Money/Mortgage Advice

TeddyRuxpin

Hi all,

This is a stretch but I hoping that I'll come across someone here who's already been through this. Our landlady has forced mine & my girlfriend's hands early. Next month out rent (Dublin 14) will be increasing by €100, maybe €150 so we'll have to move into somewhere smaller and now we've started to seriously think about our future.

Our situation is that we are a couple in our early 30's (no kids), with a combined income of €85K, no savings and one loan (due to finish payment in 1 year). We've been trying to save to get married and one day build/buy a home out of the city but can't seem to save anything at all. In an effort to save, we've stopped going out, don't go on holidays etc. but can't seem to manage more than a couple of hundred a month. We've been steadily paying rent of €1,200 per month for the last few years, which is more than anyone in our families is paying off their current mortgage.

I'm completely clueless about these kinds of things but is there anywhere we could go to realistically discuss our options? Who banks laugh us out of their offices? Would the steady rent payments account for anything or do they just look at savings?

Any help or advice would be extremely welcome. Thank you.

murphaph

My advice is to contact killers1 on this forum and talk with him. He has great reviews. If he can't advise then nobody can. I reckon the bank will seriously question why a double income no kids family can't save regularly though. The money is going somewhere and it's not all on rent. Remember your mortgage payments are stress tested as well.

bmwguy

You have at least 5k a month coming in after tax, 1200 goes on rent. Other bills etc you have at least 3k left over. You say you dont go out or holidays but you are spending 2500 a month between you. Its going on something.

ArnieSilvia

You need 10% of the value of house ready plus stamp duty (1% I think) and solicitor fees (2k), sometimes also property management fees paid upfront.

In our case, buying a 230k house with contents (showhouse) we had to have around 43k. Bank would not give mortgage for contents so it had to be paid in cash, but properties rarely come with contents so these would have to be bought anyway.

We have family of 4 and with similar income as yours we save 2k a month so it can be done. Just ask yourself a question whenever you're spending any money if you REALLY need this or is this only a nice thing to have. Look for deals, buy online etc etc.

We used to rent for 1050 while getting ready to buy. Crazy rent increases forced us to buy and I'd expect a hike to 1200 at next contract. I just think that for the financial safety of family owning is a better choice - I didn't want to face situation where It becomes too expensive to live in Dublin and I don't want to live in the countryside anymore. Our mortgage is 1050 and if we wanted to rent something of same standard it'd cost 1500 so all in great deal.

When buying, think about proximity of schools, ideally within walking distance as if you want to have kids in the future this can be a pain sometimes.

miezekatze

Before we bought our house, we made a list of all our regular monthly outgoings (including annual ones divided by 12). Any estimates should be on the high side. We also included a budget for groceries and other purchases. That should give you a good overview of where your money is going and what you can realistically afford to pay on a mortgage every month. We are on a similar income and used to pay the same amount in rent that you're paying, you should be able to save a good bit more than what you're currently saving. You need to find out where all your money is going and get a better overview of your finances.

The banks will look at your rent payments and take them into account, but you will still need to have a deposit saved before you will be able to buy anything.

Trish56

Of course the lender will take into consideration that you are paying rent of €1200 per month as this is proven repayment capacity. Your only problem is that you do not have a deposit saved circa 8%/10% of the purchase price and 1% stamp duty and approx. 2k for legal. Is there a possibility you can get a gift? You need to do out a budget plan as with your income you should be able to save at least 1k per month. Perhaps you should consider paying for cheaper accommodation or move in with family and saving 2k or more per month deposit

TeddyRuxpin wrote: »

Hi all,

This is a stretch but I hoping that I'll come across someone here who's already been through this. Our landlady has forced mine & my girlfriend's hands early. Next month out rent (Dublin 14) will be increasing by €100, maybe €150 so we'll have to move into somewhere smaller and now we've started to seriously think about our future.

Our situation is that we are a couple in our early 30's (no kids), with a combined income of €85K, no savings and one loan (due to finish payment in 1 year). We've been trying to save to get married and one day build/buy a home out of the city but can't seem to save anything at all. In an effort to save, we've stopped going out, don't go on holidays etc. but can't seem to manage more than a couple of hundred a month. We've been steadily paying rent of €1,200 per month for the last few years, which is more than anyone in our families is paying off their current mortgage.

I'm completely clueless about these kinds of things but is there anywhere we could go to realistically discuss our options? Who banks laugh us out of their offices? Would the steady rent payments account for anything or do they just look at savings?

Any help or advice would be extremely welcome. Thank you.

phormium

Spending diary! Keep it religiously for at least a month and see where on earth your money is going. You have a very good income and even allowing for rent more than sufficient to be able to save. Have you an extreme commute that uses an awful lot of petrol? or some other drain on your finances?

I would sort out your spending patterns before I would even contemplate taking on a mortgage.

I'm afraid if I was one of your parents I would be very slow to give a gift without knowing what on earth you have been doing with your own money and whether or not you can reign in the spending to allow for paying for a house and it's associated costs.

Idbatterim

stopping going out at all and no holidays on that income sounds pretty drastic to be honest and what quality of life or joy is left with that gone?

The below is available to rent for E995 asking, might be worth moving, if you could save E250 per month, its E3000 per year...

http://www.daft.ie/lettings/28-the-parklands-castleside-drive-rathfarnham-dublin/1437183/

TeddyRuxpin

To everyone who offered me advice, thank you so much. I really appreciate it.

The first thing I've done is created a spend journal that we're both going to start using, hopefully we'll find out where our money is going. Just by sitting down and filling in what I've done so far this month I can already see where we can save.

I wish some of your other advice was doable, specifically the move in with family or receive a 'gift' but unfortunately, neither of us have family in/near Dublin or have any family member with that kind of spare cash to lend us.

Thanks again.

The_Morrigan

OP when I was buying my place I used a mobile app/desktop budget tool to track my money. It's the little day to day stuff that threw me, like five days of buying coffee on the way to work, the random bottles of drinks for the commute home, ordering takeaway instead of picking up a pizza on the way home etc.
Everytime I spent cash I logged it on my phone and then sync'd that to the desktop budget application - it was a serious eye opener.

Drop me a pm if you wish to use the same product - it's free btw.

AaronB

question about the deposit, does it matter where the money comes from? Say if a family member was willing to front it, will the banks question it etc?

Trish56

AaronB wrote: »

question about the deposit, does it matter where the money comes from? Say if a family member was willing to front it, will the banks question it etc?

You will need to provide a letter from the relative confirming that they are gifting you x amount towards the purchase of your new home which is non repayable and they will have no interest now or in the future in the property.

AaronB

Thanks for that!