The Government is encouraging young couples tempted to buy a house to act now!

davet82

http://www.independent.ie/business/personal-finance/property-mortgages/firsttime-home-buyers-told-to-take-5000-deal-of-a-lifetime-3258938.html

THE Government is warning young couples tempted to buy a house to act now -- or lose out on a €5,000-a-year "offer of a lifetime".

In last year's Budget, Finance Minister Michael Noonan announced a mortgage interest relief deal worth as much as €5,000 a year for first-time buyer couples.

So is this a deal of a lifetime?

Kosseegan

Whatever the government advises you to do regarding house purchase, do the complete opposite!.

djimi

Youre basically gambling on buying now and getting "up to" €5k a year in relief for 6 years, or holding out for a couple of years and seeing if the same house becomes available for €30k less than it is now. I think Id still prefer to wait it out if Im honest...

L1011

The bulk of the value of this will likely fall off asking prices after it goes anyway

GetWithIt

The same old talking heads.

Zamboni

A manufactured dead cat bounce.

I believe property prices will plummet in 2013.

I also predict that in a number of years that the people who are rushing for this relief will use this as a claim for rebate/assistance because the govt told them to buy.

GetWithIt

And just for accuracy it isn't 5k for 6 years. It's UP TO 2.5K per person for 5 years.

Mortgage Interest Relief is an annualized relief. There are only 2 months left this year. I very much doubt anyone in the process of buying now could get more than 1 mortgage payment before the end of the year.

MIR is doubled for couples. A single FTB only gets half the amount quoted.

http://www.citizensinformation.ie/en/housing/owning_a_home/buying_a_home/mortgage_interest_relief.html

Ceilings

The amount of mortgage interest on which you can get relief is subject to upper limits or ceilings. The ceiling that applies to you depends on whether you are single; married; widowed; in a civil partnership; or a surviving civil partner.

The following are the ceiling amounts for tax years 2011 and 2012:
Single Widowed/Surviving civil partner/Married/in a civil partnership
First-time buyer €10,000 €20,000
Non-first-time buyer €3,000 €6,000

To calculate what this is worth to you each year, get the correct percentage of the ceiling amount that applies to you.

For example, married first-time buyers on the second tax year of their mortgage get relief at 25% of €20,000. Therefore, the maximum amount by which their yearly mortgage interest can be reduced is €5,000.

And lastly the key word is UP TO. 25% (12.5% for singleFTB) of €20,000 Interest is the relief. If the size of your mortgage (or the rate) results in you paying less than 20K in interest then that is your relief.

As an example: on a mortgage of 250K @ 4%. You'd pay more or less 10K interest. 12.5% of 10K is 1.25K. Multiplied by by 5 gives a saving of 6.25K.

6.25K <> 30K.

My numbers aren't entirely accurate but they're more accurate than the ministers.

the groutch

"Vested interests in talking-up of market shocker"

ABajaninCork

Buying a house now, just to save 5k when the prices are likely to fall even more in the NY???

Thanks, but no thanks. This Govt seem to think Joe Schmoe is as stupid as they are!!

Idbatterim

bloody hell, read that article earlier, sounds like something from during the boom! BUY BUY BUY, before its too late! Another 3 years of austere budgets to come, who knows what will happen to CPA... Yeah im sure prices are about to start booming again any decade now :rolleyes: Buy before you miss the boat of further falling prices LOL

Messi54

GetWithIt wrote: »

And just for accuracy it isn't 5k for 6 years. It's UP TO 2.5K per person for 5 years.

Mortgage Interest Relief is an annualized relief. There are only 2 months left this year. I very much doubt anyone in the process of buying now could get more than 1 mortgage payment before the end of the year.

MIR is doubled for couples. A single FTB only gets half the amount quoted.

http://www.citizensinformation.ie/en/housing/owning_a_home/buying_a_home/mortgage_interest_relief.html


And lastly the key word is UP TO. 25% (12.5% for singleFTB) of €20,000 Interest is the relief. If the size of your mortgage (or the rate) results in you paying less than 20K in interest then that is your relief.

As an example: on a mortgage of 250K @ 4%. You'd pay more or less 10K interest. 12.5% of 10K is 1.25K. Multiplied by by 5 gives a saving of 6.25K.

6.25K <> 30K.

My numbers aren't entirely accurate but they're more accurate than the ministers.

