Advice needed - potential first time buyer (property)

killer_penguin

Hi all,

Potential first time buyer here. Zero experience in the area so looking for some advice from those here who have taken this route in the past.

Background:

Have 25k deposit to work with Looking for something lower maintenance like a 2 bed apartment Single applicant, no dependents, 2nd room would likely be rented out Have had 1 meeting with permanent TSB about mortgage application, got the impression that they would not be inclined to mortgage a first time buyer for a property like this Looking for property like this in the Cork City/Subarb area up to 160k Unsure if I want commit to saving/going for a larger accommodation like a small house Quite ok with the idea of selling up and moving to another accommodation in a few years (not looking to bed in with 1 property for life)

Advice needed:

Is it common for Mortgage providers to not offer a mortgage for an apartment for a 1st time buyer? If you have bought a multi room apartment before, any advice for a first time buyer with one? Any general advice for a first time buyer in this scenario you could think of would be appreciated

I will probably have some more questions if the thread gets going

Thanks!

davindub

killer_penguin wrote: »

Hi all,

Potential first time buyer here. Zero experience in the area so looking for some advice from those here who have taken this route in the past.

Background:

Have 25k deposit to work with Looking for something lower maintenance like a 2 bed apartment Single applicant, no dependents, 2nd room would likely be rented out Have had 1 meeting with permanent TSB about mortgage application, got the impression that they would not be inclined to mortgage a first time buyer for a property like this Looking for property like this in the Cork City/Subarb area up to 160k Unsure if I want commit to saving/going for a larger accommodation like a small house Quite ok with the idea of selling up and moving to another accommodation in a few years (not looking to bed in with 1 property for life)

Advice needed:

Is it common for Mortgage providers to not offer a mortgage for an apartment for a 1st time buyer? If you have bought a multi room apartment before, any advice for a first time buyer with one? Any general advice for a first time buyer in this scenario you could think of would be appreciated

I will probably have some more questions if the thread gets going

Thanks!

Might be a idea to apply for sanction in principle with a bank that offers it, aib and bank of ireland do. At least then you know the budget you are working with.

Apartments are less valuable in theory because of the title (leasehold) and the extra costs that are incurred including management fees and leasehold renewal fees, i think the banks will not mortgage a leasehold with <70 years remaining. You can renew them, but obviously the less years remaining, the greater the renewal fee.

They are generally suited for shorter term ownership either as a rental property or someone who can offset the cost of finance against the rent they were previously paying and hopefully the market value increases before they sell. But you also need to think 5-10 years from now, can you sell it easily, rent it out easily?, etc. So you really aim to reduce your risk by purchasing in high demand areas or soon to be high demand areas. If in a low demand area, its a much bigger risk.

athtrasna

Your salary is key here. Does 3.5x your salary enable you to pay 160K bearing in mind you'll also need money for legal fees etc

riclad

Say you buy an apartment for 100k ,your expenses will be stamp duty ,
1k, plus legal fees 1k approx.= 2k total.Maybe 1k more to buy furniture
Every year you have to pay service charges plus property tax .
3.5 times 25k= 89k ,if you cant find a property for 89k ,you,ll have to save more .

http://www.daft.ie/cork/houses-for-sale/charleville/12-holy-cross-place-charleville-cork-1308574/
or buy some thing outside cork city and commute to work.
To buy a 140 k property you,ll need 50K deposit approx.
if you buy a 2bed house in good condition ,you,ll find the annual maintenace cost is less than 1k.

killer_penguin

athtrasna wrote: »

Your salary is key here. Does 3.5x your salary enable you to pay 160K bearing in mind you'll also need money for legal fees etc

Thanks for the reply My annual salary x 3.5 is approx 170k, have money aside from the deposit for approx fees

killer_penguin

riclad wrote: »

http://www.daft.ie/cork/houses-for-sale/charleville/12-holy-cross-place-charleville-cork-1308574/
or buy some thing outside cork city and commute to work.
To buy a 140 k property you,ll need 50K deposit approx.
if you buy a 2bed house in good condition ,you,ll find the annual maintenace cost is less than 1k.

Do you mean for an apartment purchase I would likely need 35% deposit? (50k/140k)?

killer_penguin

davindub wrote: »

Might be a idea to apply for sanction in principle with a bank that offers it, aib and bank of ireland do. At least then you know the budget you are working with.

Thanks for the reply I have not heard of sanction in principle, will inquire about it next time though

davindub wrote: »

Apartments are less valuable in theory because of the title (leasehold) and the extra costs that are incurred including management fees and leasehold renewal fees, i think the banks will not mortgage a leasehold with <70 years remaining. You can renew them, but obviously the less years remaining, the greater the renewal fee.

