Living alone - rent or buy??

singlegal

My living situation is going to be changing in the very near future – i.e. am splitting up with my boyfriend whom I’ve been living with for 5 years. I’m at an age where I don’t really want to go living with strangers and really like the idea of living on my own, but I’m kinda torn between renting and buying. I could afford perhaps €700 a month but have been browsing around Daft and it seems like the places available for rent at that price aren’t that great (have been looking around East Wall, Fairview, Portobello, South Circular Road - I work in Fairview but don't want to be too far away from the Green Luas so somewhere fairly central would be ideal - with parking) whereas buying somewhere bigger for approx €180,000 could result in repayments of about €550-600.

I guess my question is… if you were living on your own, what would you do? Take the gamble by buying a place which is likely to depreciate in value over the next 5 years, and also absorb the risk of interest rates increasing over the next couple of years? Or pay “dead money” renting a smaller place?

It’s a big lifestyle change and I’m just not sure what to do… I’d really love any advice you’ve got

Thanks xx

D3PO

if you are talking about Dublin and your budget is €700 a month then you can forget about buying as you wont be able to affrod anywhere especially when interest rate levels rise.

D3PO

singlegal wrote: »

My) whereas buying somewhere bigger for approx €180,000 could result in repayments of about €550-600.

x

This is how people got into trouble. You need to stress test. Interest rates are at historical lows 550 - 600 is way underestimating what your month mortgage will be

singlegal

Yes it is Dublin I'm talking about. Hmm yeah good point, how much do you think interest rates could rise by?

It's just that I'm hearing that rental prices are on the increase again so maybe prices aren't as negotiable? Do you think it would be realistic to find a place advertised for €800-900 and haggle down to €700?

D3PO

singlegal wrote: »

Yes it is Dublin I'm talking about. Hmm yeah good point, how much do you think interest rates could rise by?

It's just that I'm hearing that rental prices are on the increase again so maybe prices aren't as negotiable? Do you think it would be realistic to find a place advertised for €800-900 and haggle down to €700?

Dont believe the hype you can definatly still negotiate on rent

as for Interest rates you really need to consider affordability in the 4 - 5% range. @ 4.65% the monthly Mortgage would be €868.66 that would be the min point you would want to base your affordability off.

Granted you will get TRS which will work on a sliding scale before being cut completly but if you can dont calculate this into your affordability if possible.

Consider other things aswell. If you dont have a pension its touted a "soft compulsory" pension will be implemented which will reduce your net income, taxes may rise again etc etc

who_ru

D3PO wrote: »

Dont believe the hype you can definatly still negotiate on rent

as for Interest rates you really need to consider affordability in the 4 - 5% range. @ 4.65% the monthly Mortgage would be €868.66 that would be the min point you would want to base your affordability off.

Granted you will get TRS which will work on a sliding scale before being cut completly but if you can dont calculate this into your affordability if possible.

Consider other things aswell. If you dont have a pension its touted a "soft compulsory" pension will be implemented which will reduce your net income, taxes may rise again etc etc

Doesn't all of the above point to less money in people's pockets thereby reducing house prices significantly and therefore outgoings on a mortgage. if i were the OP i would haggle hard on rental price for the next 12 months at least, LL's are very keen on good tenants, and could easily knock off 10% or more on rent in order to get exactly that. overall i wouldn't buy now, i'd rent instead, haggle to get the right price. there are 1000,s of empties.

singlegal

Thanks D3PO, I certainly hope I'll be able to haggle on rental prices cos don't want to live in a horrible place just cos I want to live alone! You're right about the affordability thing - I'm lucky enough to work somewhere with salary increases coming in soon, so once I know what I'll be on I'll sit down and figure out properly what I could afford, and think it over.

Stupid question - what's TRS??

I do have a pension so they can't impose that one on me at least!!

Just wondering though (for everyone else out there in boards-land), are there many people who live alone in Dublin?? You always hear about people renting rooms or buying places as a couple etc., so would be nice to know that I'm not the only eejit out there who likes having their own place?!? Either renting or owning...

Treehouse72

singlegal wrote: »

It's just that I'm hearing that rental prices are on the increase again so maybe prices aren't as negotiable? Do you think it would be realistic to find a place advertised for €800-900 and haggle down to €700?

