Buy & sell in a few years to upsize?

Bythefire

Am in a position to buy a house but am 80/90k short of the house I really want, in the town I really want.

Would I be right to buy a house now that I can afford, in a nice estate, and sell it in a few years (3-5) when I can afford what I want or stay where I am for a few more years and continue saving?

I am thinking of buying now and then selling it and moving to the area I really want to live in - close to services, schools (if I have children) etc. etc.

Anybody else done this?

miezekatze

Plenty of people did this during the boom and are still stuck in 2 bed apartments or locations where they don't want to live. It is a gamble. If house prices remain the same or go up, fine. However, if house prices crash and you're in serious negative equity, you may not be able to move for a long time. I would think of a house as a long term investment.

GingerLily

3-5 years is too short a time span. We bought hoping to sell in 7-10 years but knowing we might be stuck.

Would you be okay if you were stuck?

zl1whqvjs75cdy

Agree with the above. Grand to aspire to a nicer place, but make sure the place you buy now will do for 10 years plus in case the arse falls out of it.

Bythefire

I wouldn't want to live there longterm if I buy it. It's fine but would just be a stepping stone.

I will be able to save the €80/90k in 3 years, 5 if anything crops up. Then I could afford the dream house. I don't see myself staying there anymore than 3 years, if I rent rooms, would be less time with that revenue.

I'm just ready to buy somewhere and hoping if I buy I will be able to sell on, just not at a loss. I'm aware and know so many who got stuck.

The Bishop Basher

GingerLily wrote: »

3-5 years is too short a time span. We bought hoping to sell in 7-10 years but knowing we might be stuck.

Would you be okay if you were stuck?

I would say currently 3 to 5 years is a good gamble if in the right location.

But ultimately it's always going to be a gamble..

Agree on being prepared for longer term though.

GingerLily

Bythefire wrote: »

I wouldn't want to live there longterm if I buy it. It's fine but would just be a stepping stone.

I will be able to save the €80/90k in 3 years, 5 if anything crops up. Then I could afford the dream house. I don't see myself staying there anymore than 3 years, if I rent rooms, would be less time with that revenue.

I'm just ready to buy somewhere and hoping if I buy I will be able to sell on, just not at a loss. I'm aware and know so many who got stuck.

I do not think you should buy, getting stuck is a very real risk and three years is a very short time. The legal fees and stamp duty alone would hit hi quite hard, and you'll lose your first time buyer LTV limit

Cash_Q

A big risk.

Also check with the mortgage provider if you are allowed to sell so soon after buying. Our mortgage agreement stipulates that we do not intend to sell in the first 5 years.

ArtyC

Would not also pay CGT on any profit you would make on a house you've had less than 7 years

Lumen

ArtyC wrote: »

Would not also pay CGT on any profit you would make on a house you've had less than 7 years

No.

Lumen

I would probably buy. Whilst there is a downside risk of negative equity, that would also bring the more expensive house closer in price.

Example.

Buy 300k house with 250k mortgage with intention of saving 100k to trade up to 400k house.

Market drops a third, you sell your house and settle the loss with 50k savings.

You now have 50k deposit for nicer house which now costs 267k.

If the market goes up you have a larger gap to bridge but your cheaper house will partially close that gap.

If the market goes up and you haven't bought, you're chasing that nicer house for much longer.

All that said, life happens and short term plans become long term plans.

bren2002

Cash_Q wrote: »

A big risk.

Also check with the mortgage provider if you are allowed to sell so soon after buying. Our mortgage agreement stipulates that we do not intend to sell in the first 5 years.

That's an odd clause, presume you got some sort of cashback deal or fixed rate special?

4ensic15

The sensible thing to do is buy now. The market is rising. If it falls, the house you want will fall harder than the one you are in. the gap will be smaller so the move up-market will cost less. If prices rise and you haven't bought you will lose out. It is a no-brainer.

LirW

If you're not willing to be there long term and it's not where you want to be stuck in the worst case, leave it. Nobody really knows how the market will be in 5 years, you might be lucky and it works out well for you but you could also really burn yourself and live in a place that you don't wanna be in really for a long period of time.

awec

4ensic15 wrote: »

The sensible thing to do is buy now. The market is rising. If it falls, the house you want will fall harder than the one you are in. the gap will be smaller so the move up-market will cost less. If prices rise and you haven't bought you will lose out. It is a no-brainer.

I am sure there were people saying the exact same thing in 2005/06/07 and ended up with 10 years of misery in homes that no longer were suitable.

Buying somewhere to live for as little as 5 years is a bit nuts, especially when you already know you won't want to be living there after that time.

uberwolf

bren2002 wrote: »

That's an odd clause, presume you got some sort of cashback deal or fixed rate special?

agree that it's an odd clause and I would be curious about the enforceability of it, the mortgage credit directive should have put paid to any such clawbacks/penalising of the consumer

bleary

It's not really possible to give a yes or no answer to this. In general 3 years is too short a time to intend to stay in a house. Stamp and legal fees are approx 5k . It will be another percent or 2 sales commission to estate agent when selling.

