FTB To buy or not to buy?

cvwallace · 30-11-2011 4:26pm #1

I'm currently saving to buy a house, hopefully in the spring, if I can get approval (I'm holding off on meeting a mortgage advisor until I've a couple grand more saved up). I'm not quite sure if I should be thinking of holding off for longer now.
I'm frankly sick to death of renting; I've moved between 6 rented houses in the last 9 years and had issues with all bar 1 landlord whenever it came to basic maintenance. I know that house prices may drop further over the next 12 months+ but given that a) I'm looking for a family home, not somewhere I'll be looking to sell over the lifetime of the mortgage, and b) my mortgage repayments will still work out less than my current rent, even allowing for up to 4% variance in interest rates.
Providing I can get Mortgage approval, am I still mad to buy?

D3PO · 30-11-2011 4:44pm

cvwallace wrote: »

I'm currently saving to buy a house, hopefully in the spring, if I can get approval (I'm holding off on meeting a mortgage advisor until I've a couple grand more saved up). I'm not quite sure if I should be thinking of holding off for longer now.
I'm frankly sick to death of renting; I've moved between 6 rented houses in the last 9 years and had issues with all bar 1 landlord whenever it came to basic maintenance. I know that house prices may drop further over the next 12 months+ but given that a) I'm looking for a family home, not somewhere I'll be looking to sell over the lifetime of the mortgage, and b) my mortgage repayments will still work out less than my current rent, even allowing for up to 4% variance in interest rates.
Providing I can get Mortgage approval, am I still mad to buy?

No there are situations and circucumstances that make buying a reasonable proposition. So your not mad to buy given what you have outlined.

Its ultimately a lifestyle choice. If your happy to rent and put up withthe hassle of landlords, the lack of regulation to protect you etc, will you be able to buy the same house for less in 12 - 18 months time most probably.

Just because you are paying more now however doesnt make you mad.

Personally I wouldnt buy now if I had a choice, and the mindset that sure its less than my rent is a misguided one especially if you consider that the house purchase price will drop most probably more than the differnece in rent v mortgage savings anyway.

But you need to ultimate weigh up the pros and cons and decide for yourself if your willing to pay a premium now for the pros that owning rather than renting provides.

cvwallace · 30-11-2011 5:11pm

I see your point. A drop of 6/7% per annum will still see me paying off more of my mortgage than i'm losing on the house's value but if we keep seeing drops of 12%+ I'd just be throwing money down a different hole really. Well I suppose the further they drop, the better for prospective buyers. I just need a good psychic to tell me when they're gonna bottom out!

Ray Palmer · 30-11-2011 6:05pm

I wouldn't buy now. People often don't work out what the costs of a house actually are versus rent.
things often foregotten

Mortgage protection (you have to have it)
Maintenace cost (gutter cleaned, bin charges, water, household charges)
Furniture (you now have to buy all of that and appliances)
Replacement factor (washing machine breaks you have to pay for it)

There are others but people don't often add them up together. If you really want to buy why not decide where you would really love to live or a particular type of house. Keep an eye out and if the dream comes up go for it. If you are going to leap make sure it is worth while

cvwallace · 30-11-2011 6:38pm

I've taken into account all of the above & have extra cash set aside for the things I'll need. I've narrowed my area down to 3/4 estates in my area which currently have 5/6 houses in my price range & I'd expect a few more to be on the market come the new year. Maybe you're right, just keep my eyes open until the right one crops up and worry about what the market's doing then. Que sera sera.

Idbatterim · 30-11-2011 8:47pm

what is the value of property and where is it located? Op take a read of the below link.

http://www.independent.ie/business/personal-finance/property-mortgages/young-couples-told-rent-dont-buy-as-prices-keep-falling-2949450.html

also good point made in the "young couples told to rent not buy thread" that I was just about to make myself

Idiots rush in to take advantage of the relief, it then gets reduced/removed leaving even less of an incentive to buy.

