Cash buyer: Buy soon or wait it ou

IsErik

As the title indicates, majority cash buyer here. Age 33, was saving a lot over the past 5 years but was fortunate enough to inherit a large sum of money and i currently have 180k deposit. The properties i am interest in are valued at around the 370k mark. My plan is to save up an additional 40k over the next 2 years and hope to purchase said property for around 300k with 220 down, leaving me with a mortgage of 80k at age 36.

OR

As i know time is not on my side i was contemplating purchase a property now for 250k however it would not be a property i am really happy with and would likely want to move in a few years. The 1st scenario would entail purchasing my forever home.

Currently renting a room from a childhood friend for 450 pm for the past 4 years and very happy with the situation but i need to purchase soon.

Any posters in a similar boat? Should i stay put hoping prices drop a small bit

Danke

fret_wimp2

most threads in here will be debating that very question in some form and you will get every answer.
The "property market 2020" thread has 600 pages of posts debating exactly this question!
Long story short - nobody knows.

People who really want to buy and have been holding off see all the signs that prices will drop.
People who own and want value to increase, or not decrease dramatically, see all the signs that demand is still high and prices wont change much.

Decide whats right for you and start from there. If you rent for the next 2 years, what will that cost you vs starting to chip away at a mortgage?

The only thing i would say is pick somewhere you are ok with staying in for 10+ years & is big enough to let your family grow. The whole first step on the ladder/starter home idea is awful, so often people get stuck in accommodation completely unsuitable for their situation.
It doesnt have to be a perfect home, but it does have to be acceptable for changes to your situation long term.

Shelga

fret_wimp2 wrote: »

The only thing i would say is pick somewhere you are ok with staying in for 10+ years & is big enough to let your family grow. The whole first step on the ladder/starter home idea is awful, so often people get stuck in accommodation completely unsuitable for their situation.
It doesnt have to be a perfect home, but it does have to be acceptable for changes to your situation long term.

I get what you're saying, but this just makes people like me feel worse. The OP is in a very fortunate position, but most single FTBs, especially in Dublin, do not have the luxury of buying somewhere the can guarantee they'd be happy to stay in for 10+ years. I'd need to save around an extra €60-80k to get a place I'd be happy to live in for 10+ years, which means living at home approximately another 4 years, while saving all of my spare income.

OP, my advice would be to wait til the end of the year, and see what is happening in the market then. I wouldn't bother waiting another 2 years tbh, and I'm 33 too. Get one that's 40k cheaper, you're still in a great position.

fret_wimp2

Shelga wrote: »

I get what you're saying, but this just makes people like me feel worse. The OP is in a very fortunate position, but most single FTBs, especially in Dublin, do not have the luxury of buying somewhere the can guarantee they'd be happy to stay in for 10+ years. I'd need to save around an extra €60-80k to get a place I'd be happy to live in for 10+ years, which means living at home approximately another 4 years, while saving all of my spare income.

This is not about feelings unfortunately, the market is what is and we navigate it the best we can with the resources we have.

If you cannot afford the place you want and would be happy with for 10+ years then the options are:
- continue to rent and save until you have enough for the bigger place.
- buy the smaller place ensuring you know its limitations so they dont eat you up if you bang against them should you be unable to sell when you need to.
- buy somewhere cheaper where floor area costs less per euro.

Again, i know this is not ideal but the housing market doesnt care what you do so its a case of using what resources you have, deciding on what you want to do and living with that decision.

To get philosophical, the key to happiness is to want what you have and not want what you dont have!

SozBbz

Why can you not just borrow €190k and buy the house you actually want, now?

If you have the capacity to save €40k after rent and bills in 2 years, surely you have the capacity to borrow what you need.

I always advise buying for the longer term, so I'm generally against "stop gap" houses. Everytime you move you pay stamp duty, legal fees and other costs besides.

That kind of mortgage would cost around €700 a month to repay, its hardly unaffordable.

There is absolutely no guarantee that the house costing €370k today will be €300k in 2 years time. There are very likely alternative scenarios where by it will cost the same or more (inflation because of the stimulus measures, no supply etc), and you'll be 2 years older in your mates spare room. Also your mate might want his house to himself again at some point.

