Should I buy an affordable house now?

shayser

We (me, wife and two kids) have been happy to be renters of a 3 bedroom semi-d with minimal rent - €200 per month at the moment with a few euro increase every few years - rather than buyers. We can have this house for life and never had much intention to buy. So, I never had interest in, and know next to nothing of, the intricacies of home owning, mortages etc.

Still, we applied for an affordable home, mostly for the location. There is a chance that we will be offered one next week. The cost of the house is 110,000.

We wouldn't be your typical first time buyers. We're much older. Both employed in the private sector. My job would be quite secure. Salary is index linked but no other rises. My wife is in her manufacturing job for 18 years (left school early and started this job) but it is likely that the business will close in the near future. I'm on the average industrial wage, she's on a bit more than the miminum wage.

Semi-detached houses are now going for 95,000 in another location close by but I think my age and possibly health might preclude me getting a mortgage from the usual avenues. Also, the current lending climate including the much larger deposits. The council are looking for 8% I think. We were never great savers but could manage this amount.

Looking at other posts I take it that the new governemnt scheme for first time buyers of private houses is not a good idea. Would there be any negatives about afforable housing in light of what is happening now and what is to come? One thing I have read that affordable housing is protected from negative equity in some way.

Help!!

Thanks.

asdasd

its 1997!

shayser

Be '87 by this time next year.

Serge

Really good price 110k. Where is that house?

Saruman

I think these are probably affordable homes so you will probably not see them advertised at that price, and a similar home next door could be twice that.

jimmycrackcorm

If you can have your present house for €200 per month with minor increments for life then there wouldn't be much incentive to change. However one factor is that if you decide to buy then you will have something to pass on to your kids years down the line.

It looks like the local authorities are over-valuing their prices though.

Gurgle

shayser wrote: »

There is a chance that we will be offered one next week. The cost of the house is 110,000.

The 'affordable housing' scheme is pretty much free money to the few people who win the lottery and qualify.

Its considered a 'bad' idea because its used to prop up developers' profit margins with public money.

With the 'clawback' conditions, you have to live there for a while before you can collect the free cash. The longer you stay in the house, the more you get.

SkepticOne

Gurgle wrote: »

The 'affordable housing' scheme is pretty much free money to the few people who win the lottery and qualify.

Really it is free money to developers who otherwise would not be able able to shift their unsold properties at a profit.

Dirk Gently

shayser wrote: »

Semi-detached houses are now going for 95,000 in another location close by

Where, and were they advertised at that price?

DonJose

Serge wrote: »

Really good price 110k. Where is that house?

Craggy Island???

Tom123

Depends on what your objectives are shayser?

You are currently paying only €200 per month on rent. If you decide to purchase a house for even €95,000 your monthly accommodation costs will almost triple.
You'll have to give up €400 of spending on other stuff to gain what ever benefits you see from owning a property.

There is no way I would but as I think property prices have a long way to fall but that may not be your primary concern.

p.s. Where the hell are you buying anything for €95k???

shayser

Maybe 12 months ago the price was 180,000. They put the scheme on hold, then readvertised at the new price a few months ago.
I had a look at daft and there is a lot of house to be got in Donegal (i.e., private, not AH) at the moment, and looks like prices will continue to fall. Look up Convoy, Ballybofey, etc.

The house I expect to be offered was built as part of an AH scheme. They are basic spec. Small gardens, very basic kitchen/bathrooms/finish etc. Wondering if affordable housing is the way to go right now. Some posters on propertypin reckon it's not.

Here's the houses for €95k:
http://www.donnybrookestateagents.com/property.php?id=1836

With the way things are going I'm don't know if I should pass up on the offer and look for better value on my own. But I'm concerned that I won't get a normal bank mortgage. At what age does age start to be a problem? I could also have a problem with life assurance/mortgage protection. So, maybe this affordable house offer is my only option.

jdivision

Gurgle wrote: »

The 'affordable housing' scheme is pretty much free money to the few people who win the lottery and qualify.
.

Depends on the scheme, the govt will do quite well on a few of them

Eurorunner

shayser wrote: »

...But I'm concerned that I won't get a normal bank mortgage.

