20k mortgage, is it worth it?

wintercamel

Hi,
This might be answered in the past or, better, there is some tool online solving this.
Basically, I would be able to put together 100/120 k for a small apartment for myself. That would dry out my savings almost completely. Still, that would be my money and I wouldn't have any debt.
An alternative could be taking up a mortgage of 10/20k. Apart from having extra money available for emergencies, and not to have to close all my actual investments, is there any real benefit for a first time buyer on having a mortgage instead of paying everything with his savings? Perhaps tax relief?
Thank you!

drunkmonkey

if you've the cash pay for it. Cash is king, if it's advertised for 120k and you've cash offer 80 and keep some of your savings. Your in a great position to play hard ball.

Lantus

for that money you could buy a house or land. With cash you are in an incredible position. Be incredibly bold and cheeky and make offers nice and low (and then creep up at a snails pace.)

alexlyons

you can't be to low with your offers, worst case they say no.

just remember, don't be quick to up it, say you'll come back and see what you can scrape together. if they know its easy for you to up it, they'll keep saying no until it becomes tough for you.

Ryaner

Most of the banks have minimum amounts on the mortgages. I've seen 50k mentioned in a few places. There is nothing to stop you getting a 50k mortgage, then paying off a large chunk of it say a month later:P

One bit of advise, not drop all your savings into an illiquid asset. There is other costs involved beyond the initial purchase, and what would happen if you lost your job/got sick/crashed your car/other random event a few months after moving in, you'd have little savings to fall back on.

riclad

There are many 2bed apartments, on the market .BUY in a small block,say 30 units, no lifts,just stairs, no garage , small block = lower maintenance,probably lower service charge.
Remember you can now buy an old house in an area like ballybough, for 110k.IT, will likely need new wallpaper ,painting, but at least you ll have on street parking.
MY friend bought an apartment ,neighbours moved in below, renters, she had to sell up , they,d have partys 3 times a week.Too noisy.
With apartments, you have no control ,whos,above, you , beside you .
IF you have a bad neighbour , you may be stuck,in negative equity.
Prices on apartments will go down another 20 per cent at least.
WE have a surplus of apartments ,enough for the next ten years .IF you put 8k into
a credit union they,ll lend you 20k.
I,M not sure theres any good reason to buy an apartment unless you want to live in a certain area, eg rathmines, i dont think theres any cheap houses on sale in rathmines.
You have to consider how much rent you are paying per month.
are you buying in dublin.OR another city.

SOME large blocks in dublin are half empty ,at some point there will be a crisis,
eg service charges will not cover the maintenance charge.

killers1

wintercamel wrote: »

Hi,
This might be answered in the past or, better, there is some tool online solving this.
Basically, I would be able to put together 100/120 k for a small apartment for myself. That would dry out my savings almost completely. Still, that would be my money and I wouldn't have any debt.
An alternative could be taking up a mortgage of 10/20k. Apart from having extra money available for emergencies, and not to have to close all my actual investments, is there any real benefit for a first time buyer on having a mortgage instead of paying everything with his savings? Perhaps tax relief?
Thank you!

There is a minimum loan amount an it's usually around 40/50k. You can borrow less than 50% ltv @2.84% variable. I'm sure you find can investment products that pay a higher net return after DIRT so it would make sense to borrow and keep some savings... You can always make capital repayments further down the road if lending rates start to creep up...

MagicMarker

I don't see how "cash is king", why is cash any different to an approved mortgage?

killers1

MagicMarker wrote: »

I don't see how "cash is king", why is cash any different to an approved mortgage?

It's not....

StillWaters

I would second keeping some cash aside, and going for a low mortgage, maybe 50k. An offset mortgage would be ideal for you, but I'm not sure if they are available on the Irish Market any more.

wintercamel

riclad wrote: »

Prices on apartments will go down another 20 per cent at least.