Claw Hammer

IsErik wrote: »

As the title indicates, majority cash buyer here. Age 33, was saving a lot over the past 5 years but was fortunate enough to inherit a large sum of money and i currently have 180k deposit. The properties i am interest in are valued at around the 370k mark. My plan is to save up an additional 40k over the next 2 years and hope to purchase said property for around 300k with 220 down, leaving me with a mortgage of 80k at age 36.

OR


Danke

That is not cash buying. A large deposit does not a cash buyer make!

IsErik

Claw Hammer wrote: »

That is not cash buying. A large deposit does not a cash buyer make!

Bit of a click baity title but it is majority cash buying as the 1st scenario would put it around 30%LTV

IsErik

SozBbz wrote: »

Why can you not just borrow €190k and buy the house you actually want, now?

If you have the capacity to save €40k after rent and bills in 2 years, surely you have the capacity to borrow what you need.

I always advise buying for the longer term, so I'm generally against "stop gap" houses. Everytime you move you pay stamp duty, legal fees and other costs besides.

That kind of mortgage would cost around €700 a month to repay, its hardly unaffordable.

There is absolutely no guarantee that the house costing €370k today will be €300k in 2 years time. There are very likely alternative scenarios where by it will cost the same or more (inflation because of the stimulus measures, no supply etc), and you'll be 2 years older in your mates spare room. Also your mate might want his house to himself again at some point.

190,000 is a colossal amount to borrow at any stage of life but especially now during a recession and given my age, it is too risky for me imo.

I've been consuming a lot of economic content and reading into several reports of where we may end up and i do think we will see a drop but wanted a 2nd opinion. If we do see a rise i believe it would be very modest (less than 5%), i would ramp my savings up to 50k and should have 230k to out towards a 390k property. I hope that does not happen

SozBbz

IsErik wrote: »

190,000 is a colossal amount to borrow at any stage of life but especially now during a recession and given my age, it is too risky for me imo.

I've been consuming a lot of economic content and reading into several reports of where we may end up and i do think we will see a drop but wanted a 2nd opinion. If we do see a rise i believe it would be very modest (less than 5%), i would ramp my savings up to 50k and should have 230k to out towards a 390k property. I hope that does not happen

Lots of people have mortgages for far far more. Its not that much, but you thinking that it is says a lot about your perspective and risk aversion. I took out a €200k mortgage in my late 20's and didnt blink. Like you, I had a large deposit, so I wasn't worried and 5ish years in, my opinion hasnt changed. And I'm now 5 years closer to owning that property outright, versus if I'd tried to outsave the market.

Also - you are not old or young, you're about the average age for a first time buyer.

To clarify, I've never had any debt in my life other than my mortgages. I don't believe in borrowing for cars, holidays, weddings.....anything really, with the exception of financing housing. Mortgage money is cheapest you'll ever get, and it allows you to benefit from the asset now rather than waiting and saving.

the_syco

IsErik wrote: »

leaving me with a mortgage of 80k at age 36

Unsure if you can get such a low mortgage?

IsErik wrote: »

As i know time is not on my side i was contemplating purchase a property now for 250k however it would not be a property i am really happy with and would likely want to move in a few years.

When you buy, make sure you buy for life. MANY people have tried the property ladder thing, and although some may have succeeded, the property crash meant that many are stuck in their shoebox starter home for life.

BrokenArrows

IsErik wrote: »

As the title indicates, majority cash buyer here. Age 33, was saving a lot over the past 5 years but was fortunate enough to inherit a large sum of money and i currently have 180k deposit. The properties i am interest in are valued at around the 370k mark. My plan is to save up an additional 40k over the next 2 years and hope to purchase said property for around 300k with 220 down, leaving me with a mortgage of 80k at age 36.

OR

As i know time is not on my side i was contemplating purchase a property now for 250k however it would not be a property i am really happy with and would likely want to move in a few years. The 1st scenario would entail purchasing my forever home.

Currently renting a room from a childhood friend for 450 pm for the past 4 years and very happy with the situation but i need to purchase soon.

Any posters in a similar boat? Should i stay put hoping prices drop a small bit

Danke

Honestly you should disregard the current economic and virus situation.
You have a 2 year plan and know what you want.

Better not to buy now and sell in 2 years.

