To have savings or be in debt if Euro goes belly up!

nacimroc

So I'm about a week away from signing the contracts on a house. (First time buyer). I reckoned now is the right time up until today....

So they announced this referendum which I reckon will go the no route, which may lead to the beginning of the end of Ireland in the Euro IMO. So just wondering....

If the Euro goes tits up, is it better to be mortgage free with savings (that I presume will be worthless) or be in debt but tied to the country with a bleek outlook.

AlekSmart

nacimroc wrote: »

So I'm about a week away from signing the contracts on a house. (First time buyer). I reckoned now is the right time up until today....

So they announced this referendum which I reckon will go the no route, which may lead to the beginning of the end of Ireland in the Euro IMO. So just wondering....

If the Euro goes tits up, is it better to be mortgage free with savings (that I presume will be worthless) or be in debt but tied to the country with a bleek outlook.

I salute your bravery,Nacimroc....right now I'd want everything to be as liquid as possible to make it easy to cut n run.

Property would not be my chosen topic right now,for sure.

AlmightyCushion

I doubt a no vote would be the beginning of the end for us, based on what I know about this (which I admit is very little) I think we should still vote yes though. If Ireland did hypothetically leave the euro I think having savings would be best.

nacimroc

AlekSmart wrote: »

I salute your bravery,Nacimroc....right now I'd want everything to be as liquid as possible to make it easy to cut n run.

Property would not be my chosen topic right now,for sure.

But unless its held in Dollars/pounds etc, if we left the euro any savings would become useless ? Up until this announcement today, I reckon we were about a year to 18 months from bottoming out. So I wanted to buy before there was site of the bottom as people won't accept ridiculously low offers otherwise.

CiaranC

One things for sure, If you buy a mortgaged property you are along for the ride, whatever happens. Every tax hike and austerity measure will be directed squarely at you and there is no out.

Dr Expired

nacimroc wrote: »

So I'm about a week away from signing the contracts on a house. (First time buyer). I reckoned now is the right time up until today....

So they announced this referendum which I reckon will go the no route, which may lead to the beginning of the end of Ireland in the Euro IMO. So just wondering....

If the Euro goes tits up, is it better to be mortgage free with savings (that I presume will be worthless) or be in debt but tied to the country with a bleek outlook.

Its a tough call for you as i'd say your in a zone where your a week away and trying to tell yourself that its the right thing to now. I'd say trust your instincts and the fact that your on boards seeking reassurance say to me that your instincts are telling you to be careful.
If it was me i would not do it, nobody, even the governmow knows how this mess will turn out.
Let what you have be your own.

[Jackass]

There is absolutely zero chance of Ireland leaving the euro zone, and a very slim chance of a currency collapse, and no matter what happens in the vote, this legislation (or by another name) will go through.

I don't see why it wouldn't pass a referendum though..

In terms of savings or investing in property, you can't ask for that kind of advice on an internet forum, but if you want 2 cents on market conditions, you're buying in and around the right time. Perhaps for another 12 months. There may be an over correction in market prices where you will find a bargain, but don't expect any significant capital gains on property investments over the next decade at least.... not massively off the return rate from inflation plus any minimal margin, depending on the rate of growth, but property is not an investment option for a good few years yet, unless it's for a yield off rent, which should now cover any mortgage payments etc.

krd

[Jackass] wrote: »

property is not an investment option for a good few years yet, unless it's for a yield off rent, which should now cover any mortgage payments etc.

If you want to measure the value of property by rent yields, property is still massively over valued.

The only thing that could make a return on property at the moment is another fools gold property credit bubble.

nacimroc

The only reason I asked about rental income was if we had to emigrate and leave the house to rent. Sorry, I should have clarified. We are buying it to live in it and can't see us selling within the next 10+ years anyway.

I'm not too pushed on the prices getting lower as IMO we are 5 years into a recession, prices are about half the building cost where I live and rent is higher than the mortgage repayments. Even if prices drop 10+% this year, that loss is still cheaper than our yearly rent. The only problem I see is if the whole thing came crashing down, which looks semi stable at the moment.

But having savings if the Euro did go would surely be wiped out by massive inflation, devaluing the new currency etc etc? So I'm better off to be in debt ?

RichardAnd

nacimroc wrote: »

So I'm better off to be in debt ?

I don't think that can ever be the case to be honest. As someone mentioned above, regardless of what happens, you are tied into the system once you put yourself in serious debt by buying the house. It may end up that it was a good decision but equally, you could loose your job in a few years, the euro could collapse or any other number of unforeseen issues could arise. The only constant is that you will be dependent on events that you can't control so you need to decide if you're comfortable with that.

GSF

nacimroc wrote: »

The only reason I asked about rental income was if we had to emigrate and leave the house to rent. Sorry, I should have clarified. We are buying it to live in it and can't see us selling within the next 10+ years anyway.

Rental potential depends totally on location and property type. Apartments dont rent well, houses rent easier. If its in Dublin (in a reasonable area) the rental market is still good. If its in the country, not so good.

FreudianSlippers

Your debt will be just converted into the new, worthless currency. Buy a house if you can afford it, not based on whether the Euro will go bust.

johnnyskeleton

FreudianSlippers wrote: »

Your debt will be just converted into the new, worthless currency. Buy a house if you can afford it, not based on whether the Euro will go bust.

I don't see how that necessarily follows. International lenders who will still operate in euro would have no interest in taking new currency, and I don't see why the banks should accept it either, unless there is some form of parity arrangement.

FreudianSlippers

johnnyskeleton wrote: »

I don't see how that necessarily follows. International lenders who will still operate in euro would have no interest in taking new currency, and I don't see why the banks should accept it either, unless there is some form of parity arrangement.

What I meant was that if you go to an Irish bank and take out a loan, if Ireland is out of the Euro, you just have to pay your loan off in the new currency.

If it's in Euro with some other European bank, then you have to pay the same way you would if you had a loan in GBP.

GSF

For sentimental reasons I'd like to have maybe one €5, €10, €20 and €50 note if the euro collapses. The rest I'd like to be holding in a somewhat stonger currency.

FreudianSlippers

GSF wrote: »

For sentimental reasons I'd like to have maybe one €5, €10, €20 and €50 note if the euro collapses. The rest I'd like to be holding in a somewhat stonger currency.

The Euro aint goin' nowhere... the question is where are we going?

GSF

FreudianSlippers wrote: »

The Euro aint goin' nowhere... the question is where are we going?

Its papering over the cracks for the moment - lending money from the ECB to banks to buy Spanish & Italian bonds but fundamentally the same problems that were there last December are still there today and next year for that matter. Question is, when do they flare up again?

nacimroc

FreudianSlippers wrote: »

The Euro aint goin' nowhere... the question is where are we going?

I think its possibly only a couple of badly timed announcements away from getting very weak at the knee. Greece going mental (expected to happen?) and bad news from Italy and Spain (kind of expected to happen at some stage?) all within a few weeks of each other could start the house of cards to tumble in my opinion so thats my hesitation.

But Dr Expired is probably right. I'm just getting nerves this close to signing.

(Disclaimer: I have no idea about ecomonics and all opinions should be taken as if your beside me in a pub whilst drunk )