First time buyer questions - single applicant

froog

hi all

so i'm thinking of applying for a mortgage, completely clueless about the whole thing, can you help me with some questions please? single applicant, in the 100k region, gross salary is 28k but i get about 5k in bonuses a year.

1. what's a good bank to go for a mortgage, i've heard AIB are pretty cheap?

2. should i go for fixed or variable? i assume rates will rise a lot in the next few years, so fixed seems a safer option? and after the fixed term, can the follow on rate change or is it fixed for good?

3. is rent relief taken out of your repayments or do you apply at year end?

4. when making an offer on a house, how low should you go below asking price, i've read 10% in a few places? and can you change your mortgage agreement with bank based on the new lower offer. e.g. change from 100k to 90k?

5. how much will associated fees cost you, stamp duty, solicitor etc?

Jehuty42

My personal advice would be to wait a while until prices drop even further and you have a larger salary.

the groutch

froog wrote: »

hi all

so i'm thinking of applying for a mortgage, completely clueless about the whole thing, can you help me with some questions please? single applicant, in the 100k region, gross salary is 28k but i get about 5k in bonuses a year.

1. what's a good bank to go for a mortgage, i've heard AIB are pretty cheap?

2. should i go for fixed or variable? i assume rates will rise a lot in the next few years, so fixed seems a safer option? and after the fixed term, can the follow on rate change or is it fixed for good?

3. is rent relief taken out of your repayments or do you apply at year end?

4. when making an offer on a house, how low should you go below asking price, i've read 10% in a few places? and can you change your mortgage agreement with bank based on the new lower offer. e.g. change from 100k to 90k?

5. how much will associated fees cost you, stamp duty, solicitor etc?

I was in similar scenario 2 years ago, so I'll help answer as best I can.

1. they're not necessarily cheaper, but they seem to be more open to giving mortgages than some other banks. you'll need at least a 15% deposit nowadays, with evidence of constant savings being very important.

2. you'd generally be best to go fixed for about 2 years, it's good to have some certainty about you outgoings and get into a budgeting routine, especially if moving straight from your parents' house.

3. I assume you're talking about Mortgage Interest Relief. You have to apply for it through revenue.ie (there is a form you can request through their office if you prefer the pen & paper method), and once it goes through it will be automatically be deducted from your month repayments.

4. It depends on the specific property. Some are still overpriced, some are "priced to sell". But in general I'd offer 75-80% of asking and see what they say.

5. There won't be any stamp duty, solicitors fees would usually be about €2,000.
More significant is the cost of furnishing the property, and I don't just mean the furniture. Think of every little thing you're going to need to make it habitable, from the small appliances, to the towels, cutlery, crockery, cleaning supplies, it all mounts up very quickly. You'd want to have a good few thousand extra set aside for all of these or any other unforseen expenses.

I have a last bits of advice for you:

- View as many properties as you can, and go through the places with a fine tooth comb.
- Don't buy a one bedroom property
- There is no such thing as the perfect house/apartment, don't let emotions cloud your judgement, and be prepared to walk away if the seller wants too much
- Don't take what an estate agent says as gospel, do your own homework too
- There is no time limit for buying (although I can understand you wanting to buy this year for mortgage interest relief). Supply will outstrip demand for a long time still, and if you "miss out" on one property, there will be another similar one just around the corner.


Good luck, and I hope it all works out well for you.

Dr. Dodger

the groutch wrote: »

5. There won't be any stamp duty

Why would there be no Stamp Duty? Aren't all reliefs abolished now?

not even wrong

froog wrote: »

4. when making an offer on a house, how low should you go below asking price, i've read 10% in a few places?

Your offer should not be based in any way on the asking price. Asking prices are very often pure wishful thinking by the vendor. If you get 10% off the asking price of a house that's 50% overpriced, you're still paying 35% too much.

Instead you should look at similar houses in the neighbourhood and see what they're selling for, and what the hypothetical rental yield should be (look for at least 10%). Follow the newspaper ads, follow the daft reports, the CSO statistics and the auction results. Yes it's a lot of work but it's a job that pays you hundreds of euros per hour if you look at it from that angle.