If you buy now you are taking a gamble on being able to achieve what you really want. You currently have cheap rent so stick it out for 2 years more.

JeffKenna

Keeping away from the financial side of things, it's not clear whether you have a partner in your life. If not, I'd be inclined to hold on as at your age you'll probably meet someone in the next few years and settle down. Buying a house could he something you'd like to do with them.

Of course if that doesn't interest you then apologies for an offense caused.

IsErik

SozBbz wrote: »

Lots of people have mortgages for far far more. Its not that much, but you thinking that it is says a lot about your perspective and risk aversion. I took out a €200k mortgage in my late 20's and didnt blink. Like you, I had a large deposit, so I wasn't worried and 5ish years in, my opinion hasnt changed. And I'm now 5 years closer to owning that property outright, versus if I'd tried to outsave the market.

Also - you are not old or young, you're about the average age for a first time buyer.

To clarify, I've never had any debt in my life other than my mortgages. I don't believe in borrowing for cars, holidays, weddings.....anything really, with the exception of financing housing. Mortgage money is cheapest you'll ever get, and it allows you to benefit from the asset now rather than waiting and saving.

Each is entitled to their own opinion. To play devils advocate, prices could drop 20% in two years and i will have my forever home for only borrowing a mere 80k opposed to your 200 and i'd have it paid off in 5 years and be mortgage free before 40 whilst you'd still only be another "5 years closer to owning that property outright".

It's all up in the air and no one has a crystal ball but to subtly insult someone for having a risk averse approach and encourage them to borrow nearly 200 thousand euros when we are entering the biggest recession in history is a little reckless tbh.

KilOit

IsErik wrote: »

Each is entitled to their own opinion. To play devils advocate, prices could drop 20% in two years and i will have my forever home for only borrowing a mere 80k opposed to your 200 and i'd have it paid off in 5 years and be mortgage free before 40 whilst you'd still only be another "5 years closer to owning that property outright".

It's all up in the air and no one has a crystal ball but to subtly insult someone for having a risk averse approach and encourage them to borrow nearly 200 thousand euros when we are entering the biggest recession in history is a little reckless tbh.

You made up your mind, don't buy so

Hollybeg

IsErik wrote: »

As the title indicates, majority cash buyer here. Age 33, was saving a lot over the past 5 years but was fortunate enough to inherit a large sum of money and i currently have 180k deposit. The properties i am interest in are valued at around the 370k mark. My plan is to save up an additional 40k over the next 2 years and hope to purchase said property for around 300k with 220 down, leaving me with a mortgage of 80k at age 36.

OR

As i know time is not on my side i was contemplating purchase a property now for 250k however it would not be a property i am really happy with and would likely want to move in a few years. The 1st scenario would entail purchasing my forever home.

Currently renting a room from a childhood friend for 450 pm for the past 4 years and very happy with the situation but i need to purchase soon.

Any posters in a similar boat? Should i stay put hoping prices drop a small bit

Danke

It's hard to be positive about property at the moment but I think unless there's a really urgent reason to purchase, I'd hold on to your cash for the moment. The market was already overheated pre Covid (I'm looking at it from a different set of eyes to be fair). Review in 6 - 12 months and see what the lie of the land is.

awec

IsErik wrote: »

As the title indicates, majority cash buyer here. Age 33, was saving a lot over the past 5 years but was fortunate enough to inherit a large sum of money and i currently have 180k deposit. The properties i am interest in are valued at around the 370k mark. My plan is to save up an additional 40k over the next 2 years and hope to purchase said property for around 300k with 220 down, leaving me with a mortgage of 80k at age 36.

OR

As i know time is not on my side i was contemplating purchase a property now for 250k however it would not be a property i am really happy with and would likely want to move in a few years. The 1st scenario would entail purchasing my forever home.

Currently renting a room from a childhood friend for 450 pm for the past 4 years and very happy with the situation but i need to purchase soon.

Any posters in a similar boat? Should i stay put hoping prices drop a small bit

Danke

This thread is very strange, truth be told. Want to save for 2 more years, but needs to buy soon.

Apparently been researching the economy, talks about worst recession in history, says 200k is colossal for a mortgage, yet also asks if they should buy a house they are not really happy with. Truly bizarre.

