Avoid mortgage or up price range?

Empty_Space

I'm a single buyer, I don't own any property.

I've been looking to buy a property for just myself and am finding it difficult.

I initially intended on buying a property outright. I can scrape together 300k. However I'm not finding anything that really grabs me in this price bracket. I'm buying in Dublin commuter areas.
I have noticed much better value in the 500k range. Should I get a mortgage and go for this bracket. Would I be mad to mortgage myself out when I can avoid?

Also, 300k is majority of savings, is it foolish to sink all into property?. For my own reasons I really want to buy, I know I will get people saying I'm buying at top.

GreeBo

Would you be happy to remain in the 300k house for next 10 years?

That would be my major deciding factor

randomname2005

Empty_Space wrote: »

I'm a single buyer, I don't own any property.

I've been looking to buy a property for just myself and am finding it difficult.

I initially intended on buying a property outright. I can scrape together 300k. However I'm not finding anything that really grabs me in this price bracket. I'm buying in Dublin commuter areas.
I have noticed much better value in the 500k range. Should I get a mortgage and go for this bracket. Would I be mad to mortgage myself out when I can avoid?

Also, 300k is majority of savings, is it foolish to sink all into property?. For my own reasons I really want to buy, I know I will get people saying I'm buying at top.

Don't but unless you really like it and could see yourself living there for a long time (assuming job stability). If the 300k range doesn't feel like the right house or area, think carefully about living there for the next 10+ years

bilbot79

What age are you?

I think I'd mortgage up in that scenario

listermint

Aye new poster with 300k in savings



Sounds.. original

If you've saved 300k a 200k mortgage isn't too much of a burden IMO.

About 900/month over 30 years.....

300k is a huge wad of savings for a single person.

Empty_Space

randomname2005 wrote: »

Don't but unless you really like it and could see yourself living there for a long time (assuming job stability). If the 300k range doesn't feel like the right house or area, think carefully about living there for the next 10+ years

Would I be wrong to buy mortgage free with the thought process I can always trade up?
I know property could crash but at least I wouldn't be sinking cash into repayments and I could comfortably put more savings aside.

Empty_Space

bilbot79 wrote: »

What age are you?

I think I'd mortgage up in that scenario

35

Gael23

If you can afford it I would do it. Buy the best house you reasonably can

drunkmonkey

Empty_Space wrote: »

35

Your still young I'd hold fire a couple of years or just mortgage 75% of what your buying. Hold your cash and grow it.

Empty_Space

drunkmonkey wrote: »

Your still young I'd hold fire a couple of years or just mortgage 75% of what your buying. Hold your cash and grow it.

The problem is I don't know how to grow it at greater rate than mortgage interest.

GreeBo

Empty_Space wrote: »

Would I be wrong to buy mortgage free with the thought process I can always trade up?
I know property could crash but at least I wouldn't be sinking cash into repayments and I could comfortably put more savings aside.

You can trade up assuming you can sellb this house and clear 300k, with fees and stamp duty etc included.

If life goes perfectly fit 10 years can you see yourself married with 2 kids in the 300k house?

Empty_Space

GreeBo wrote: »

You can trade up assuming you can sellb this house and clear 300k, with fees and stamp duty etc included.

If life goes perfectly fit 10 years can you see yourself married with 2 kids in the 300k house?

I'd obviously prefer to live in more expensive house.

But if life doesn't go perfect at least I don't risk failing mortgage repayments. At least that's concern. You never know.

Honestly I'd just go mortgage free but there is just so much better value higher. Im just have never owed a penny and the thought of oweing large sums scares me.

listermint

How can't anyone take this thread seriously..

300k savings.. currently living.... God knows where..and states that there is only value in the 500k plus range in the commuter belt.



Lol

Squall Leonhart

I'm amused by the term "scraping together" coupled with 300K.

Empty_Space

This is an honest thread....I don't know why people don't believe. I'll give you it may not be usual scenario but not everyone is the same.

