only speak from personal experience, I sold my house in December of last year.
If I has sold 9 months earlier, I would easily have gotten 45-50k extra, no problem.

so if you are happy buying in a falling market, fair enough.
BTW money spent on home improvements hardly ever gets a return o your money when you sell.

Ginny

I was being flippant SS, its all well and good waiting around for what ifs but I've made a decision and its a sound investment for a home, right now I've bought a house at a very reduced rate compared to others around it, I have to buy now, the house is the house I want, in 6 - 12 months if the house is still there and if the market still drops I'd be slugging it out with all the other sitters.
As for all the reporting on the market, on the ground houses that are in good nic and at a good price are still moving well, I've seen some crazy bidding going on, over and above asking prices even.
Dursey were you buying too? if so 9 months earlier wouldn't you have spent that extra on your purchase?
As for the home improvements? seriously? I've lived through 6 moves and every move has given a return, mostly down to the house refurbishments.

no wasn't buying, so kicking myself now,
still it's nice looking at the cash earning 5.5% in the bank!

SimpleSam06

GinnyJo wrote: »

As for all the reporting on the market, on the ground houses that are in good nic and at a good price are still moving well, I've seen some crazy bidding going on, over and above asking prices even.

Yes thats expected in some areas, dead cat bounces on a regional level. Might I ask you where you saw this bidding frenzy, purely out of curiosity?

Ginny

North Co. Dublin,(the nice bit ) now the dregs of the market aren't moving and the good places prices have dropped a good bit, and these are the ones people seem to be pouncing on.
I put a low low offer in on one place, EA cam back some other bidder went asking price straight away and EA offered to let me go higher...:D I really thought he was joking, but no the house is sold now.

On the other hand I wandered over to the Albany (cardboard box) HolyWell sale when the remaining lots were rereleased and people were queing up to put their name down for cancellations, it was horrible, poor poor deluded people.

iguana

GinnyJo wrote: »

Thats all well and good if you're buying for investment, some people myself included are buying for a home and will not be looking to move in the next 7-10 years.

Do you know that for sure? Obviously the house you are looking at isn't suitable for raising a family in if you think you will be moving again within a decade. Are you 100% sure that you won't have children sooner than you expect? That you won't have a multiple birth when you were expecting 1 baby? If that happens can you afford childcare and your mortgage? Will your home be big enough?

That you or your partner won't be offered a bloody amazing job in a different region. That you or your partner won't lose your job? That interest rates will not rise?

And what if house prices don't come back to today's levels within a decade? Just take a look at Japan if you think that is unlikely. Are you prepared to live where you're looking for the next 20 years?

Anyone thinking of buying now needs to ask themselves these questions and answer very honestly. If you already have children, decent savings, and can find the house that you are reasonable sure you can live in forever and have a big comfort zone in your re-payments so you can over-pay or keep saving, then I can see the case for buying now, as renting in Ireland isn't a very secure way to raise a family. But other than that, too much can go wrong.

gurramok

GinnyJo wrote: »

As for the home improvements? seriously? I've lived through 6 moves and every move has given a return, mostly down to the house refurbishments.

On this part, this has happened in the boom, correct but not on basis totally.

If the place was a derelict house, it went up in price even if it wasn't refurbished during a boom. If it was then refurbished, the gain in price was only down to some of the refurbishment, the rest was on paper.

It's a different story in a bust. Your refurbishing it to maintain price(rare now if achieved due to Manhattan prices at present), not gain it. Paper falls will wipe out any physical value put in. Big difference.

Ginny

iguana wrote: »

Do you know that for sure? Obviously the house you are looking at isn't suitable for raising a family in if you think you will be moving again within a decade. Are you 100% sure that you won't have children sooner than you expect? That you won't have a multiple birth when you were expecting 1 baby? If that happens can you afford childcare and your mortgage? Will your home be big enough?

That you or your partner won't be offered a bloody amazing job in a different region. That you or your partner won't lose your job? That interest rates will not rise?

And what if house prices don't come back to today's levels within a decade? Just take a look at Japan if you think that is unlikely. Are you prepared to live where you're looking for the next 20 years?

Anyone thinking of buying now needs to ask themselves these questions and answer very honestly. If you already have children, decent savings, and can find the house that you are reasonable sure you can live in forever and have a big comfort zone in your re-payments so you can over-pay or keep saving, then I can see the case for buying now, as renting in Ireland isn't a very secure way to raise a family. But other than that, too much can go wrong.

Well you've made a hell of a lot of assumptions there, if I could have kids the home is well able for 3-4 children, like I said before I've bought a home not a house.
Partner issues aren't an issue as there isn't a partner, as for job issues I will not be losing my job, and yes I can say this knowing myself and my job.
Since I've lived in the area for the last 29 years I think its safe to say I'm happy here.
Why assume I or any other buyers haven't asked themselves these questions?

iguana

GinnyJo wrote: »

Why assume I or any other buyers haven't asked themselves these questions?

Because most people haven't asked themselves these questions, that is why there are 1000's of people out there right now stuck in negative equity in unsuitable houses. And still 100's of people who are willing to get themselves into that situation if the banks let them.

As for the assumptions I made they were based on your previous comments. You were the one who mentioned moving from your home and you talked about how easy it is to get a 100% mortgage, and in a later comment said these mortgages are for couples.

Ginny

I have never said it was easy to get a 100% mortgage, I was clarifying that they still are being offered.
As for the couples, the question was asked by a person in a couple and I stated the terms as far as I know for couples and 100% mortgages.
Your previous assumptions were just that assumptions, I really can't see the relevance or reference for over half the stuff you stated.

SimpleSam06

iguana wrote: »

Because most people haven't asked themselves these questions, that is why there are 1000's of people out there right now stuck in negative equity in unsuitable houses. And still 100's of people who are willing to get themselves into that situation if the banks let them.

+1 ain't that the sad truth.

gurramok

GinnyJo wrote: »

I have never said it was easy to get a 100% mortgage, I was clarifying that they still are being offered.
As for the couples, the question was asked by a person in a couple and I stated the terms as far as I know for couples and 100% mortgages.
Your previous assumptions were just that assumptions, I really can't see the relevance or reference for over half the stuff you stated.

You stated earlier that the 'because if I ever move by the time I do with the work going into the house it will be worth twice what I will pay for it.'

How do you know this 'worth twice'?..self-build from scratch?

To sum up on what iguana was saying, you don't know whats around the corner in 7yrs. Good for you your job is solid for next 7-10yrs at no loss of income, many people cannot say that.

And what usually happens if it does happen is mishaps like iguana stated.

This applies to everyone.

iguana

GinnyJo wrote: »

I really can't see the relevance or reference for over half the stuff you stated.

Then why would you imply that everyone buying would ask those questions?

GinnyJo wrote: »

Why assume I or any other buyers haven't asked themselves these questions?

There are those who say that negative equity only matters if you want to sell. But the fact is that there are hundreds of unforeseen reasons for which you might want/need to sell. Job loss, illness, awful neighbours that you just can't cope with anymore, a commute that has become too much to bear, the opportunity of a much, much better job in a different region, rising rates that mean you can no longer afford the property. And that is just for those who own a house which is suitable for the rest of their lives.

Negative equity is a horrible place to be. And buying with a 100% mortgage in a falling market means that by the time you have moved in you are in negative equity.