Brego888

IsErik wrote: »

As the title indicates, majority cash buyer here. Age 33, was saving a lot over the past 5 years but was fortunate enough to inherit a large sum of money and i currently have 180k deposit. The properties i am interest in are valued at around the 370k mark. My plan is to save up an additional 40k over the next 2 years and hope to purchase said property for around 300k with 220 down, leaving me with a mortgage of 80k at age 36.

You'll probably need to be setting aside another 20-30 grand for all the fees associated with the pitches plus furniture, repairs etc.

Mike3287

Either buy something with cash or take a mortgage with 10% deposit

What your doing is absolutely idiotic

Your giving a bank €180,000 in cash, are you mad?

Makes no sense when mortgages are practically free these days, with rates as low 2.6%

Keep your cash or use it to get a bargain, don't give it to a bank

Banks will have so many people in arrears soon and they will be laughing asses off at you giving them €180,000 in these times, when they won't be able to get €100 a week off some customers in 300k houses

Why can't you buy something outright for €180,000 cash?

Where you looking to buy?

You could buy something now with cash, keep saving and then get a mortgage later on and own 2 properties.

With the cash you have, endless options, don't be an idiot and give the bank, all I am saying.

jlm29

the_syco wrote: »

Unsure if you can get such a low mortgage?.

Yes you can. Minimum was 25k when we took ours out

Bass Reeves

IsErik wrote: »

190,000 is a colossal amount to borrow at any stage of life but especially now during a recession and given my age, it is too risky for me imo.

I've been consuming a lot of economic content and reading into several reports of where we may end up and i do think we will see a drop but wanted a 2nd opinion. If we do see a rise i believe it would be very modest (less than 5%), i would ramp my savings up to 50k and should have 230k to out towards a 390k property. I hope that does not happen

200k borrowed over 25 years, on a 10 year fixed is costing sub 950/months with the amount of deposit you have. I would consider it a low risk loan and would not consider it a colossal loan.

Assuming that 2 years time will be the ideal time to buy or sell that the market will collapse is also a high risk strategy. Never assume you can read the market in. If it falls faster than you think will you buy earlier, the bottom of the trough if there is one may be earlier or later. Repossessed houses usually need more money put into them than non repossession property. I cannot see repossessed properties coming on the market within 12-24 months. Banks can be willing to ride out recession Nd sell repossessed properties on the upturn and vulture funds take the same attitude.

With your level of deposit you have the choice of waiting but many waited too long after the last recession , they presumed a double dip they are still without houses.

Bass Reeves

jlm29 wrote: »

Yes you can. Minimum was 25k when we took ours out

Bank legal fees make paying for low value loans poor value. Bank legal fees will be 2-3k I imagine

jlm29

Bass Reeves wrote: »

Bank legal fees make paying for low value loans poor value. Bank legal fees will be 2-3k I imagine

They’re going to pay legal fees anyhow. I wouldn’t say they should get a bigger mortgage to make their legal fees better value

Pkiernan

OP, why are you predicting a 20% drop in house prices in 2 years?

Bass Reeves

jlm29 wrote: »

They’re going to pay legal fees anyhow. I wouldn’t say they should get a bigger mortgage to make their legal fees better value

Mortgage borrowing is the cheapest money you will probably ever borrow. It is below 3% at present. If you pay your insurance in installments it about 30%, house improvements/extensions, car loans are 7% and borrowing for college fees is about 4-5%. If you borrow for an investment property you may pay 4% and need a lot bigger Deposit. If I was the OP if things work the way he thinks(they seldom do) I still borrow up on 200k and keep.part of my cash in hand

On very small mortgages where you are borrowing for a short time period legal fees should be looked at Vis a via interest rate.

Bass Reeves

Pkiernan wrote: »

OP, why are you predicting a 20% drop in house prices in 2 years?

He has been to a fortune teller and she sees it in the crystal ball

IsErik

KilOit wrote: »

You made up your mind, don't buy so

Going to wait until June 2022 to purchase, if prices drop a hefty amount(+25%) before then i'll jump in but i won't hold my breath.


Thanks for all the responses!

IsErik

awec wrote: »

This thread is very strange, truth be told. Want to save for 2 more years, but needs to buy soon.