Completely agree with your sentiment, just pointing out that the maximum amount for a single person to claim is 25% of E10,000 -
2012 - (if you buy now, possibly get one month- 2,500 / 12 = e208
2013 - e2,500
2014 - e2,500
2015 - e2,250 (22.5% for years 3-5)
2016 - e2,250
2017 - e2,250,
Grand total possible for single person of E11,958, meaning a mortgage of about 250K @ 4.2%.
or E 23,916 for a couple with a mortgage of 500K @ 4.2%.

In both cases this is a relief of about 4.78% of the purchase price. So if you believe property prices will drop by more than 4.78% probably best holding off until the new year and let this artificial support pass by with the inevitable slump to follow next year.

gerire

ABajaninCork wrote: »

This Govt seem to think Joe Schmoe is as stupid as they are!!

I've seen queues out side of houses, much bigger than I ever saw in the height, to view a 3 bed in SCD.

I know of people who have gotten into bidding wars. You can only advise them buy they wanted to rush through buying before year end.

I also know of estate agents who were moving a lot of old stock very easily since march.

As they say, with a fool and his money....

Glenbhoy

Messi54 wrote: »

Completely agree with your sentiment, just pointing out that the maximum amount for a single person to claim is 25% of E10,000 -
2012 - (if you buy now, possibly get one month- 2,500 / 12 = e208
2013 - e2,500
2014 - e2,500
2015 - e2,250 (22.5% for years 3-5)
2016 - e2,250
2017 - e2,250,
Grand total possible for single person of E11,958, meaning a mortgage of about 250K @ 4.2%.
or E 23,916 for a couple with a mortgage of 500K @ 4.2%.

In both cases this is a relief of about 4.78% of the purchase price. So if you believe property prices will drop by more than 4.78% probably best holding off until the new year and let this artificial support pass by with the inevitable slump to follow next year.

Not too many qualify for a 500K mortgage nowadays, if they do, joint income is probably about 150K.

gerire

gerire wrote: »

I've seen queues out side of houses, much bigger than I ever saw in the height, to view a 3 bed in SCD.

I know of people who have gotten into bidding wars. You can only advise them buy they wanted to rush through buying before year end.

I also know of estate agents who were moving a lot of old stock very easily since march.

As they say, with a fool and his money....

Maybe I'm a fool but I'm buying at the moment. This is a family home, and the benefit of the current scheme for my wife and I, and the fact that we won't be paying rent anymore is quite attractive. We had to bid a little for our house, nothing dramatic (albeit more than we had hoped) - however it's re sale value is good.

We have saved a fairly substantial deposit so our mortgage terms are good. I don't think buying now is a uniformly "bad idea", and we *are* pushing the sale to close before December 31st.

Just wanted to offer another perspective on things.

Mr. Loverman

Deleted User wrote: »

the benefit of the current scheme for my wife and I, and the fact that we won't be paying rent anymore is quite attractive

I'm not trying to be an ass, but could you explain how a) you will save money with this scheme and b) you will save money by not renting any longer.

I think you'll find your logic is faulty...

By all means buy if you want to buy, but don't use faulty logic.

quad_red

Gotta say - having the fear big style at the moment.

We've been waiting for a few years now. Have deposit, have been waiting waiting waiting. Have been promising the mrs that the market in Dublin would continue to slide and it has.

But things *are* moving now. In the SCD there is so little in the areas we're interested in and stuff is selling for more than it was a few months ago.

I'm just hoping that Dublin isn't different this really is a dead cat bounce.

Cos I'm starting to sweat now!

Mr. Loverman

quad_red wrote: »

But things *are* moving now.

Temporarily.

Ask yourself this:

Are the Irish and European economies getting better or worse?

quad_red

Mr. Loverman wrote: »

Temporarily.

Ask yourself this:

Are the Irish and European economies getting better or worse?

I know - things are still sliding.

And if I was in anyplace but Dublin I would be far more assured.

But there is so little actually for bloody sale in the areas we're looking at. And I'd say there is now something like 50 per cent less than there was six months ago. Most people still have jobs and there are allot of people who have been sitting on the fence like us for the last few years.

I don't fear there will be any sort of major splurge of activity. I am just afraid the negative equity situation will make the vast majority of potential sellers stay where they are meaning a huge constriction of supply. And this limited supply will boost prices.

Mr. Loverman

Mr. Loverman wrote: »

I'm not trying to be an ass, but could you explain how a) you will save money with this scheme and b) you will save money by not renting any longer.

