About to Buy - Getting Cold Feet!

Lauren27

Put a booking deposit on house about 2 months ago, just at the stage now where Engineer report is in everything is in order, next move is contracts to be signed however with all that has gone on especially in the last couple of weeks we feel uncertain whether buying now is the right move:

House €240k
House mortgage will be €200k
Putting down €40k
Both earn €60k combined annually

Taking into consideration income tax cuts, new property taxes etc should we hold off for another year or two... Anyone in the same boat...

We are entitled to our booking deposit back I'm sure, we'll just have the cost of our Solicitor up to now... We really do not know what to do.. have to decide in the next week..

Any advice/professional expertise greatly appreciated!

drunkmonkey

How much is it to rent for the next few years on a similar house? House prices could get a hammering over the next 4 years, you need to work out what the rent will cost compared to the drop in house prices.
It's not costing you 200,000, it's costing 200,000 + interest. Huge difference.

D3PO

personally speaking Id take the hit on the solicitors fee and pulll out.

With all the changes due property prices are likely to continue falling for the forseeable future, and thats without even considering ECB rate rises that are no projected mid next year.

3DataModem

If you love the house and see yourself living there for 7-10 years or more AND your jobs are relatively secure than go for it, you can afford it.

ntlbell

keep the 40k in the bank, keep saving away and let the prices fall at least for the next year two and see how the land lays then.

quozl

Apart from all the usual arguments about house prices dropping - which I agree with - there's another reason that has become my main one for not buying.

My family and I can easily emigrate if we need to, or choose to, as we're renting. Both our jobs seem secure, but the value of being able to leave if things get ludicrously bad here has grown for me over the last year.

We're either going to be one of the most indebted nations in europe (combining public and private debt), or we're going to be part of a failed bailout and default. Now, or in 3 years time when the deal being hammered out ends.

Mobility is priceless imo, and renting with a family has been absolutely fine so far. I'm renting a perfectly nice house that we still couldn't afford to buy even if we wanted to.

quozl

Apart from all the usual arguments about house prices dropping - which I agree with - there's another reason that has become my main one for not buying.

My family and I can easily emigrate if we need to, or choose to, as we're renting. Both my wife and my jobs seem secure, but the value of being able to leave if things get ludicrously bad here has grown for me over the last year.

We're either going to be one of the most indebted nations in europe (combining public and private debt), or we're going to be part of a failed bailout and default. Now, or in 3 years time when the deal being hammered out ends.

Mobility is priceless imo, and renting with a family has been absolutely fine so far. I'm renting a perfectly nice house that we still couldn't afford to buy even if we wanted to.

Zamboni

quozl wrote: »

My family and I can easily emigrate if we need to, or choose to, as we're renting. Both my wife and my jobs seem secure, but the value of being able to leave if things get ludicrously bad here has grown for me over the last year.

Mobility is priceless imo, and renting with a family has been absolutely fine so far. I'm renting a perfectly nice house that we still couldn't afford to buy even if we wanted to.

My sentiments exactly.
For right or wrong, your life is only as good as your ability to earn money.
Mobility is a massively underrated part of that.

Snakeblood

I wouldn't buy. It's a bad market and the future is unknowable but not good.

Treehouse72

OP, don't buy now. I cannot think of a single advantage to buying now rather than delaying. On a €240,000 property I think you can save €30,000+ over the next 2 years (20% price drop less rent paid in the meantime). By the bottom of the housing crash, it could be €50,000.

If you work out how long it takes to pay that amount from a mortgage (several years) and how nice it would be to have it sitting in your bank account, I think it's a no-brainer to wait. I very much doubt you won't be able to find an equivalent property in 2 years.



Ed: IMO. Just an amateur on t'internet.

The_Conductor

OP- I'd echo the above sentiments- the country is going to feel a lot of pain for the next 4 years- aside from the ominous comments from the ECB about interest rates increasing sooner rather than later. There really isn't any particular upside to buying property at the moment- the potential falls could be significantly higher than than any rent you might pay- and you are certainly going to be a hell of a lot less mobile if you buy.......