Apparently been researching the economy, talks about worst recession in history, says 200k is colossal for a mortgage, yet also asks if they should buy a house they are not really happy with. Truly bizarre.

Thanks for the input, i consider "soon" as within the next 12-24 months, given my age.

IsErik

Pkiernan wrote: »

OP, why are you predicting a 20% drop in house prices in 2 years?

Due to the global recession we are basically in already, there is not much wiggle room to get out of it even if we print money to infinity. Many people i know, even in the tech game have lost jobs/expect to lose jobs, have received pay cuts and even those working in the big players (think FAANGS etc) do not expect promotions or increases to offset cost of living(if inflation takes hold).

IsErik

Bass Reeves wrote: »

Mortgage borrowing is the cheapest money you will probably ever borrow. It is below 3% at present. If you pay your insurance in installments it about 30%, house improvements/extensions, car loans are 7% and borrowing for college fees is about 4-5%. If you borrow for an investment property you may pay 4% and need a lot bigger Deposit. If I was the OP if things work the way he thinks(they seldom do) I still borrow up on 200k and keep.part of my cash in hand

On very small mortgages where you are borrowing for a short time period legal fees should be looked at Vis a via interest rate.

I don't want to borrow 200k, 80k is the target as it will allow me more freedom and money to pump into other investment vehicles

Bass Reeves

IsErik wrote: »

Going to wait until June 2022 to purchase, if prices drop a hefty amount(+25%) before then i'll jump in but i won't hold my breath.


Thanks for all the responses!

For houses to drop that amount we will need to see a serious restrictions on borrowing and in that case builders will have stopped building as house prices will be too low for them to build and banks will not lend them money to build

IsErik wrote: »

I don't want to borrow 200k, 80k is the target as it will allow me more freedom and money to pump into other investment vehicles

More often than not we do not get what want it the ability to adapt differencate between where you end up

IsErik

Bass Reeves wrote: »

For houses to drop that amount we will need to see a serious restrictions on borrowing and in that case builders will have stopped building as house prices will be too low for them to build and banks will not lend them money to build



More often than not we do not get what want it the ability to adapt differencate between where you end up

There will be up to 50,000 social houses built within the next few years, this will ease things with the supply side, i don't think we will see such a big drop though, i'm thinking more along the lines of 12-15% across the board.

Borrow the difference and buy want you want. This fear of a mortgage is childish stuff. You may also struggle to get a mortgage as low as 80k and to be honest it’s a dangerous game assuming prices will drop so much if at all. This is not like other “recessions” a lot of people didn’t lose jobs or have pay cuts especially in high paying sectors like tech in fact some areas are booming right though the corona virus. All the business that get back to work over the next while will still have the work they had before hand it hasn’t gradually dried up like normal recessions it was just paused. House prices are already recovering the bit they did drop so I really think you are foolish to assume the big drop will happen that you are hoping for.

Are you also considering the fact you are throwing away 450pm on rent now? If you were to borrow more and have your own place this could go towards paying off the mortgage faster along with the money you intended saving and I wouldn’t be surprised if you did the maths that you could end up mortgage free close to if not as quick going this route but have all the advantages of your own home, not sharing etc.

Mike3287

Mike3287 wrote: »

Either buy something with cash or take a mortgage with 10% deposit

What your doing is absolutely idiotic

Your giving a bank €180,000 in cash, are you mad?

Makes no sense when mortgages are practically free these days, with rates as low 2.6%

Keep your cash or use it to get a bargain, don't give it to a bank

Banks will have so many people in arrears soon and they will be laughing asses off at you giving them €180,000 in these times, when they won't be able to get €100 a week off some customers in 300k houses

Why can't you buy something outright for €180,000 cash?

Where you looking to buy?

You could buy something now with cash, keep saving and then get a mortgage later on and own 2 properties.

With the cash you have, endless options, don't be an idiot and give the bank, all I am saying.

This post is absolute rubbish. To begin with you aren’t giving the bank 180k if you use it towards your purchase you are using it to pay the current owner of the house. Secondly while I wouldn’t use the full 180k it would be very wise to use the majority of it to minimise your mortgage, minimise the interest you pay and minimise your mortgage payments etc. If I had 180k I’d be putting 150k towards the house and keeping 30k in savings/I’m investments and starting to add to it again after buying.