3DataModem

the groutch wrote: »

froog wrote: »

hi all

so i'm thinking of applying for a mortgage, completely clueless about the whole thing, can you help me with some questions please? single applicant, in the 100k region, gross salary is 28k but i get about 5k in bonuses a year.

1. what's a good bank to go for a mortgage, i've heard AIB are pretty cheap?

2. should i go for fixed or variable? i assume rates will rise a lot in the next few years, so fixed seems a safer option? and after the fixed term, can the follow on rate change or is it fixed for good?

3. is rent relief taken out of your repayments or do you apply at year end?

4. when making an offer on a house, how low should you go below asking price, i've read 10% in a few places? and can you change your mortgage agreement with bank based on the new lower offer. e.g. change from 100k to 90k?

5. how much will associated fees cost you, stamp duty, solicitor etc?

I was in similar scenario 2 years ago, so I'll help answer as best I can.

1. they're not necessarily cheaper, but they seem to be more open to giving mortgages than some other banks. you'll need at least a 15% deposit nowadays, with evidence of constant savings being very important.

2. you'd generally be best to go fixed for about 2 years, it's good to have some certainty about you outgoings and get into a budgeting routine, especially if moving straight from your parents' house.

3. I assume you're talking about Mortgage Interest Relief. You have to apply for it through revenue.ie (there is a form you can request through their office if you prefer the pen & paper method), and once it goes through it will be automatically be deducted from your month repayments.

4. It depends on the specific property. Some are still overpriced, some are "priced to sell". But in general I'd offer 75-80% of asking and see what they say.

5. There won't be any stamp duty, solicitors fees would usually be about €2,000.
More significant is the cost of furnishing the property, and I don't just mean the furniture. Think of every little thing you're going to need to make it habitable, from the small appliances, to the towels, cutlery, crockery, cleaning supplies, it all mounts up very quickly. You'd want to have a good few thousand extra set aside for all of these or any other unforseen expenses.

I have a last bits of advice for you:

- View as many properties as you can, and go through the places with a fine tooth comb.
- Don't buy a one bedroom property
- There is no such thing as the perfect house/apartment, don't let emotions cloud your judgement, and be prepared to walk away if the seller wants too much
- Don't take what an estate agent says as gospel, do your own homework too
- There is no time limit for buying (although I can understand you wanting to buy this year for mortgage interest relief). Supply will outstrip demand for a long time still, and if you "miss out" on one property, there will be another similar one just around the corner.


Good luck, and I hope it all works out well for you.

This is very very good advice. I'd also add that if moving from home, rent first so you have some idea of what sort of home you want.

froog

great post the groutch, thanks.

yes, i've been renting for about 5 years. one of the reasons i want buy, sick of that dead money every month.

Senna

froog wrote: »

great post the groutch, thanks.

yes, i've been renting for about 5 years. one of the reasons i want buy, sick of that dead money every month.

If you had of bought 5 years ago when you started renting you would have paid out a lot more "dead money" than you did while renting.

gurramok

Jehuty42 wrote: »

My personal advice would be to wait a while until prices drop even further and you have a larger salary.

This 2nd part does not make sense in relation to the OP who is seeking a mortgage at 100k which looks to me is within his means on his present salary assuming no loans outstanding. Its only relevant if the poster wants to increase his/her disposable income in the future, not to qualify for the amount that is sought.

not even wrong

froog wrote: »

yes, i've been renting for about 5 years. one of the reasons i want buy, sick of that dead money every month.

Really? This is the lesson you've drawn from the past 5 years?

froog

Senna wrote: »

If you had of bought 5 years ago when you started renting you would have paid out a lot more "dead money" than you did while renting.

not even wrong wrote: »

Really? This is the lesson you've drawn from the past 5 years?

i've also learned that house prices are 60% + lower and it seems like a good time to buy.

Colonel Panic

Regarding regular savings... I'm a pretty steady saver, but I will often USE the money I've saved to buy things. Bikes, laptops and luxury items. Do banks have a problem with that?

Snakeblood

froog wrote: »

i've also learned that house prices are 60% + lower and it seems like a good time to buy.