Congrats on saving 40k- my personal advice would be to continue renting, to continue saving- and in possibly 4-5 years time- after the elapse of the current 4 year plan and after the effects of ECB rate increases has levelled out- to re-acces the situation at that stage.

Idbatterim

OP completely leaving aside the dropping prices argument. What value can you place on complete flexibility and freedom if you rent? I really think its madness for people to be tying themselves to huge amounts of debt, with a mortgage slip, which at the end of every month will say last payment - 2035 or 2040! Some people on this forum will say, but if you can afford it and have a secure job go for it. How secure is ANYTHING anymore? Given all we have been through and are about to enter into, nothing could shock anymore.

Kintarō Hattori

Interesting reading and there certainly seems to be only one judgement that the OP could make from reading the replies. I don't mean to hi-jack your thread OP but I'm in a similar situation to yourself and it wouldn't make sense to start a new thread.

Myself and my good lady are in the process of buying a house. We put down a booking deposit but haven't signed anything yet so have the option of pulling out and getting the deposit back. The house we're after is fairly modest at just €135,000 which would mean a mortgage repayment each month of about €600 which is perfectly manageable.

I know prices will drop and it would make sense to hold off but we've been renting apartments for the last six years and it would be nice to have a house that we can call our own. I feel time is against me too as at 33 the number of years I can take a mortgage for is getting less each year (not a bad thing some would say!). I'm prepared to lose some value in the house but I don't mind this to some degree as it'd be nice to finally have the ability to decorate it the way we want, to have a garden to grow things, to keep a pet and of course to start thinking about a child.

Taking into account that last paragraph in particular what would your advice be? Keep renting or buy.

quozl

Kintarō Hattori wrote: »

and of course to start thinking about a child.

Just on this point. I rent, and managed to successfully have twins a few months back

You can even find rentals that will accept pets!

My family is, I believe, gaining much greater financial security (from renting) for a loss of security in where exactly I will be living in a year or two. However, if I have to move from this house, I can get another one in the area. For me, that's a very good trade.

Lots of people seem to think that you can't have children if you rent. Why on earth is that?

HardyEustace

I can completely understand people's desire to have somewhere nice to live and a nice quality of place to live in.

However, I think anyone without a mortgage at the moment is incredibly lucky. I would not advise getting one for at least the next six years.

In general (this isn't pointed at any poster in particular), I think that people's wish for somewhere nice is sometimes a driving force in a mortgage. However, pause for thought -
even if the people moved into a house and decided to get a new couch, get new plates/delph, new bed (these are the main things that I know are very important to me in house) and yes, spent their own money in say Ikea, (and yes, I know that it's the landlords responsibility to provide these but frankly most rental house furniture is very ugly) this is a fraction of the cost of a house you've just bought dropping in value by 30 or 40 or 50 thousand euro.

I hope I'm explaining this properly. But what I'm trying to say is that even if you went to Ikea and blew 5,000 euro on "nice house things" to live with for the next few years - yes, you are furnishing a house you've already paid for - it's far, far cheaper than taking out a mortgage on a house that is sliding in value.

KindOfIrish

Save another 40k and you will buy a house mortgage free in 4 years time

Kintarō Hattori

quozl wrote: »

Lots of people seem to think that you can't have children if you rent. Why on earth is that?

Hmnn I started off and now I don't know how to answer that. I guess for me I just want to feel like a place is home. Our current apartment while lovely just doesn't feel homely, I don't feel settled. I want to try and be sensible and sort out a home before I start a family. I don't know if that's old fashioned but that's how I feel. I guess I fear if we start a family buying a home won't happen.

Idbatterim

The higher the asking price, the more you gain by waiting. Kintarō Hattori - where are you looking at buying and what type of property?

quozl

Fair enough Kintarō Hattori, but it's worth thinking about imo. You might decide it's not a rational worry after a while.

My house feels like a home - I have my wife, babies, my own super-kingsize bed and it's the kind of house I'd buy if I was buying.

As for

I want to try and be sensible and sort out a home before I start a family

,
are you sure that is being sensible?

You haven't given any reason for why it's sensible? It seems the opposite to me currently - I'm not trying to be argumentative, I'm just trying to help.