It’s also a very bad idea to “make do” with a house for 180k just because you can afforded it outright much better to use the combination of a mortgage and the savings to buy what you want.

guyfawkes5

IsErik wrote: »

I don't want to borrow 200k, 80k is the target as it will allow me more freedom and money to pump into other investment vehicles

You're confident you can beat the interest rate on your mortgage on investment returns after tax? Seems pretty risky.

jlm29

IsErik wrote: »

I don't want to borrow 200k, 80k is the target as it will allow me more freedom and money to pump into other investment vehicles

Could you not borrow the money, buy the house you want and overpay your mortgage for the first few years

Truthvader

Chill. Big difference between "the property market" and buying a home. Dont buy anything unless you love it. Pay whatever you can afford. The property market will do whatever it likes for every reaon and no reason. If anyone knew why all auctioneers would retire at 40. No-one has a clue. So sit where you are where you are happy. No rush. Wait until "your house" arrives and then buy it.

TheSheriff

IsErik wrote: »

There will be up to 50,000 social houses built within the next few years, this will ease things with the supply side, i don't think we will see such a big drop though, i'm thinking more along the lines of 12-15% across the board.

There is a big difference between political promises and reality. These houses are unlikely to materialise.

If prices of houses drop by what you hope they will it's unlikely such houses will manifest.

OP, I think there are many people on this board who will tell you buy/don't buy. I've been coming here for two years and the advice has always been the same ,"the market is going to crash in 12 months", or "the market won't crash and it'll be business as usual".

Buy a house when you are ready rather than listening to random people online.

In hindsight I wish we had bought two years ago.

Mic 1972

IsErik wrote: »

As the title indicates, majority cash buyer here. Age 33, was saving a lot over the past 5 years but was fortunate enough to inherit a large sum of money and i currently have 180k deposit. The properties i am interest in are valued at around the 370k mark. My plan is to save up an additional 40k over the next 2 years and hope to purchase said property for around 300k with 220 down, leaving me with a mortgage of 80k at age 36.

OR

As i know time is not on my side i was contemplating purchase a property now for 250k however it would not be a property i am really happy with and would likely want to move in a few years. The 1st scenario would entail purchasing my forever home.

Currently renting a room from a childhood friend for 450 pm for the past 4 years and very happy with the situation but i need to purchase soon.

Any posters in a similar boat? Should i stay put hoping prices drop a small bit

Danke

With 250K you can buy a 1bed apt in town. You are never gonna regret that even in ten years. Don't take a huge mortgage at any age

msvino

If I were you I would buy a house as soon as you can. I doubt we'll see better prices whether it be for mortgages or anything else. If a country wants a fair marketplace and fairer life in general, there has to be people at the top who believe the same and create policies that protect working people. That doesn't happen here; pre covid or post covid. Bottom line is that big business in Ireland has lost a lot of money during the lockdown, and they'll be looking to get all their lost money back! Expect higher prices across the board. I see property prices rising higher.

Bass Reeves

Liliana Full Stock wrote: »

This post is absolute rubbish. To begin with you aren’t giving the bank 180k if you use it towards your purchase you are using it to pay the current owner of the house. Secondly while I wouldn’t use the full 180k it would be very wise to use the majority of it to minimise your mortgage, minimise the interest you pay and minimise your mortgage payments etc. If I had 180k I’d be putting 150k towards the house and keeping 30k in savings/I’m investments and starting to add to it again after buying.

It’s also a very bad idea to “make do” with a house for 180k just because you can afforded it outright much better to use the combination of a mortgage and the savings to buy what you want.

Mortgage money is the cheapest money you ever borrow. People have a fixation with reducing mortgage borrowing. 30 years ago it made sense with interest rates of 8-10% and being charged a 2-3%premium to fix for even 5 years.

People often try to keep mortgage borrowing and are down at the credit unions a few weeks/years later borrowing money at 7%. Twenty years later they borrow another mortgage to put kids through college at 4-5%

There is no way in hell if I could afford to comfortably make the repayments that I would not maximizing my mortgage draw down. You can always change you mind 3-5 years down the line and repay a lump off it.