I think you'll find your logic is faulty...

By all means buy if you want to buy, but don't use faulty logic.

Ok, well in the area that we are buying, prices have gone up slightly in the last few months, but over the last year they are in an area that hasn't seen a continued dramatic decline. Even if they dip further next year - I don't envisage the numbers being huge, of course I could be mistaken.

The difference to us between drawing down a mortgage before or after December 31st comes to a not insignificant sum. Add that to what we pay in rent a year (as paying a mortgage goes somewhat towards capital, paying rent goes only to the landlord) and our house would need to devalue as much (or more) next year as it did last year for us to be in the red.

So lets say we pay 15,000 a year in rent and the mortgage relief scheme gives us 3500 back a year until 2017. I would see this as 15000 going towards an asset as opposed to just disappearing from our account and a benefit of 3500 by buying now as opposed to continuing to spend money paying our landlords mortgage and missing out on the scheme by waiting for prices to *possibly* go down more in a years time.

I don't know where the faulty logic is, however I haven't completed the sale yet so please feel free to convince me otherwise!

Ash.J.Williams

buy a few eircom shares while you're at it!

Mr. Loverman

Deleted User wrote: »

So lets say we pay 15,000 a year in rent and the mortgage relief scheme gives us 3500 back a year until 2017. I would see this as 15000 going towards an asset as opposed to just disappearing from our account and a benefit of 3500 by buying now as opposed to continuing to spend money paying our landlords mortgage and missing out on the scheme by waiting for prices to *possibly* go down more in a years time.

All the (big) signs point to house prices continuing to slide for years to come. I won't regurgitate every reason, but basically the economy is screwed, the government is effectively bankrupt and still living beyond its means, taxes will continue to increase while wages will continue to decrease...

As I said, buy if you want to buy, but the odds are heavily in favour of house prices continuing to drop.

Mr. Loverman

Mr. Loverman wrote: »

All the (big) signs point to house prices continuing to slide for years to come. I won't regurgitate every reason, but basically the economy is screwed, the government is effectively bankrupt and still living beyond its means, taxes will continue to increase while wages will continue to decrease...

As I said, buy if you want to buy, but the odds are heavily in favour of house prices continuing to drop.

In parts of Dublin there aren't BIG signs that house prices will continue to fall. And even if they do slide more, I've already indicated that we can accommodate a fall greater than last year and still work out better.

Taxes will go up, the economy isn't doing well but my salary has gone up the last two years so your statements whilst not inaccurate - is not uniformly applicable.

The point I'm trying to make is that for a growing number of people, there isn't much risk buying now, and much of the risk is heavily mitigated against existing costs.

Regardless, my mortgage is *way* less than my rent and I'll be in a larger house in a better area.

I don't see any flawed logic in what I'm doing, just calculated and very acceptable risk.

Momento Mori

Kosseegan wrote: »

Whatever the government advises you to do regarding house purchase, do the complete opposite!.

This.

Zamboni

quad_red wrote: »

Gotta say - having the fear big style at the moment.

We've been waiting for a few years now. Have deposit, have been waiting waiting waiting. Have been promising the mrs that the market in Dublin would continue to slide and it has.

But things *are* moving now. In the SCD there is so little in the areas we're interested in and stuff is selling for more than it was a few months ago.

I'm just hoping that Dublin isn't different this really is a dead cat bounce.

Cos I'm starting to sweat now!

You are watching a lot of people showing their cards too early, jumping the gun, and rushing for interest relief. Let them have it.
Hold firm.
Prices will drop significantly next year.
People will still die. Houses get sold.

Idbatterim

Ok, well in the area that we are buying, prices have gone up slightly in the last few months, but over the last year they are in an area that hasn't seen a continued dramatic decline. Even if they dip further next year - I don't envisage the numbers being huge, of course I could be mistaken.

The difference to us between drawing down a mortgage before or after December 31st comes to a not insignificant sum. Add that to what we pay in rent a year (as paying a mortgage goes somewhat towards capital, paying rent goes only to the landlord) and our house would need to devalue as much (or more) next year as it did last year for us to be in the red.

So lets say we pay 15,000 a year in rent and the mortgage relief scheme gives us 3500 back a year until 2017. I would see this as 15000 going towards an asset as opposed to just disappearing from our account and a benefit of 3500 by buying now as opposed to continuing to spend money paying our landlords mortgage and missing out on the scheme by waiting for prices to *possibly* go down more in a years time.