As far as i'm aware, even if you go the AH route, you still have to jump all the hoops as regards qualifying for a mortgage. Its just that there are only 3(?) banks that you can approach for a mortgage under the scheme. Otherwise, their criteria have to be met as regards establishing your ability to repay mortgage...(for real - as opposed to what was happening ).

shayser

Thanks. Council gave me a list today of 6 or 7 banks, and the name of a local broker who would get me the best rate from these 6 or 7. They reckon I'll get a better rate than they are offering. Council give 97% but this includes 0.67% mortgage protection. Banks are giving 100% for AH.

I know I've asked too many questions already but my original point was could I get better value by buying myself with the falling prices, even if i had to wait till next year. Or should I snap up the 110k AH right now, cheap finish, small garden and all?

I'll be talking to a friend of a friend tomorrow who's in the business.

Climate Expert

Where are you renting for €200 a month? I can't think of any location on Ireland that would rent for that price.

AARRRGH

Why do you want to buy? Are you certain you can continue renting in your current home for the rest of your life? If so, it would make financial sense to not buy.

shayser

It's a family house. That'll be my rent for as long as I wan't it.

What I'm trying to decide it whether to take the cheap AH or let it go (if offered) and buy on my own, with the way prices are falling.

seahorse

I'm curious as to why you'd want to buy at all Shayser? At this stage in your life I mean, surely continuing to rent at 50 quid a week would be the better option? If it's inheritance for the kids you're thinking about couldn't you just put a portion of what you'd be paying to the banks into a trust fund instead?

I cant be of very much help regarding your queries about the housing market. I'm renting myself and don't understand much about those intricacies either. The one thing I would say to you is that I wouldnt buy property in any way shape or form with the way the market is heading. My instinct would be to steer clear and keep on paying that 50 quid a week and thank your lucky stars you're not one of the people strangled by mortgages on small cheaply thrown-together properties that are losing value every moment of the laborious hours it takes to drive home to them from work every day.

Boggle

You live in Donegal which has a large overhang of property and a huge amount of second and holiday homes. Sit back and put your feet up and wait for the banks to close in on developers and "thought they were" rich people.

A house costs €70k to build typically so expect to see houses in this region pretty soon as the (now guaranteed) banks start to foreclose...

Saruman

shayser wrote: »

It's a family house. That'll be my rent for as long as I wan't it.

What I'm trying to decide it whether to take the cheap AH or let it go (if offered) and buy on my own, with the way prices are falling.

Do you mean to say that you, your wife and two kids are renting a room/rooms at your parents house?

Or is it in fact a council house designated for families at the amazingly low price of €200 a month?
That is €2400 a year (many Dublin families pay this a month).


Lets say you are paying that for the next 30 years (average mortgage) length years then you would be paying 72k in total for the accommodation you are in now. Far cheaper than a mortgage for even the cheapest home. Only problem is you have nothing to pass on to your kids later on, or nothing to sell and live in luxury for your pension years.
Still

shayser

Thanks for the advice. Appreciate it.

The location of the AH is close to my my wife's family and is in a lovely location. We imagine it would be a much nicer place to live than the concrete jungle we are currently in.

The house we are currently in belongs to a brother-in-law who is living in the US. He owns several houses in Ireland. We can stay here as long as we wish.

The AH offer is close to decision time and will be the last chance to purchase where the old rules apply i.e. no government equity. We applied before the fall in property prices.

My conundrum is whether to by the AH which, a short time ago, would have been considerably cheaper that the open market price of the nearst comparble house. It will still be cheaper but I'm not sure it would be any better value considering the prices we are seeing now.

SimpleSam06

Saruman wrote: »

Only problem is you have nothing to pass on to your kids later on, or nothing to sell and live in luxury for your pension years.
Still

I don't get this argument, I really don't. If you have more than one child leaving them a single house is only asking for trouble. Chances are they are going to sell it, which means capital gains, carraige, real estate agents fees, and more. Also, by the time you've repaid triple its value in your mortgage payments, surely they would have been much better off if you left them lump sums of cash you have been saving in a high interest account, or something similar?