I semi retired a while back I had 3 loans, a credit union load for a tractor, a small personal loan that we bought a cheap property both att about 7% a with and a fairly substantial commercial tracker that has 5+years left. I paid down the 7% loans but I not giving the bank back any free money they gave me. Money is worth about 5% because of the opportunity value it gives me.

Bass Reeves

Bass Reeves wrote: »

Mortgage money is the cheapest money you ever borrow. People have a fixation with reducing mortgage borrowing. 30 years ago it made sense with interest rates of 8-10% and being charged a 2-3%premium to fix for even 5 years.

People often try to keep mortgage borrowing and are down at the credit unions a few weeks/years later borrowing money at 7%. Twenty years later they borrow another mortgage to put kids through college at 4-5%.

which is why I said using the example of 180k, I’d be keeping 30kish back and putting the rest towards the house. That 30k should cover anything really that might pop up and the small mortgage means you can start adding to it straight away.

It gives a lot of security having a small mortgage or getting it paid off earlier due to it being small if there are job losses etc or thing pop up. I would certainly encourage people to save towards college etc but I’d see that as a separate account from other savings with child benefit going into it from day one.

The other thing is if you don’t put the money into the house then you would really need to invest it (aside from around 30k or so) to keep track with inflation but if it’s locked into investments you can’t access it and you are in the same situation as if you put it in the house I.e. if something so significant that 30k didn’t cover it came up you would have to borrow as invested money is normally inaccessible.

Mike3287

Liliana Full Stock wrote: »

which is why I said using the example of 180k, I’d be keeping 30kish back and putting the rest towards the house. That 30k should cover anything really that might pop up and the small mortgage means you can start adding to it straight away.

It gives a lot of security having a small mortgage or getting it paid off earlier due to it being small if there are job losses etc or thing pop up. I would certainly encourage people to save towards college etc but I’d see that as a separate account from other savings with child benefit going into it from day one.

The other thing is if you don’t put the money into the house then you would really need to invest it (aside from around 30k or so) to keep track with inflation but if it’s locked into investments you can’t access it and you are in the same situation as if you put it in the house I.e. if something so significant that 30k didn’t cover it came up you would have to borrow as invested money is normally inaccessible.

Giving the bank 150k is idiotic

You can borrow for 2.3%, it's practically free money

Cheapest money ever as pointed out to you

Or look at it another way, you dont invest 150k to get a 2.3% return

Do you think thats a good investment?

That's what your doing effectively

Bass Reeves

Liliana Full Stock wrote: »

which is why I said using the example of 180k, I’d be keeping 30kish back and putting the rest towards the house. That 30k should cover anything really that might pop up and the small mortgage means you can start adding to it straight away.

It gives a lot of security having a small mortgage or getting it paid off earlier due to it being small if there are job losses etc or thing pop up. I would certainly encourage people to save towards college etc but I’d see that as a separate account from other savings with child benefit going into it from day one.

The other thing is if you don’t put the money into the house then you would really need to invest it (aside from around 30k or so) to keep track with inflation but if it’s locked into investments you can’t access it and you are in the same situation as if you put it in the house I.e. if something so significant that 30k didn’t cover it came up you would have to borrow as invested money is normally inaccessible.

30k is only beer money. It has no opportunity value. Say OP is right and houses fall 20%+ would it not make more sense to buy two a home and an investment property. As he said part of the money is an inheritance,l. He had not originally factored it into his deposit. Saving is grand but it will take years to put 100k in opportunity money together again.

At present you can still buy holiday homes that are pool rental tied for sub 100k. The rental side will be released in 5-10 years in most cases. You still buy investment properties in small to mid sized towns for sub 100k. If OP is willing to gamble on house prices being down in 1-2year time there will be other investment opportunities as well.

IsErik

Mike3287 wrote: »

Giving the bank 150k is idiotic

You can borrow for 2.3%, it's practically free money

Cheapest money ever as pointed out to you

Or look at it another way, you dont invest 150k to get a 2.3% return

Do you think thats a good investment?

That's what your doing effectively

And so you keep saying..... Also, that is not not what "i am doing effectively".



What i will be doing (if successful) is owning my forever home outright and being mortgage free at age 40. The peace of mind of not having a mortgage at that age will make me sleep well every night, giving me abundance in almost all areas of life. That is what matters to me, borrow all the "free money" you want, you still have to pay it back(plus interest).