However if you could stay longer without major issue if you had to it may be an option
How much is your salary?
How much is your rent
How much is the house.

4ensic15

awec wrote: »

I am sure there were people saying the exact same thing in 2005/06/07 and ended up with 10 years of misery in homes that no longer were suitable.

I wasn't and didn't. The market had been rising since 1994-1995 by then. there were 100% mortgages. The banks were chasing their losses in 2005-2007 not re-investing their profits.

awec wrote: »

Buying somewhere to live for as little as 5 years is a bit nuts, especially when you already know you won't want to be living there after that time.

In a rising market, it is quite sensible. The o/p only wants to trade up at some point, hopefully within 5 years but doesn't say he has to do so at that time.

awec

4ensic15 wrote: »

I wasn't and didn't. The market had been rising since 1994-1995 by then. there were 100% mortgages. The banks were chasing their losses in 2005-2007 not re-investing their profits.


In a rising market, it is quite sensible. The o/p only wants to trade up at some point, hopefully within 5 years but doesn't say he has to do so at that time.

He said he doesn't want to live there long term.

I am not convinced it is so sensible at this stage. If you are fortunate enough to get in when the market is very low (i.e. immediately post-crash) it certainly seems like a smart plan, but buying a short-term property at a time when prices are already inflated with the expectation that you'll be up significant money in 5 years time seems overly risky.

At some point the market is going to stop rising.

It's also an awful lot of hassle and stress for such a short term.

Lumen

awec wrote: »

If you are fortunate enough to get in when the market is very low (i.e. immediately post-crash) it certainly seems like a smart plan

Fortunate yes, smart only with hindsight. Post-crash we had Euro break up on the cards. Is Greece "post-crash" yet? Cos that's what Ireland looked like in 2011.

Also, whatever about Ireland's property "recovery", it's not the only asset class to benefit from big returns. S&P500 is up 140% since 2011, 250% since 2009.

The only thing property has in its favour is tax treatment.

Timing markets is a mugs game.

Cash_Q

bren2002 wrote:

That's an odd clause, presume you got some sort of cashback deal or fixed rate special?

We are fixing for 5 years alright but I don't know if that is why this was stipulated. It was one of a number of things our solicitor stated when we went in to sign. Part of his speech that included the risk of losing the home if repayments aren't made etc.... maybe I'm remembering it wrong but I'm pretty sure he said this.

Bythefire

Thanks for your replies.

House is €250k. Between savings and parents helping me, I have €130k so I'm looking at €120k mortgage.

I could rent out 2 rooms, there is a shortage in the area I'm looking at. Ea says I can get €900 per month for the 2.

I know I can clear the €120k in 3 to 5 years. Then it's a case of getting a new mortgage for the house I want which costs more than I can go to at the moment.

daithiK1

i'm intrigued, even considering the rent a room income how is it possible to pay down the 120k principle in 5 years but it is not possible to obtain an additional 80k mortgage now - based on the info supplied there is something not adding up here, have you considered the interest part of the 120k? It should be a significant portion of your repayments for the first few years, or perhaps is your income due to increase significantly within the 5 year period?

Bythefire

- based on the info supplied there is something not adding up here,

Between my salary and money I am owed for something else that's soon due, I will have it. If it's all the same with you I'd prefer to stick to the facts I am giving rather than being questioned on my credibility. Thanks.

thierry14

Bythefire wrote: »

Thanks for your replies.

House is €250k. Between savings and parents helping me, I have €130k so I'm looking at €120k mortgage.

I could rent out 2 rooms, there is a shortage in the area I'm looking at. Ea says I can get €900 per month for the 2.

I know I can clear the €120k in 3 to 5 years. Then it's a case of getting a new mortgage for the house I want which costs more than I can go to at the moment.

If you were buying for cash I would say go for it, half cash and half mortgage is pointless

Either one or the other

If I were you I would wait and buy dream house for cash in a few years or take a full mortgage on the one you are looking at now

Never pay cash for something you don't intend to keep

Buying the dream house will be a pain in the ass if you have to sell before you can buy with a mortgage on top

Aim for mortgage free would be my choice

Wesser

If you rent out 2 rooms for 5 years then thats 54000 off your mortgage.....

daithiK1

Bythefire wrote: »

- based on the info supplied there is something not adding up here,

Between my salary and money I am owed for something else that's soon due, I will have it. If it's all the same with you I'd prefer to stick to the facts I am giving rather than being questioned on my credibility. Thanks.

I wasn't at all questioning your credibility, I ran the sums and was not able to comprehend how your repayment capacity will take such a significant jump upwards in the near future. there is quite a difference in earnings from the initial c. 600e repayment per month and the c.1700e needed to pay down the 120k

Based on this additional info, which in my opinion is relevant, i would strongly suggest you hold off the purchase until you 'obtain the money owed to you, as it will significantly improve your purchase options.