I think so. Here's quite a cute little 2-bed for €900 right in the middle of Ranelagh. You'd get it for €800, so considering it's a 2-bed I think that means that elsewhere in D6/near Luas Green you'll find a 1 bed cheaper than that.

www.daft.ie/2855899

Above all, do not under any circumstances buy a property now. Only this evening AIB announced that .5% will be going on mortgage rates before the summer...that in itself will put downward pressure on prices.

Add to that tomorrow's live register (unemployment) figures will be atrocious, making sentiment even worse. Also consider on-going emigration, falling immigration, falling wages and a totally blocked-up credit system and it is in my opinion impossible that property won't be 10% - 15% cheaper this time next year. That could be €20,000 at your price level. Even allowing you might spend €9,000 on rent in that time it is still too much to lose. (I should also mention you will be saving on costs of ownership in that period which could be a couple of grand). Throw in the fact 2011 will be much the same and you'd be throwing money down the drain if you buy now IMO.

singlegal

Wow I think we've reached a consensus anyway! Thanks for all this advice, I didn't think about the actual figures of value-loss vs rent paid in the same period - when you put it like that it's a no-brainer. Myself and my ex had been thinking of buying, and I would have gone for it as would have tried to find somewhere we could settle in for the medium-long term and not worry so much about what would happen in the short-medium term. But now I'm on my own who knows where I'll be or what I'll want in a year or 2 or 5, so I suppose with that in mind buying isn't my best option at the mo.

That place in Ranelagh is cute!! That's the kind of place I would love to get, not some crappy bedsit in an old musty converted house. Fingers crossed I'll find something for a decent price anyway xx

Idbatterim

there is a hotel in Dun Laoire on the sea front letting rooms, minimum lease 6 months for E600 per month, its on the dart line...

Klingon Hamlet

Idbatterim wrote: »

there is a hotel in Dun Laoire on the sea front letting rooms, minimum lease 6 months for E600 per month, its on the dart line...

Link?:D:D

shoegirl

singlegal wrote: »

Just wondering though (for everyone else out there in boards-land), are there many people who live alone in Dublin?? You always hear about people renting rooms or buying places as a couple etc., so would be nice to know that I'm not the only eejit out there who likes having their own place?!? Either renting or owning...

Sorry to hear your relationship has broken up. Its actually one time that I would definitely recommend living alone as you do need space etc to get your head around things. I am gathering from your messages that you are not exactly 21 so I guess looking at buying does seem to make sense.

To be honest, the decision on whether or not you buy needs to be made on long term plans and needs. If you would like to move away or go travelling in a few years time, a house or flat would be a noose around your neck. Also, consider how much savings you'd have towards a deposit. At the moment most lenders are looking for anything from 8 to 20% of the price so you'd need realistically a solid amount of cash. How secure is your job also? Lastly, your life has enough changes in it right now, so I'd suggest renting for 6-12 months and then looking at things.

I know lots of people think 900 pm rent is cheap - I don't. Most of the places that are 700 or less (which to be honest I still think is obscene if you consider an "average" earner is taking home about 2200 a month) usually are in older house conversions that often have standards well below what many people will tolerate. Also, bear in mind that rents haven't come down anything like house prices have - its mostly the middle and upper end that has dropped, which is why you see most people settling for renting somewhere good.

Bear in mind also that your tax relief for the first 7 years for buying would be better. However really there isn't much in that level of the market for what you are willing to pay. Can you drive? If so there is a huge amount of property both for sale and rent in north county Dublin that is affordable.

JuliusCaesar

Also how much do you have saved? Apparantly the LTV is an important consideration for getting a mortgage these days. (LTV = loan to value ie are you borrowing 50% of the property price? or 80%? or more?) The more you have saved, the better chance of getting a decent mortgage.

Jeacle's mortgage calculator is good for seeing what interest rises will do to your repayments.

Idbatterim

see below link for Dun Laoire hotel accomodation for E150 per week, originally I came across this ad on daft...

http://www.rent.ie/short-lets/Kingston-Hotel-Adelaide-Street-Dun-Laoghaire-Co-Dublin/8798/

AARRRGH

Rent isn't dead money. That's just some nonsense EA's invented to make people want to buy houses. It is normal to have to pay for a service.

If I were you, I would rent. Why? Because you've just broken up so you may not be thinking clearly. Spend a few months renting as you get your shit together, and then decide what your next move is gonna be.

You should not be in a hurry to buy as property prices are only going in one direction. The longer you wait to more you'll save. (Even 20k over the lifetime of a mortgage is about 50k).