Everyone has a different opinion, it makes life interesting. Enjoy the "free money".

TheW1zard

IsErik wrote: »

And so you keep saying..... Also, that is not not what "i am doing effectively".



What i will be doing (if successful) is owning my forever home outright and being mortgage free at age 40. The peace of mind of not having a mortgage at that age will make me sleep well every night, giving me abundance in almost all areas of life. That is what matters to me, borrow all the "free money" you want, you still have to pay it back(plus interest).


Everyone has a different opinion, it makes life interesting. Enjoy the "free money".

If your paying off 80 grand in 4 years, including compound interest you must be really making some serious dosh!

Wesser

Buy now if you can i think. Its not an investment if its your forever home. After you buy....Forget about how much its worth. All you have to think about then is can I afford the mortgage.

Dont assume property prices will fall in 2 years time.

P.s. you are not a cash buyer!

Mike3287

Mike3287 wrote: »

Giving the bank 150k is idiotic

You can borrow for 2.3%, it's practically free money

Cheapest money ever as pointed out to you

Or look at it another way, you dont invest 150k to get a 2.3% return

Do you think thats a good investment?

That's what your doing effectively

You still haven’t explained how to me how using 150k towards the purchase is “giving money to the bank”? Unless you are buying a repossessed house that is.

Also the op would not be able to borrow enough to buy the house he wants without a sizeable deposit. It will be the same for myself with a house build, I will be putting significantly more than 10% towards it in cash as I want to minimise the mortgage but also I simply would not get a mortgage high enough to pay for the house I want to build without a large deposit.

Bass Reeves wrote: »

30k is only beer money. It has no opportunity value. Say OP is right and houses fall 20%+ would it not make more sense to buy two a home and an investment property. As he said part of the money is an inheritance,l. He had not originally factored it into his deposit. Saving is grand but it will take years to put 100k in opportunity money together again.

At present you can still buy holiday homes that are pool rental tied for sub 100k. The rental side will be released in 5-10 years in most cases. You still buy investment properties in small to mid sized towns for sub 100k. If OP is willing to gamble on house prices being down in 1-2year time there will be other investment opportunities as well.

The op is like most people buying a home and has little or no interest in investment properties. He wants the smallest mortgage possible like most. Now I would personally put the 150k up now and borrow the rest to buy the 370k house rather than keep saving (and wasting money in rent) but I would still agree more with him to be honest than borrowing more than is necessary in a mortgage.

The term opportunity money means nothing to me personally would never enter my head when it comes to trying to minimize a mortgage on my forever home (which is guaranteed in my case as I’m building at home so could never sell).

Gumbo

IsErik wrote: »

There will be up to 50,000 social houses built within the next few years, this will ease things with the supply side, i don't think we will see such a big drop though, i'm thinking more along the lines of 12-15% across the board.

Why are you staying here that a 15% drop is expected, yet your opening posts hopes to get a 450k house for 300k ??

Empty_Space

I'm in a similar situation. I have a 310k deposit.

Trying to decide between buying a 310k house with no mortgage, buying a 500kish house with big mortgage, something in between or just waiting a while longer.

I'm leaning towards buying mortgage free, I don't buy into this talk of free money. How is it free at 2.6 percent interest....makes no sense to me.
Yes it might be cheaper money but it's not free, I'd rather not pay back interest.

TheW1zard

Empty_Space wrote: »

I'm in a similar situation. I have a 310k deposit.

Trying to decide between buying a 310k house with no mortgage, buying a 500kish house with big mortgage, something in between or just waiting a while longer.

I'm leaning towards buying mortgage free, I don't buy into this talk of free money. How is it free at 2.6 percent interest....makes no sense to me.
Yes it might be cheaper money but it's not free, I'd rather not pay back interest.

You get to live in a nicer house in a nicer area?

I mean that why youd go for the 500k house for a 190k mortgage.Makes sense to me

Empty_Space

TheW1zard wrote: »

You get to live in a nicer house in a nicer area?

I mean that why youd go for the 500k house for a 190k mortgage.Makes sense to me

Yes, I understand this is a pro. Thank you.