Not sure if this prediction is nationwide or only Dublin area. I'm renting in Cork and looking for a 2/3 bed apartment in the same city. Of course the risk of ending up with negative equity doesn't get me excited for the big step, but rents are still quite high in city centre and it would look to me like a way to save some euros.
Thank you for all the replies.

riclad

I dont know bout cork, prices will continue to drop in dublin,look at daft ie houses cork 120k max before you buy an apartment.CERTAINLY in dublin theres older houses ,going for reasonable prices.These would need decorating, modernisation.

mazdamps

wintercamel wrote: »

Hi,
This might be answered in the past or, better, there is some tool online solving this.
Basically, I would be able to put together 100/120 k for a small apartment for myself. That would dry out my savings almost completely. Still, that would be my money and I wouldn't have any debt.
An alternative could be taking up a mortgage of 10/20k. Apart from having extra money available for emergencies, and not to have to close all my actual investments, is there any real benefit for a first time buyer on having a mortgage instead of paying everything with his savings? Perhaps tax relief?
Thank you!

If I had 120k I would be on a plane to a country that offered dirt free savings account.

Switzerland, Andorra, Luxembourg spring to mind.

http://en.wikipedia.org/wiki/Offshore_bank

4 % tax free account on 120k is nearly 5k per year or 420 euro a month.

That would take a good chunk out of mortgage payment/rent and you would keep your money

Win win.

mazdamps

/ wrong thread:)

Marcusm

MagicMarker wrote: »

I don't see how "cash is king", why is cash any different to an approved mortgage?

It is if approved mortgages fail the purchase which has been known to happen.

EricPraline

MagicMarker wrote: »

I don't see how "cash is king", why is cash any different to an approved mortgage?

Because most banks will still make people jump through multiple hoops even if a mortgage is "approved". Currently there is a world of difference between "approved in principle" versus receiving your final draw down from an Irish bank. At the very least, the amount of time between going from the former to the latter is out of a vendor's hands. Most Irish banks want to give the perception of providing mortgages, but aren't particularly swift about actually doing the loathsome deed :rolleyes:

killers1

Marcusm wrote: »

It is if approved mortgages fail the purchase which has been known to happen.

You mean if the 'approved' mortgage isn't actually approved??

killers1

EricPraline wrote: »

Because most banks will still make people jump through multiple hoops even if a mortgage is "approved". Currently there is a world of difference between "approved in principle" versus receiving your final draw down from an Irish bank. At the very least, the amount of time between going from the former to the latter is out of a vendor's hands. Most Irish banks want to give the perception of providing mortgages, but aren't particularly swift about actually doing the loathsome deed :rolleyes:

I'm pretty sure magicmarker meant an approved mortgage, loan offered and ready to draw down in which case it is exactly the same as cash.... approval in principle wasn't mentioned anywhere...

EricPraline

killers1 wrote: »

I'm pretty sure magicmarker meant an approved mortgage, loan offered and ready to draw down in which case it is exactly the same as cash.... approval in principle wasn't mentioned anywhere...

Actually he wasn't clear. My point was that it is amazing how many purchasers still confused approval in principle with a letter of offer. And I still wouldn't regard the latter being the same as cash, until you have the cheque in your hand. But I suppose it depends on how much you trust your bank.

Francie Barrett

Ryaner wrote: »

There is nothing to stop you getting a 50k mortgage, then paying off a large chunk of it say a month later:P

Unless it's a fixed rate mortgage, then there would be a penalty.

Victor

mazdamps wrote: »

If I had 120k I would be on a plane to a country that offered dirt free savings account.

Switzerland, Andorra, Luxembourg spring to mind.

http://en.wikipedia.org/wiki/Offshore_bank

4 % tax free account on 120k is nearly 5k per year or 420 euro a month.

That would take a good chunk out of mortgage payment/rent and you would keep your money

Win win.

Please don't advocate breaking the law.

mazdamps

Victor wrote: »

Please don't advocate breaking the law.

I didn't know it was illegal to do that.

Could someone educate me please.

StillWaters

mazdamps wrote: »

Victor wrote: »

Please don't advocate breaking the law.

I didn't know it was illegal to do that.

Could someone educate me please.

Its not illegal to have an overseas account, but it is illegal not to pay DIRT on it.
There was a huge scandal about this (showing my age), and Revenue have clamped down on it. Only a fool would try it.