Cool - was thinking of a new/recent build apartment. Am I correct in saying this type of build is less likely to have a leasehold agreement for buying outright? (I'm assuming for some reason that leaseholds are on older accommodations in city areas - could be way off the mark here though)

davindub wrote: »

They are generally suited for shorter term ownership either as a rental property or someone who can offset the cost of finance against the rent they were previously paying and hopefully the market value increases before they sell. But you also need to think 5-10 years from now, can you sell it easily, rent it out easily?, etc. So you really aim to reduce your risk by purchasing in high demand areas or soon to be high demand areas. If in a low demand area, its a much bigger risk.

Looking to purchase in a high demand area, was thinking about the risk/resale opportunities in the future like you said. Shorter term ownership is something I'm ok with also

riclad

Think 3.5 times income = amount i can borrow ,but bank may only give you
80-90 per cent of the house value.They look at can you pay the loan if interest rates went up by 2 per cent.

Glass fused light

killer_penguin wrote: »

Cool - was thinking of a new/recent build apartment. Am I correct in saying this type of build is less likely to have a leasehold agreement for buying outright? (I'm assuming for some reason that leaseholds are on older accommodations in city areas - could be way off the mark here though)

You are not looking for a home for life so you are investing in property.
Have a read of this http://www.citizensinformation.ie/en/housing/owning_a_home/home_owners/management_companies_for_apartment_blocks.html
If you still don't know what you are buying you should go to a solicitor and get them to explain the different choices or just stick to freehold houses. You need to figure out the cost and potential income from the second bedroom and as a single, the usual of questions of what happens if you can't work to cover the mortgage for a period of time etc

All apartments have a shared ownership structure.
With your contract you buy 'access' to the interior of the apartment and normally a share in the physical structure ie a company which owns the building (could be multiple buildings and surrounding lands) You pay an agreed fee to the company each year and this is used to pay for day to day expenditure and build up a cash reserve for future costs.

You are basically investing in a property with random strangers, so you need to be aware of what you would be prepared to do to make your investment work if there are problems. Basic requirement would be to pay the fees and turn up to vote at the AGM but you may have to become a part of the management of the company to protect your investment. If you are buying into an existing development you need to figure out if it is in a healthy financial position and how proactive the management are in looking after the property.

Michael D Not Higgins

killer_penguin wrote: »

Do you mean for an apartment purchase I would likely need 35% deposit? (50k/140k)?

Unless you're going for a one bed, no. Most banks will only lend 70% of the value of a one bed, so anything 2 bed and above will be 10% to 220k and 20% above that for a first time buyer.

Considering your stated income and deposit and your price range, I'm not sure why the banks aren't more positive in lending to you. Have you applied for approval in principle yet or just a meeting to discuss?

riclad

Depends on where you are looking at to buy ,
3.5 25k= 87k, approx it would be hard to find a 2 bed apartment going for 90k,100k
unless you are going to buy in athlone, longford ,or some other rural area .

bleary

riclad wrote: »

Depends on where you are looking at to buy ,
3.5 25k= 87k, approx

what are you talking about?? Their salary is 48,000 approx with 25k deposit?

My first property purchase was an apartment, 2 bed.

I wouldn't consider them overly suitable for renting the spare room out as there typically is only one living room are which often is open to the kitchen.

If there's no en-suite I reckon they are 100% not suitable for "house share" type arrangements.

Regarding the annual management fee, mine is under €1000 so €20/week ish. I consider that value for the insurance, refuse, upkeep of the greens & lighting etc. It's not wasted money. The complexes with elevators and/or underground parking are of course more expensive management fee wise.

No grass cutting etc is worth a lot to me as I have no interest in such things.

killer_penguin

Augeo wrote: »

My first property purchase was an apartment, 2 bed.

I wouldn't consider them overly suitable for renting the spare room out as there typically is only one living room are which often is open to the kitchen.

If there's no en-suite I reckon they are 100% not suitable for "house share" type arrangements.

Regarding the annual management fee, mine is under €1000 so €20/week ish. I consider that value for the insurance, refuse, upkeep of the greens & lighting etc. It's not wasted money. The complexes with elevators and/or underground parking are of course more expensive management fee wise.

No grass cutting etc is worth a lot to me as I have no interest in such things.

Thanks for this reply That makes sense about house share arrangements, I'll have to review

killer_penguin

Michael D Not Higgins wrote: »

Unless you're going for a one bed, no. Most banks will only lend 70% of the value of a one bed, so anything 2 bed and above will be 10% to 220k and 20% above that for a first time buyer.

Considering your stated income and deposit and your price range, I'm not sure why the banks aren't more positive in lending to you. Have you applied for approval in principle yet or just a meeting to discuss?

Thanks for the reply

I only spoke to the 1 bank and just got the impression from their replies when I spoke about apartment purchases so I said I'd ask here.

I guess I need to find the time to speak to a few and see if its the same across the board. Seems to not be though based on some responses here which is promising :pac: