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Seeking advice - to buy a house or not.

Pussyhands

Let me give some background.

40k basic salary
Single
Paying rent of ~3500 a year
60k in bank.

I was thinking of purchasing a property (2 bed apartment) and getting a 10 year mortgage. I want to be debt free as soon as I can and renting out to someone else will mean that will pay off at least the interest part of the mortgage.

I would live in it and rent out a room to another person. I believe I could get rent of 45% of the mortgage repayment.

Pro's:

I wouldn't have dead money and I'd have someone paying towards my mortgage.
I could go travelling for a short period yet still be gaining net value as I could rent out my room to someone else.
With property prices increasing, my money will not be losing value.

Cons:
Extra costs such as management fees, insurance, bills being more expensive as split between less people. etc. (I don't know exactly how much this would add up to)
If I lost my job (permanent and no reason for it to go) I might end up with a long commute or need to rent somewhere else myself.
Not looking to go long term on this as I'd like to move home to the country eventually so property prices may go down? (But I can't see them going down in the eastern region)

So what do you think I should do?

Essentially, I'm looking for a gain in net value. My money is sitting in my account losing value now while property prices may go up year on year.

If anyone has any other advice regarding what I should do with my money, I am all ears.

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ixus

220k -50k =170k @ 2.6% 4yr fixed with UB is approx 1610pm.

You currently pay less than 300pm for a room.

How will you manage the jump to 800pm assume other room is let full time ~50%?

How will you manage if other room empty for a few months?

Add property tax to annual expense.

How will you save with new financial commitments?

Putting 50k in plus kitting out, legal expenses etc will leave you without the safety net you currently have. Adverse circumstances could easily leave you in financial distress.

Macro economics - Brexit and Trumps trade wars can have an effect on global economic cycle. Plus FED rate cycle.

Being single and cash positive gives you a lot of freedom particularly of movement.

All factors to be considered.

Taylor365

Get the longest mortgage possible and just overpay.

Saves any unfortunate events causing unwanted stress..

BrokenArrows

OP,

My choice would be to buy a property. Thats what i did recently and i dont regret it.

Now you have to realise that with ownership there are extra expenses. Everything related to the property is now your responsibility, where as previously it was the landlords.

Everything from the €10 kettle to the multi 000's you may have to spend if you get a bad run of luck. ie Major plumbing issues, boilers, washing machine etc.

Once you understand the costs then id say go for it.

phantom_lord

Rent isn't really dead money, and in many cases can work out cheaper in the long-term. You're getting the use of an expensive asset with a lot of convenience (someone else is responsible for maintenance, and compare what's involved in moving when renting vs buying)

Buying a home tends to be more of an emotional rather than financial decision. Don't feel pressured because you've money in the bank.

Ireland too is a bit unique when it comes to property prices, in the US the long-term returns are about 1%.

If you want to have you're money doing something, are you maximising your pension contributions?

(impressive level of savings and rent btw)

Pussyhands

Coinsguy wrote: »

I'm in a similar position to yourself. But how can you get a 10 year mortgage with the money you're on? I assume you want to buy somewhere in Dublin?

Say you need 250k for a place and you need a mortgage of 190k - surely you couldn't pay that off in 10 OK 40k per year?

It's not in Dublin but near. 2 bed apartments could be bought for 200-220k.

Coinsguy

I'm in a similar position to yourself. But how can you get a 10 year mortgage with the money you're on? I assume you want to buy somewhere in Dublin?

Say you need 250k for a place and you need a mortgage of 190k - surely you couldn't pay that off in 10 OK 40k per year?

Pussyhands

Bump