So the rent money wasn't actually dead money, it saved you from a 60% fall in prices.

froog

Snakeblood wrote: »

So the rent money wasn't actually dead money, it saved you from a 60% fall in prices.

what do you all want exactly, people to never buy houses again?

honestly, came on here looking for advice, three people seem to think i should be in some kind of mourning and penance for the property bubble. i'm fully aware of what happened. and i wish to buy a house. sorry that upsets so many people.

testicle

froog wrote: »

Snakeblood wrote: »

So the rent money wasn't actually dead money, it saved you from a 60% fall in prices.

what do you all want exactly, people to never buy houses again?

honestly, came on here looking for advice, three people seem to think i should be in some kind of mourning and penance for the property bubble. i'm fully aware of what happened. and i wish to buy a house. sorry that upsets so many people.

It's still happening. The bubble is still deflating rapidly.

Snakeblood

froog wrote: »

what do you all want exactly, people to never buy houses again?

honestly, came on here looking for advice, three people seem to think i should be in some kind of mourning and penance for the property bubble. i'm fully aware of what happened. and i wish to buy a house. sorry that upsets so many people.

I want people to stop saying things that are completely ignorant and misinformed, so we don't have another bubble because people believe things that are wrong just because everyone says them. Not really upset at you, you can do whatever you like. But you come to an open forum, prepare to be corrected when you say something that is wrong.

killers1

froog wrote: »

hi all

so i'm thinking of applying for a mortgage, completely clueless about the whole thing, can you help me with some questions please? single applicant, in the 100k region, gross salary is 28k but i get about 5k in bonuses a year.

1. what's a good bank to go for a mortgage, i've heard AIB are pretty cheap?

2. should i go for fixed or variable? i assume rates will rise a lot in the next few years, so fixed seems a safer option? and after the fixed term, can the follow on rate change or is it fixed for good?

3. is rent relief taken out of your repayments or do you apply at year end?

4. when making an offer on a house, how low should you go below asking price, i've read 10% in a few places? and can you change your mortgage agreement with bank based on the new lower offer. e.g. change from 100k to 90k?

5. how much will associated fees cost you, stamp duty, solicitor etc?

Leaving aside some of the unhelpful posts on this thread and some mis-information the answers to your questions are as follows;

1) AIB have the cheapest variable rate on the market at present. If you are thinking of fixing their may be more competitive rates elsewhere.

2) You don't opt for a fixed rate to 'beat the system' & because you've used your economic expertise to decide what way rates will go over the next few years. By taking a fixed rate you are buying peace of mind. That peace of mind comes in the form of knowing what you rate & repayments will be for a specified period of time. As the fixed rates are more expensive than the variable this is the premium you pay for the peace of mind. You need to look at repayments on both and consider if the increased repayment is value for money and how you might cope were the variable rate to increase. People have the thought that being on a variable rate the bank can increase the repayment month to month. This is not the case and the rate only goes up when the bank decide to increase their rates across the board & not just on your loan (AIB haven't increased rates in over a year)

3) By Rent Relief you mean Tax relief at source. Once your mortgage has issued you can apply online to the Revenue Commissioners and they will inform your lender how much relief you are entitled to and tell them to reduce your monthly direct debit accordingly. It can take 6/8 weeks for the claim to be processed but will be backdated to the date the mortgage issued.

4) There is no hard & fast rule. A good indication would be the longer the property has been on the market the more chance there is of getting a reduced price. You won't know the sellers circumstances so won't know if they are under pressure to sell or not. All you need is an initial starting point and go from there. If the purchase price is €100k start at €60k and see what happens. They can only say no and will always give you the opportunity to put in a higher bid before they sell to someone else.

5) A good solicitor competitively priced should cost no more than €1,600 all in. Stamp duty is 1% of the purchase price irrespective of whether you are a first time buyer or not. A bank valuation costs circa €130 and a structural survey around €300.

Your income of €28 is sufficient for you to qualify to purchase a property costing €100k. In order to obtain approval you need to show a proven repayment ability for the proposed mortgage repayment stressed @ 2%. You prove your repayment ability by way of rent, savings, existing loan repayments etc..