I'm going to have more money to spend on my kids because I've rented the last two years instead of buying again. My house is a home. Even if I have to move house, I'll create another home in the same area. And crucially, if my wife or I lose our jobs, or decide that Ireland is in too big of a mess, my family will have the option to move elsewhere if it's in our best interest.

Kimia

I understand where you're coming from Kintarō Hattori - I think your idea of not wanting to have a kid when you don't own your own house is common of our age group (late 20s, early 30's I'm guessing). i would imagine this is because of all the 'truths' we got rammed down our throats over the years - that you're not settled until you own your own house.

I have now realised that that is bullcrap. Your home is where you make it. I had similar ideas to you - I wouldn't decorate a rented apartment for example, but about 2 years ago I started furnishing our current (rental) apartment with our own stuff. Slowly but surely it nows feels really homey, because we put effort into it, and stopped thinking about it being 'someone elses home'. If you're paying rent every month it is your home, simple as that. You can't be turfed out and you do have security if the landlord acts up - I think people underestimate this.

And imagine all the things you're avoiding - worries about interset rates, repairs, upkeep on things (we don't even need to worry about buying a new hoover!) - you can really see the benefits of living like this instead. Best of luck.

Kintarō Hattori

Idbatterim wrote: »

The higher the asking price, the more you gain by waiting. Kintarō Hattori - where are you looking at buying and what type of property?

It's a two bed end of terrace in Balbriggan.

Stheno

Kintarō Hattori wrote: »

It's a two bed end of terrace in Balbriggan.

Very much imo and I'm not an expert, but unless you are planning on living there for 10+ years and/or have the opportunity to extend, given that you are planning a child, I'd consider that a fairly poor investment/buying choice in the current market.

It's just a two bed, and imo it's essentially an apartment with a garden.

If you were to wait could you potentially afford to buy a better house in a year or two? I'd imagine so.

dan_d

Hattori, if that's what you're considering buying, hold off.
What happens when you want another child?
Either that or start looking further out at 3/4 bed homes (if that's possible for you).The biggest question, after money, when you buy a home, is can you live in it for the rest of your life.Don't think in terms of starter homes or property ladders - that no longer exists.

mathie

Kimia wrote: »

I understand where you're coming from Kintarō Hattori - I think your idea of not wanting to have a kid when you don't own your own house is common of our age group (late 20s, early 30's I'm guessing). i would imagine this is because of all the 'truths' we got rammed down our throats over the years - that you're not settled until you own your own house.

I have now realised that that is bullcrap. Your home is where you make it. I had similar ideas to you - I wouldn't decorate a rented apartment for example, but about 2 years ago I started furnishing our current (rental) apartment with our own stuff. Slowly but surely it nows feels really homey, because we put effort into it, and stopped thinking about it being 'someone elses home'. If you're paying rent every month it is your home, simple as that. You can't be turfed out and you do have security if the landlord acts up - I think people underestimate this.

And imagine all the things you're avoiding - worries about interset rates, repairs, upkeep on things (we don't even need to worry about buying a new hoover!) - you can really see the benefits of living like this instead. Best of luck.

That's factually incorrect.
You can be "turfed out"

There are many advantages and disadvantages to renting vs buying.
The reason people with families would buy over renting would be security amongst other reasons.
A friend of mine with a family didn't get an extension on a rental lease on two different occasions. That pushed him to buy.
Moving with a family can be quite an upheaval. Maybe not as bad if you're single or a couple.

Kimia

mathie wrote: »

That's factually incorrect.
You can be "turfed out"

There are many advantages and disadvantages to renting vs buying.
The reason people with families would buy over renting would be security amongst other reasons.
A friend of mine with a family didn't get an extension on a rental lease on two different occasions. That pushed him to buy.
Moving with a family can be quite an upheaval. Maybe not as bad if you're single or a couple.

When can you be turfed out? I'm not talking about the natural ending of a tenancy for which you can be prepared, I'm talking about being thrown out at a moments notice and as far as I know there are laws against illegal evictions.

gurramok

Kimia wrote: »

When can you be turfed out? I'm not talking about the natural ending of a tenancy for which you can be prepared, I'm talking about being thrown out at a moments notice and as far as I know there are laws against illegal evictions.