Victor

I think rent just for the moment, until you get settled. Expect interest rates to go to 5-8% in the medium term.

singlegal

Thanks everyone - just to note, I actually have an inheritance of about €50K so have that for a deposit - no savings to speak of but with that and a record that I've been paying rent for the last 5 years I think I'd be okay - right?

But I think you're all right, it's probably too soon after a break up to be making such a big life decision so I think I'll go with the advice here and find somewhere to rent for 6-12 months and decide then what I want to do - as you've all said, there's no rush into the housing market so better to wait and see what happens with prices and interest rates over the next year I guess.

shoegirl - yes I do drive, but TBH most of my friends live around town or on the southside, and if I'm going to be living on my own I'd like to be close enough to them, I'm not from Dublin originally so don't really know the northside too well and think it could be pretty depressing living at any distance from anyone I know. Idbatterim - likewise for Dun Laoghaire.

I will keep looking anyway and hopefully find somewhere - shoegirl, you're too right about the converted house thing, that's exactly the kind of place I want to avoid!! Please keep all of your fingers crossed I don't end up in some sh*thole

D3PO

well best of luck with it.

2 final things back to your earlier question TRS = Tax relief at source you get some relief on the interest your paying on your mortgage (going to be phased out so may well be gone when you buy )

Secondly try and save a little if you can I know you ahve the 50k but these days the banks want to see your savings capacity and not just the fact you have some equity. They have gone ultra cautions on their mortgage underwriting these days.

shoegirl

If you've 50k to spare, the interest rates on that kind of fixed 1 year would be pretty reasonable. NIB are giving 3% for eSaver accounts right now if you don't make withdrawals. And likewise Permanent TSB are offering 3.35% on an 11 month account - would definitely help you if you were planning to buy later on.

who_ru

Idbatterim wrote: »

see below link for Dun Laoire hotel accomodation for E150 per week, originally I came across this ad on daft...

http://www.rent.ie/short-lets/Kingston-Hotel-Adelaide-Street-Dun-Laoghaire-Co-Dublin/8798/

150 p.w. for a bed and tv - no thanks, although it may suit some.

fontanalis

singlegal wrote: »

My living situation is going to be changing in the very near future – i.e. am splitting up with my boyfriend whom I’ve been living with for 5 years. I’m at an age where I don’t really want to go living with strangers and really like the idea of living on my own, but I’m kinda torn between renting and buying. I could afford perhaps €700 a month but have been browsing around Daft and it seems like the places available for rent at that price aren’t that great (have been looking around East Wall, Fairview, Portobello, South Circular Road - I work in Fairview but don't want to be too far away from the Green Luas so somewhere fairly central would be ideal - with parking) whereas buying somewhere bigger for approx €180,000 could result in repayments of about €550-600.

I guess my question is… if you were living on your own, what would you do? Take the gamble by buying a place which is likely to depreciate in value over the next 5 years, and also absorb the risk of interest rates increasing over the next couple of years? Or pay “dead money” renting a smaller place?

It’s a big lifestyle change and I’m just not sure what to do… I’d really love any advice you’ve got

Thanks xx

Please give this phrase the disdain it deserves. Do a calculation on total interest and then you'll see dead money.

Idbatterim

Op I would take a read of below link...

http://www.independent.ie/business/personal-finance/home-truths-key-factors-when-trying-to-get-a-mortgage-2085250.html

Dirk Gently

depends what you buy. If you can get a 2 or 3 bed place for 6 - 700 a month repayments, with a view to renting rooms when the interest rises you could be ok. I wouldn't buy a one bed or somewhere not with at least one spare double room suitable for renting if you need to.

BoI have a 2 year fixed at 2.6% or there abouts. You can part insure payment protection as well, e.g cover yourself for 400 out of the 600 repayment instead of the full amount. AiB is currently at 3.1% 3 year fixed but expect that to rise sooner rather than later.

If you can afford the 600-700 on a property you can rent a room or 2 in then I'd consider it as you can expect to be paying 5%-6% a few years down the road.

Interest relief on 600 is in around €70. It should cover a few things like payment protection / mortgage insurance etc which will bring you back up around the 600 mark. It will end in 2017 I think.

D3PO

clown bag wrote: »

depends what you buy. If you can get a 2 or 3 bed place for 6 - 700 a month repayments, with a view to renting rooms when the interest rises you could be ok. .

Did you not read the OP's first post ?

"I don’t really want to go living with strangers and really like the idea of living on my own," :rolleyes::rolleyes:

Dirk Gently

D3PO wrote: »

Did you not read the OP's first post ?