I used wrong words when I said "scraping together". I just meant I'd have to pull money out of various places, e.g post office, banks and other.

I do think there is much greater value in 500k. The 300k bracket is much more squeezed.

Squall Leonhart

If by 35 you've managed to save 300K, and feel there's better to be had by borrowing 200K, then if I were you, that's what I would do. Money management/earning capacity seems to be on your side.

Most borrow over 200K for their 300K house. I understand being debt averse, but you seem to be able to handle it.

Empty_Space

Empty_Space wrote: »

The problem is I don't know how to grow it at greater rate than mortgage interest.

If you've saved from 0 to 300k by 35 surely you know how to 'grow it'

listermint

Augeo wrote: »

If you've saved from 0 to 300k by 35 surely you know how to 'grow it'

Bingo

Which leads me to believe this is a spoof. One of many non original spoofs on this forum.

marko99

Is it not possible that OP has inherited 250k?

S/he never said "saved".

Empty_Space

Squall Leonhart wrote: »

If by 35 you've managed to save 300K, and feel there's better to be had by borrowing 200K, then if I were you, that's what I would do. Money management/earning capacity seems to be on your side.

Most borrow over 200K for their 300K house. I understand being debt averse, but you seem to be able to handle it.

I could be wrong somewhere but let's say I borrow 200k and pay back over 25 years, I'll end up paying back around 280k.

I'll be paying back around 900 a month, 11k a year.
In 10 year that's 110k.
If I got mortgage free and save this instead, Along with other savings I should be able to buy 500k property right out in 10 year assuming markets similar.
Earnings on savings could also dramatically improve.

So possibly living in lesser house for some years is best path to similar house. If I can put up with it.

Empty_Space

Augeo wrote: »

If you've saved from 0 to 300k by 35 surely you know how to 'grow it'

Honestly other then put in bank etc no. I know if ways but haven't had time to commit to it.

Certainly no clear way to beat mortgage rate.

Caquas

Empty_Space wrote: »

Honestly other then put in bank etc no. I know if ways but haven't had time to commit to it.

Certainly no clear way to beat mortgage rate.

Due to the ECB, there is currently no safe way to invest your capital productively. The ECB thinks this will kickstart investment but it mainly drives up asset prices and increases the appetite for risk (but why worry...!)

My advice is buy a place that suits you and borrow if necessary.

There is no value to be had currently at €300k. because lending limits leaves almost everyone with less than €400k. so demand is outstripping supply at that level. Prices below 400k. are close to peak in Dublin while the very top of the market (€2m. +) is well below peak. Remember when anything on Ailesbury Rd. was double digit millions? If the CB lifts its limits, the price of >€500k properties will jump.

StupidLikeAFox

Empty_Space wrote: »

I could be wrong somewhere but let's say I borrow 200k and pay back over 25 years, I'll end up paying back around 280k.

I'll be paying back around 900 a month, 11k a year.
In 10 year that's 110k.
If I got mortgage free and save this instead, Along with other savings I should be able to buy 500k property right out in 10 year assuming markets similar.
Earnings on savings could also dramatically improve.

So possibly living in lesser house for some years is best path to similar house. If I can put up with it.

Except in ten years the house could be worth 600k, or 700k? Or granted 400k

I would buy the bigger house if you think it will do you for life. You would be getting a serious house for 900 quid a month. Bear in mind that the interest might seem a lot at the moment but over the lifetime of a mortgage inflation will eat into that (your wages will go up, repayment amount stays the same)

GreeBo

Empty_Space wrote: »

I could be wrong somewhere but let's say I borrow 200k and pay back over 25 years, I'll end up paying back around 280k.

I'll be paying back around 900 a month, 11k a year.
In 10 year that's 110k.
If I got mortgage free and save this instead, Along with other savings I should be able to buy 500k property right out in 10 year assuming markets similar.
Earnings on savings could also dramatically improve.

So possibly living in lesser house for some years is best path to similar house. If I can put up with it.