The social welfare supports are better for when owning rather than renting. You're not entitled to rent allowance if working when you fall behind in rent. As an owner you are entitled to negotiation of repayments with the bank and along with the 1yr moratorium on repossessions, there is far more support for owning than buying.

The_Conductor

Kimia wrote: »

When can you be turfed out? I'm not talking about the natural ending of a tenancy for which you can be prepared, I'm talking about being thrown out at a moments notice and as far as I know there are laws against illegal evictions.

There are laws governing the manner in which evictions can occur, and you are quite correct, it is illegal to evict someone from a rented accommodation unless set rules are followed.

There are however several reasons a person can be evicted from rented accommodation (if you check out the 2004 act, it details them). The natural elapse of a lease of is not just cause for an eviction- however providing a lease is not in effect- a tenancy could be terminated by either party by serving requisite notice on the other party.

Outside of normal reasons- notice could be served for-

1. Non payment of rent
2. Modification of the accommodation or service providors without the landlords assent
3. If the landlord needed the accommodation for his/her or a member of their immediate family's accommodation needs
4. Antisocial behaviour on the part of the tenant
5. A declaration by an environmental health officer
6. Force majeure

Etc.

Mr Cawley

You'll be throwing money away buying now(unless this property is in hot demand).

If you want the house so badly that you'd be prepared to lose value on it for the next few years(again presuming the house isn't in hot demand) then buy now.

The market is not at bottom yet.

You've cold feet, you know that you're buying on a downward slope.

Overpaying for property helped this country go bust, don't compound the problem or do it to yourself.

There's a relevant phrase in stock trading, 'don't try to catch a falling knife'

Mr K
(investments and markets forum)

ask over there to the respected posters

ricman

Say you buy a house now ,200k, in a years time the same home will be for sale for 150 k,or less PROBABLY.You borrow 200k, it costs 400k plus to pay that back at 4 per cent interest rate.For most people ,a couple its cheaper to rent an apartment now.and you could be in negative equity ,ie home value 150k, mortgage 200k.

X files

My uncle has been an agent for more years than he will admit and says maybe another 20 % to come of current prices. Be carefull we are obessed with ownership and the lassies love the nest.

ricman

IN a years time, we,ll know can spain ,portugal can be rescued ,is the euro stable.I EXPECT 20-30 PER CENT DROP in prices in the next year , those countrys have a banking crisis like ireland,banks lent too much to many people,and house prices have declined.They are in a similar situation to ireland.

mathie

ricman wrote: »

IN a years time, we,ll know can spain ,portugal can be rescued ,is the euro stable.I EXPECT 20-30 PER CENT DROP in prices in the next year , those countrys have a banking crisis like ireland,banks lent too much to many people,and house prices have declined.They are in a similar situation to ireland.

Can you tell me who wins this years premier league?

The_Conductor

mathie wrote: »

Can you tell me who wins this years premier league?

Thats easy. Chelsea.....

The_Conductor

ricman wrote: »

IN a years time, we,ll know can spain ,portugal can be rescued ,is the euro stable.I EXPECT 20-30 PER CENT DROP in prices in the next year , those countrys have a banking crisis like ireland,banks lent too much to many people,and house prices have declined.They are in a similar situation to ireland.

On what basis are you predicting a 20-30% drop in prices in the next year? Purely on a purchasing parity basis- the fall in Irish houseprices, is already the steepest in the world (at over 60% from peak).

Spain and Portugal do not have banking crisis like Ireland- even the Portuguese problem is less than 45% as severe as the Irish issue. In an Irish context- Irish banks borrowed over 160 billion in overnight lending from the ECB- representing over 20% of ECB lending, despite the fact that we are less than 1% of the Eurozone economy. Is it any wonder the ECB got skittish with us?

Further- the issue in Portugal and Spain is local banks lent internationally- which is almost the polar opposite of the Irish situation.

I do predict substantial continued falls in prices here- but on the basis of the ECB increasing interest rates- and with the end of cheap working capital for the banks (they were getting ECB overnight rates of 1.5%, which will now be replaced with bailout funds at 5.5%) totally aside from increases in ECB base rates- Irish rates will soar, and it will be incredibly expensive to borrow new funds......