"I don’t really want to go living with strangers and really like the idea of living on my own," :rolleyes::rolleyes:

Bold and 2 rollseyes. Jasus you're great aren't you.

There's no reason the OP can't buy and live alone for a few years if she gets a low fixed rate for a few years. I just said it would be wise to allow for interest rate rises by having a room available to rent in the property if she needs to. She can rent to family / a friend / someone she knows. It's not the same as randomly renting a room somewhere with people you have no control over choosing.

Aineeoghan

I hope you got sorted with accommodation.

I was in same situation as you just four weeks ago. I broke up with fiance of four years and as he owned the house i had to move. I really did not want to share either as i was heartbroken and needed my own space.
I looking at some really bad one bed apartments/bedsits and could not believe the standard of them in musty old buildings.

I eventually found a nice modern apartment by luck for €700 a month which is the highest i can afford. But dont give up and dont settle for some place you will not be comfortable in.

Best of luck, i know what your going through!!

singlegal

Hi Aine, sorry to hear about your breakup it's such a horrible thing to go through!

Do you mind me asking whereabouts you found the apartment - is it in the city centre or further out? Was it advertised for €700 or did you haggle down?

clown_bag/D3PO now now enough squabbling that is a fair point to buy with a view to renting a room down the line to someone I know, it certainly is a different thing to sharing with randomers. But I do think I'd be better off putting off the buying thing altogether til I get my head sorted and figure out what I want - you never know I might end up fecking off out of here to go travel for a while!! Don't want to commit to anything til I get used to the single life at least...

danbohan

singlegal wrote: »

My living situation is going to be changing in the very near future – i.e. am splitting up with my boyfriend whom I’ve been living with for 5 years. I’m at an age where I don’t really want to go living with strangers and really like the idea of living on my own, but I’m kinda torn between renting and buying. I could afford perhaps €700 a month but have been browsing around Daft and it seems like the places available for rent at that price aren’t that great (have been looking around East Wall, Fairview, Portobello, South Circular Road - I work in Fairview but don't want to be too far away from the Green Luas so somewhere fairly central would be ideal - with parking) whereas buying somewhere bigger for approx €180,000 could result in repayments of about €550-600.

I guess my question is… if you were living on your own, what would you do? Take the gamble by buying a place which is likely to depreciate in value over the next 5 years, and also absorb the risk of interest rates increasing over the next couple of years? Or pay “dead money” renting a smaller place?

It’s a big lifestyle change and I’m just not sure what to do… I’d really love any advice you’ve got

Thanks xx

http://www.realtor.com/home-finance/financial-calculators/rent-vs-buy-calculator.aspx
try this site might give you better idea , and factor irish mortgage rates at 7%+ on average over next 10 years

Aineeoghan

Hi Singlegal

Thanks, I ending up finding one in Beaumont after searching for three weeks and looked everyplace on daft.ie etc. I ended up contacting an estate agent and they were managing 5 apartments for a landlord.

Even though i dont own it, its great having a nice cosy apartment to myself that i can call home and have the girls over for dvd's etc.

Best of luck

shoegirl

clown bag wrote: »

Bold and 2 rollseyes. Jasus you're great aren't you.

There's no reason the OP can't buy and live alone for a few years if she gets a low fixed rate for a few years. I just said it would be wise to allow for interest rate rises by having a room available to rent in the property if she needs to. She can rent to family / a friend / someone she knows. It's not the same as randomly renting a room somewhere with people you have no control over choosing.

Absolutely, its not totally unreasonable to expect that older people in their late 30s to 50s might not want to share a house like they were still students. Its entirely different if you want to rent out your own place should the need be there, at least you have some say, a lot of friends of mine who share find it difficult not only in sharing with 3 or 4 others but they also don't have a lot of say over co-sharees as people move in and out, which is constant. I don't blame people for wanting to live alone as long as they can realistically afford it.

AARRRRGH

shoegirl wrote: »

Absolutely, its not totally unreasonable to expect that older people in their late 30s to 50s might not want to share a house like they were still students. Its entirely different if you want to rent out your own place should the need be there, at least you have some say, a lot of friends of mine who share find it difficult not only in sharing with 3 or 4 others but they also don't have a lot of say over co-sharees as people move in and out, which is constant. I don't blame people for wanting to live alone as long as they can realistically afford it.

The older you get the more the need to just live with your family if married/children or even on your own if you are single.
I didnt mind sharing at 20 or 25. Couldnt handle it now.