Buy a house - any house..

Xaracatz

Hi all

I have been working between Ireland and another country. I may need to come back to Ireland (Dublin) full time.

I have savings of approx. €30k and earnings of approx €60k per year.

If I come back to Ireland full time, I'll need a home. I really don't want to rent again, and I am thinking of buying somewhere, and then renting out later, as I would hope to be relocated again.

Is this a good idea? I just hate the thought of coming home and wasting €1,000+ a month on rent when this should / could go to mortgage repayments.

I appreciate that I'm lucky to have this saving and salary - I just don't want to waste what I've saved now

Any advice would be appreciated.

Lumen

Xaracatz wrote: »

I really don't want to rent again, and I am thinking of buying somewhere, and then renting out later, as I would hope to be relocated again.

Is this a good idea?

It's difficult to state definitely that it's a bad idea without foresight but the current tax system and central bank rules are not favourable.

You'll have to save up a fresh deposit for the next place, will get hammered by the LTI criteria, be taxed on the rental income, and have the hassle of being a landlord.

There are thousands of people trying to get out of exactly the situation you're considering getting yourself into.

Xaracatz

Thanks Lumen

This is exactly the advice I'm looking for. I do not want to spend a thousand euro on an apartment for one month - just throwing away a lot of money. This is why I think I should buy (if the banks allow me). I've been broke through renting before - I would at least like some return on what I'm paying.

Lumen

Xaracatz wrote: »

I do not want to spend a thousand euro on an apartment for one month - just throwing away a lot of money.

Renting is not dead money!

You're buying security of a different sort by avoiding a massively leveraged bet on the property market and keeping the flexibility to move around as you see fit.

The people least well served by renting are families who need to stay in one place due to the absurd inflexibility of the school system (off-topic). This is why traditionally people didn't buy until they settled down to start a family.

Xaracatz

I know there is a "renting is not dead money" argument - which may well be right. I know over here we don't buy so often, and everybody rents.

I guess I'm in the mentality that buying will eventually mean we own the property and no more monthly re-payments. My thoughts (which may be very basic) are - paying for a mortgage is getting towards owning a property, and paying rent is just paying to live there.

Sarn

Securing the mortgage depending on whether you have an Irish salary or not would be the next thing. Based on what you spent on rent it must be Dublin that you are looking to buy in. Taking into account the 3.5 multiple and your deposit of €30k, realistically you are looking at a property in the €230-240k range when stamp duty etc. are taken into account.

riclad

IF you buy in a good area its not a bet, prices may not go up, but they probably wont go down ,in say santry, dublin 2 , cabra, and you can always rent a room for extra income if you are a single person,
Who really wants to rent for 1000 euro per month for 10 years ?
thats ,over 110k .
its not like the old days when u could rent for 70 euro a week, and save for
a deposit.
And rents in dublinand other area,s are going up every year .
i,d prefer to pay 1200 a month on a mortgage than pay 1000 per month
for a rental .
As a single person you,ll need a 20 per cent deposit ,say house is 100k ,you,ll
need at least 25k saved ,
banks will expect you to live here at least a certain amount of time before you get a loan,save money every week,
put your money in aib,or tsb.
look on daft.ie for house prices .
Old houses can be cheaper but it can be harder to get a loan on a house
thats not in very good condition.

bleary

Your cost to buy will be about 5000 euro for solicitor , stamp duty , and other fees.
When you have a mortgage you are also renting money from the bank and the cost is highest at the beginning so it really depends on how long you are going to live there for.
Ongoing bills for lpt, maintenance etc need to be taken into account too.

I don't think you should buy to be honest unless you have some definite plan to live here long term .I saw this rent vs buy calculator recently, it's American but you can adjust the figures for Irish interest rates,lot etc
http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0

Xaracatz

Thanks guys for your replies.

Yes - I would be looking to buy in Dublin. I know there's a limit on how much I can borrow based on my salary. Also, as a first time buyer, I know that limits me also. I would be buying the place on my own.

Just seeking opinions really. I don't plan to live in Dublin permanently yet, but I will need to live there for a while, and if I could buy somewhere that I could later rent out - or sell to put towards a different place in the long term, it's probably time to start now - well, that's what I think.

But it's also a big decision that I don't want to rush into and regret.

But rental prices are crazy in Dublin and I just hate the thought of paying all of that out - I don't want to actually return to Dublin forever in 10 years and have to start all over again.

Going to talk to my bank tomorrow, but - as I said - just looking for thoughts.

Stheno

Will you be starting a new job when you come back?

Xaracatz

Hi

I'll be continuing in my current job - just different projects. I'll be with these guys three years by the time I come back.

thierry14

Why don't you share?

Your not going to find anywhere decent for 1000 anyway

In your situation I wouldn't buy as an investment.

Prices are starting to stabilise with the lending rules and the tax on being a landlord is madness, after tax your probably not going to break even vs mortgage.

Government are starting to meddle with property too, incentives on new builds, new rent schemes for families etc, not to mention uncertainty with Britain and the states

Debt free with savings is a good place to be

riclad

he,s buying to avoid spending 1000s on rent,
And to get into the market, while he can,in 5 years time he may not be able to buy a house in dublin if prices rise .
He can sell up and buy a house elsewhere if he decides to live somewhere else in 6 years time

thierry14

riclad wrote: »

he,s buying to avoid spending 1000s on rent,
And to get into the market, while he can,in 5 years time he may not be able to buy a house in dublin if prices rise .
He can sell up and buy a house elsewhere if he decides to live somewhere else in 6 years time

What if prices fall?

What if another recession is around the corner?

Xaracatz

Well - I'm a "she" for starters. :pac:

This is where I don't know. My savings will be depleted if I have to rent in Dublin - so that's why I'm thinking of buying. There are clearly differing opinions even on here so that's why I'm asking. There are people here who would have a lot more knowledge than me on this!

Debt free with savings is good - but, like it or not (and I don't), I'm going to have to pay some large amounts of money to stay in Dublin and that is going to essentially disappear. I rented in Dublin from the age of 16 (31 now)- and I don't even like to think about how much money I spent. Now I am finally a in a position that I could potentially buy.

At least if I could buy, it would be going towards paying off a mortgage and I would have a base that I could live in / rent out / return to.

Again - thanks for your replies. Trying to figure out the best thing to do - but there's arguments for and against for sure.

riclad

Wait 2-3 months,.see if brexit, trump election causes prices to fall,
i think what could happen prices might stop rising.
say u buy a house next week, you are saving x amount per week in rental costs .
i,d dont expect prices to fall in dublin

davo10

riclad wrote: »

Wait 2-3 months,.see if brexit, trump election causes prices to fall,
i think what could happen prices might stop rising.
say u buy a house next week, you are saving x amount per week in rental costs .
i,d dont expect prices to fall in dublin

Trump/Brexit are not the main issue, supply and central bank mortgage rules are, and that will not change any time soon so until more properties become available and lending rules are tweaked, rental and property prices will rise albeit at a slower rate.

The argument being put forward about dead money and equity at the end of the mortgage term is the same one put forward before 2008. What must also be considered is that a mortgage is over a long term and if supply catches up and surpasses demand, prices will fall again. The pitfalls of negative equity must be given as much consideration as the benefits of positive equity.