With first time buyers essentially frozen from the market- pre-existing owners will be sellers only if they have no other option, particularly as ECB rates increase........

Like it or lump it, we are in for a rocky ride over the next 10-15 years........

chicken fingers

Kintarō Hattori wrote: »

it would be nice to have a house that we can call our own.

You could call it your own, but you would be only codding yourself.
Only when the last payment is made in 10-25 years it will be yours.

This is the Irish obsession with owning their own place [not a bad thing per se].
But don´t let it cloud your judgement.
135k is not a huge amount to spend on a house, true, but the arguments [here on boards] for buying now are always the same.
Based on personal emotions rather than logical economics or business acumen.

X files

Thanks guys between this and the cold weather expect more to be digging and burning peat this winter.
Still the best country to live in.
Watching Cowan on the TV, it seems to me he is still out of touch with reality and cant actually grasp the figures involved.
Hearing that the Anglo Irish Bank is going to take years to wind up not just 3 months is scary.

Tea drinker

Kintarō Hattori wrote: »

I feel time is against me too as at 33 the number of years I can take a mortgage for is getting less each year (not a bad thing some would say!). I'm prepared to lose some value in the house but I don't mind this to some degree as it'd be nice to finally have the ability to decorate it the way we want, to have a garden to grow things, to keep a pet and of course to start thinking about a child.

Taking into account that last paragraph in particular what would your advice be? Keep renting or buy.

Friend, do not put off having a child because of the house. We did this for a few years but nature intervened to take away our chance of having kids. Imagine how I feel about FF and property developers :mad::mad::mad:
OP - you are not defined by home ownership, this time next year you could be living abroad.

foxy06

I agree with tea drinker. Don't put off having kids just because you are not a homeowner. If you can afford them while renting then have them and enjoy them. Life is too short.

ricardo1

OP Why don't you bargain again with the seller or have you even bargained at all?
Listen to what everyone is saying.
Prices will drop another 20%.
Even Estate Agents believe this will be the case.
The people who influenced prices in the property market, the banks, are going to shrink hence less finance from less banks. Higher interest rates. There's only one place where the market price is going ie down down down....
Trust me you have cold feet well the sellers are scared stiff they'll be unable to sell this house.
Wait a number of weeks
Wait for them to contact you
Explain you've had to refinance
And break the bad news
Cut 20% off the 240,000 and say this is all you can get from the bank
You've nothing to lose....
By the way your solicitor may just want the transaction to go ahead and get paid so they're not the best to ask in this situation.
Good luck

Lauren27 wrote: »

Put a booking deposit on house about 2 months ago, just at the stage now where Engineer report is in everything is in order, next move is contracts to be signed however with all that has gone on especially in the last couple of weeks we feel uncertain whether buying now is the right move:

House €240k
House mortgage will be €200k
Putting down €40k
Both earn €60k combined annually

Taking into consideration income tax cuts, new property taxes etc should we hold off for another year or two... Anyone in the same boat...

We are entitled to our booking deposit back I'm sure, we'll just have the cost of our Solicitor up to now... We really do not know what to do.. have to decide in the next week..

Any advice/professional expertise greatly appreciated!

davymc31

id tell the auctioneer that you have to pull out of sale as both your wages are dropping a few thousand after christmas and tell him all you can offer for house is €200000 and see hows that goes ,dont be suprised if he accepts the €200000 as they have houses inflated by about that much i know for a fact ,you can sit back and wait till they accept then it will be a bargin that u need at this time ,if they dont then keep trying.if they value house at 240000 its only worth 200000.

quietsailor

Lauren27 wrote: »

Put a booking deposit on house about 2 months ago, just at the stage now where Engineer report is in everything is in order, next move is contracts to be signed however with all that has gone on especially in the last couple of weeks we feel uncertain whether buying now is the right move:

House €240k
House mortgage will be €200k
Putting down €40k
Both earn €60k combined annually

Taking into consideration income tax cuts, new property taxes etc should we hold off for another year or two... Anyone in the same boat...

We are entitled to our booking deposit back I'm sure, we'll just have the cost of our Solicitor up to now... We really do not know what to do.. have to decide in the next week..

Any advice/professional expertise greatly appreciated!