In ten years your 300k house won't have appreciated as much as your 500k house... You'll be falling further and further behind.

To look at your example a different way, you borrow 200k and buy a 500k house.
In 25 years you have repaid an extra 80 but the house is worth 620.
Congratulations, you just grew your investment.

jlm29

I presume if you’ve managed to accumulate that kind of money, you have a decent job. Unless you’re concerned about the ability to afford the 900/mth, or about job security or whatever, I would buy the house you want to live in more.
Remember that if you buy the cheaper house now, you’ll spend a lot more commuting -this is significant, when I had a long commute it was like paying a small mortgage, between longer childcare hours, diesel, tolls and car maintenance. If you sell In ten years, you’ll also have a whole set of moving costs - stamp duty, solicitors fees, engineers, not to mention hassle and quality of life. Those things will make a fair hole in the money you will save in interest by being mortgage free now.

Owing money isn’t the end of the world. I’m not saying it’s compulsory, but once you don’t borrow yourself to the max and put yourself under pressure, sometimes it makes sense.

Empty_Space

jlm29 wrote: »

I presume if you’ve managed to accumulate that kind of money, you have a decent job. Unless you’re concerned about the ability to afford the 900/mth, or about job security or whatever, I would buy the house you want to live in more.
Remember that if you buy the cheaper house now, you’ll spend a lot more commuting -this is significant, when I had a long commute it was like paying a small mortgage, between longer childcare hours, diesel, tolls and car maintenance. If you sell In ten years, you’ll also have a whole set of moving costs - stamp duty, solicitors fees, engineers, not to mention hassle and quality of life. Those things will make a fair hole in the money you will save in interest by being mortgage free now.

Owing money isn’t the end of the world. I’m not saying it’s compulsory, but once you don’t borrow yourself to the max and put yourself under pressure, sometimes it makes sense.

Thanks Jim,

I have a maybe backwards instinct that borrowing such a large sum makes the banks winners.Im leaning towards borrowing for expensive house though.

The other problem I'm finding is on size. I'm a single buyer and planned to buy a small place. I'm finding any adaquatley sized places very grim and am now thinking of just buying large property and leaving rooms idle.

Where are you currently living.... As in it must be a cost per month to you.

Also, you mention your single currently but that might well change.

s7ryf3925pivug

Maximising tax free pension contributions yields more than avoiding mortgage interest. But that money is locked in until you retire whereas minimizing or eliminating mortgage repayments affects a monthly expense.

Mortgage interest rates are very low, so there's no point repaying a mortgage or avoiding one only to need a personal loan at a higher rate.

I was in a similar situation to you. I paid off a large lump sum on my mortgage then arranged a ten year fixed term very affordable repayment on the rest.

pwurple

Oh for goodness sake people, is every thread on boards these days full of 'i don't believe this'. Can't we just take the OP at face value? There are other ways to get money other than your bog standard PAYE. Sell a business, inheritance, shares, etc.


OP, if it were me, I would hold back a rainy day fund of about 20-30k for a start. That should cover something like needing to fly somewhere and not work for a few months, or buy a new car if yours gets totalled, or replace part of a roof, buy some furniture.

So, that leaves you with 270k deposit. You have not mentioned earnings, you would need to meet the 3.5 multiplier on there. So, say you earn 40k... you could get a mortgage for another 140k. Bringing your max up to about 410k
If you're borrowing 200k, you need an income of ~ 60k.

You will be at about 35% LTV there, which should give you a better interest rate.

I wouldn't max out your borrowing, if there is something in the 400's you can afford, go for that. Remember the larger the house, the more expensive it is to furnish, maintain, repair, insure, heat, tax etc. So a smaller house, maybe a solid 2 bed, in a decent area should be manageable. People always forget with renting that ownership comes with that additional cost overhead of maintenance.

JustMe,K

Borrow the money, buy a good decent size house, find a mate, reproduce and you'll be thankful you bought the better house.