Savings advice

Tantan1305

Hi,

My partner and I are planning to start saving for a mortgage. But I don't know where is the best and safest place to save.

Also I'm not sure what sort of % of the price of the house is needed in order to apply for a mortgage.

I would be grateful if anyone could give me some advice.

Thanks

gonedrinking

You need at least 8% for a deposit, but if are smart then you will save until you have about an 80% deposit. It makes much more sense in the long term. Unfortunately most Irish people don't think this way.

beeno67

gonedrinking wrote: »

You need at least 8% for a deposit, but if are smart then you will save until you have about an 80% deposit. It makes much more sense in the long term.

How do you work that out?

digme

beeno67 wrote: »

How do you work that out?

compound interest will kill you allllllllllllllllllllllllllllllllllllllllllll :mad:

beeno67

digme wrote: »

compound interest will kill you allllllllllllllllllllllllllllllllllllllllllll :mad:

I don't get you

RichardAnd

Hi Tantan.

If you're looking to save long term then I'd recommend a post office account. It's as safe as anywhere these days.

There is also a feature of An Post savings that allow you to put X amount of money into long term savings for a higher interest rate. IF you go to a post office, they will be able to fill you in more about these scheme, I think they're called bonds.

Anyway, as has been pointed out already, you need about 8% to apply for a mortgage but you should be aiming for more than that. Personally, I'd be aiming for 25% myself and even then, I'd only be looking to borrow about 4 times my annual salary.

Remember though, house prices here still need to come down by a decent amount before they even approach being reasonable. Don't hesitate to keep waiting, saving up a larger deposit as you do.

digme

if you get a "mortgage " for 300,000 you may pay back 900,000 or more

beeno67

Tantan1305 wrote: »

Hi,

My partner and I are planning to start saving for a mortgage. But I don't know where is the best and safest place to save.

Also I'm not sure what sort of % of the price of the house is needed in order to apply for a mortgage.

I would be grateful if anyone could give me some advice.

Thanks

Ulster bank are offering 4% on one of their online accounts for amounts up to €15,000. Certainly a good place to start. Look for an account the allows regular payments but also allows withdrawals with notice (Ulster Banks is on demand but 30 or 60 day notice accounts would be fine also).

You will need 8% of property value (not necessarily the same as the price you pay), also 1% of price for stamp duty and about another 1% for legal fees. So you will need about €20k or so for an average house.

beeno67

digme wrote: »

if you get a "mortgage " for 300,000 you may pay back 900,000 or more

That is a very simplistic view and ignores inflation, cost of renting when you are saving, interest rate on savings, taxes on savings and mortgage interest rate.

Your assumption that a mortgage for 300k will cost 900k is also a bit wide of the mark. A 300,000 mortgage over 25 years at an average interest rate of 6.5% (3% more than currently available) means you will pay back under 600,000. Obviously you can get a fixed rate for the next 10 years of 5.2%. Were that to stay the same for the entire 25 years then the total interest payable would be €230,000 (not the 600,000 you maintain)

later12

You don't mention if you're living in Dublin or outside, if you're in dublin I would actually suggest that you go into Anglo (of all places) on St Stephen's Green and talk about opening an easy access reward account which offers 3.2% gross/ AER return. You will have the security of instant access in an already Government backed bank, although withdrawals will as always change the overall rate of return.

I'm not sure what rates BOI and AIB are offering, but I think they're lower generally for regular savers and without investing your savings with a UK or European deposit holder, the Anglo Irish rate would be my preferred choice if I were in your position.

Maybe this would be better in Investments & Markets...

sceptre

later10 wrote: »

Maybe this would be better in Investments & Markets...

Indeed and it would, cheers. Moving it there.

The Irish Economy forum is basically for discussions about the Irish economy rather than individual queries.