OP I don't understsand the bolded sentence above, you signed a contract and paid a deposit with the contract stating (I presume) that you lose your deposit if you pull out without good reason - eg engineers report highlighting a fault, false advertising. I don't think "cold feet" comes under the reasons for breaking a contract as the law sees it.

Saying that even if you were to loose your deposit I would agree with the other posters, hold off and wait to see the bottom of the market.

I'm still confused how you think you can break a contract and get your money back

3DataModem

quietsailor wrote: »

OP I don't understsand the bolded sentence above, you signed a contract and paid a deposit with the contract stating (I presume) that you lose your deposit if you pull out without good reason - eg engineers report highlighting a fault, false advertising. I don't think "cold feet" comes under the reasons for breaking a contract as the law sees it.

Saying that even if you were to loose your deposit I would agree with the other posters, hold off and wait to see the bottom of the market.

I'm still confused how you think you can break a contract and get your money back

Read OP again. Didn't sign contract yet.

ricman

How do you feel,in a years time, if house is worth 160k .you are in negative equity.
some experts predict further property value falls in 2011.especially outside dublin.
I,M not an expert ,i,d advise you to pull out or offer 175k.
ALL the legal work is not done, you,ll have to pay solicitor, x amount, not the full fee.
its not a matter of will,prices, decline,its by how much?

quietsailor

3DataModem wrote: »

Read OP again. Didn't sign contract yet.

Isn't handing in a deposit considered a form of contract, tbh I can't see the vendor/estate agent handing back that deposit too quickly. Why would they - the OP indicated they wanted to buy, its not the vendors fault the OP gets cold feet. Never the less I'd still back out myself and rent somewhere while you wait to see if/how much house prices will drop further.

Leiva

Bet the OP is a happy man , just saved a shoite load of money with the new stamp duty .

Now only €2400 for this house in particular .

Delighted for you ( thats if you decide to proceed with purchase)

M

EDIT: AHHH crap think he is a FTB which means an extra €2400

BostonB

Any update on this thread? Have to say unless its was in a location you won't get again, I wouldn't be rushing to buy any property at the moment.

bugler

quietsailor wrote: »

Isn't handing in a deposit considered a form of contract, tbh I can't see the vendor/estate agent handing back that deposit too quickly. Why would they - the OP indicated they wanted to buy, its not the vendors fault the OP gets cold feet. Never the less I'd still back out myself and rent somewhere while you wait to see if/how much house prices will drop further.

The deposit is refundable unless contracts have been signed.

mathie

bugler wrote: »

The deposit is refundable unless contracts have been signed.

A lad in work had a nice present of a few quid less in stamp duty as he delayed close until the budget

edanto

OP - there's certainly a consensus on the thread that now is the wrong time to buy.

For me though, now is the right time to buy and we've gone sale agreed. Some of our reasons may apply to your situation, and other won't. Ultimately, the main piece of advice is that your own set of factors will tell you when it is time for you to buy a house; and that combination of factors is unique to each person/couple.

For us... the reasons are:

- there is literally nobody else buying houses at the moment, which gives the us, as buyers, a very rare negotiating strength

- I have had a steady job for the past few years, and as such can get a mortgage now. However, over the next few years, I'll become more self-employed. I've no worries about not being able to earn enough to pay the mortgage, more a concern that the bank won't give me a mortgage without what looks like stable employment

- I think that the asking prices of the houses that we are looking at will fall by another 10-15% until the bottom of the market. However, because of the lack of interest from other buyers, we were able to make a deal at 15% below asking, so I feel like I've already achieved the price that other people will be getting in 18 months time, but in that time I will have paid off a bit of my mortgage

- the area that we are looking in is one of those most likely to rebound first (leafy suburbs), and attract other buyers, so now is a better time to buy in that area than in somewhere less likely to rebound (e.g rural estate outside a small town)

- if we want to get any building/extension work done over the next 2/3 years, it will be cheaper now than at any other time

For all of those reasons, it's a good time for me to buy. Sure, the house next door to my new house may sell for a little less than mine over the next 3-4 years. But I'm fine with that, I've no intention of selling it for many, many years.

I'm going back to packing boxes!