I don't know where the faulty logic is, however I haven't completed the sale yet so please feel free to convince me otherwise!

I agree with a lot of this sentiment, in the decent area's, I see supply quite a bit more limited now & prices appear to have increased, certainly am not seeing some of the absolute bargains I saw only a few months ago. Bear in mind it is selling season though and the end of mortgage interest relief is resulting in some people deciding to jump, there is also the fact that mortgage interest rates are only going to go up (this could however also be argued as another reason prices will drop). That said, I reckon wait until proper winter hits, the doom and gloom sets in i.e. budget etc, selling season ends... It was a heard mentality that lead to the prices rising, prices rising is a limited time self fulfilling prophecy, likewise with prices falling. If those who have been waiting in the wings now start moving, it doesnt matter whether I or anyone else reckon its a good move or not, it increases demand and when there is a limited supply of good family homes in good areas, the result is inevitable. I think people are to an extent scarred and scared of what happened the last time, i.e not getting in early and then being forced to pay over the odds or not being able to afford a home at all. human logic and behaviour is fairly complex...

MaxPower131

Deleted User wrote: »

Ok, well in the area that we are buying, prices have gone up slightly in the last few months, but over the last year they are in an area that hasn't seen a continued dramatic decline. Even if they dip further next year - I don't envisage the numbers being huge, of course I could be mistaken.

The difference to us between drawing down a mortgage before or after December 31st comes to a not insignificant sum. Add that to what we pay in rent a year (as paying a mortgage goes somewhat towards capital, paying rent goes only to the landlord) and our house would need to devalue as much (or more) next year as it did last year for us to be in the red.

So lets say we pay 15,000 a year in rent and the mortgage relief scheme gives us 3500 back a year until 2017. I would see this as 15000 going towards an asset as opposed to just disappearing from our account and a benefit of 3500 by buying now as opposed to continuing to spend money paying our landlords mortgage and missing out on the scheme by waiting for prices to *possibly* go down more in a years time.

I don't know where the faulty logic is, however I haven't completed the sale yet so please feel free to convince me otherwise!

How much interest will you pay in the first couple of years? Remember interest is dead money as well.

If your landlord bought this property in the last 10 years you are not paying his mortgage, just a portion of it.

MaxPower131

MaxPower131 wrote: »

How much interest will you pay in the first couple of years? Remember interest is dead money as well.

If your landlord bought this property in the last 10 years you are not paying his mortgage, just a portion of it.

Both points are correct, however the first is going to be a necessary consequence regardless of when we buy. I'd still rather be paying towards interest than into the hands of a landlord.

As for the second point - it doesn't have any bearing on me personally.

Zamboni

Deleted User wrote: »

Both points are correct, however the first is going to be a necessary consequence regardless of when we buy. I'd still rather be paying towards interest than into the hands of a landlord.

Even if it works out more expensive for you in the long run?

Zamboni

Zamboni wrote: »

Even if it works out more expensive for you in the long run?

Absolutely not which is why I've waited since mid 2008 when I first got loan approval until now to buy. I am hopeful given the circumstances outlined above that at worst we will break even and at best we will be better off buying now.

Mr. Loverman

Deleted User wrote: »

The point I'm trying to make is that for a growing number of people, there isn't much risk buying now, and much of the risk is heavily mitigated against existing costs.

But property in Dublin is still shockingly overvalued.

I know it is 50% cheaper than bubble prices, but that means nothing. You should not make a judgement based on something being cheaper than it's bubble price.

I can see you've already made up your mind anyway. Good luck with your purchase.

greecy_joe

i think now is a good time to buy in quality locations in dublin but nowhere else , i would not touch a property outside the premium locations of dublin for at least three more years , their will always be a certain number of well paid people who can afford to buy in a good location regardless of the broader economy and theese people prevent houses in the likes of D4 , D6 etc from falling through the floor , now is a great opportunity for those on modest incomes to buy in areas which were in the past beyond them , IMO

condra

There is definitely a little spike in asking prices in the areas I have been looking, (D3,5,9)

The sellers and agents are clearly wise to the tax relief rush, and are offsetting the price.

There are also fewer properties for sale in the areas I've been looking.
I'm guessing a lot of people would rather not sell their house over Christmas.

I bet come Feb/March 2013, there will be some great value out there, and a lot of people who rushed in Q4 2012 will be sick.