TheFarneyman · 01-12-2011 10:45am

Im currently in the process of buying a house at the min, I got it about 62%off peak prices and is the ideal home to settle down with my family. In the country, in an area i like and want, which suits my needs. Was a bit like you renting for 10 years, figured out that i would be dropping 10,000 roughly in rent a year of dead money waiting to save money on a house, 2 years down the line 20,000 (5%) down a hole and the house prices may have hit 70% off peak is it really worth two years of my life to deal with the hassle that goes with rented accommodation to overall save maybe 3%. Will be here for the foreseeable future and my kids have the life i want for them.Really depends on circumstances i think! if you have money to buy, like a house in the area and it suits what you need and dont think of it as an investment then i think you should go with your gut on it. One word of advise do the maths and offer at least 60% or as low as you can it really is a buyers market. Id sort out your mortgage too, ya never know if it all goes belly up, they might never give you one in 2 years anyway. Just tryin to give you two sides of the coin.

Zamboni · 01-12-2011 10:50am

TheFarneyman wrote: »

Im currently in the process of buying a house at the min, I got it about 62%off peak prices and is the ideal home to settle down with my family. In the country, in an area i like and want, which suits my needs. Was a bit like you renting for 10 years, figured out that i would be dropping 10,000 roughly in rent a year of dead money waiting to save money on a house, 2 years down the line 20,000 (5%) down a hole and the house prices may have hit 70% off peak is it really worth two years of my life to deal with the hassle that goes with rented accommodation to overall save maybe 3%. Will be here for the foreseeable future and my kids have the life i want for them.Really depends on circumstances i think! if you have money to buy, like a house in the area and it suits what you need and dont think of it as an investment then i think you should go with your gut on it. One word of advise do the maths and offer at least 60% or as low as you can it really is a buyers market. Id sort out your mortgage too, ya never know if it all goes belly up, they might never give you one in 2 years anyway. Just tryin to give you two sides of the coin.

Don't value a house based on what peak prices were. It is meaningless.

Snakeblood · 01-12-2011 10:51am

TheFarneyman wrote: »

Im currently in the process of buying a house at the min, I got it about 62%off peak prices and is the ideal home to settle down with my family. In the country, in an area i like and want, which suits my needs. Was a bit like you renting for 10 years, figured out that i would be dropping 10,000 roughly in rent a year of dead money waiting to save money on a house, 2 years down the line 20,000 (5%) down a hole and the house prices may have hit 70% off peak is it really worth two years of my life to deal with the hassle that goes with rented accommodation to overall save maybe 3%. Will be here for the foreseeable future and my kids have the life i want for them.Really depends on circumstances i think! if you have money to buy, like a house in the area and it suits what you need and dont think of it as an investment then i think you should go with your gut on it. One word of advise do the maths and offer at least 60% or as low as you can it really is a buyers market. Id sort out your mortgage too, ya never know if it all goes belly up, they might never give you one in 2 years anyway. Just tryin to give you two sides of the coin.

It's not dead money.

TheFarneyman · 01-12-2011 10:56am

Snakeblood wrote: »

It's not dead money.

Well your paying off someone else's mortgage!

ResearchWill · 01-12-2011 10:59am

cvwallace wrote: »

I'm currently saving to buy a house, hopefully in the spring, if I can get approval (I'm holding off on meeting a mortgage advisor until I've a couple grand more saved up). I'm not quite sure if I should be thinking of holding off for longer now.
I'm frankly sick to death of renting; I've moved between 6 rented houses in the last 9 years and had issues with all bar 1 landlord whenever it came to basic maintenance. I know that house prices may drop further over the next 12 months+ but given that a) I'm looking for a family home, not somewhere I'll be looking to sell over the lifetime of the mortgage, and b) my mortgage repayments will still work out less than my current rent, even allowing for up to 4% variance in interest rates.
Providing I can get Mortgage approval, am I still mad to buy?

My usual advice to people is don't buy. But in your case in my opinion buying seems the best option. You have worked good stress test in to the equation, you are not doing it to make a killing. Your main reasons is to have some better control over your family's living arrangements and make a slight saving on monthly expenditure. If you find the right property where the money adds up then go for it.

Zamboni · 01-12-2011 10:59am

TheFarneyman wrote: »

Well your paying off someone else's mortgage!

You are paying for a service.

Who cares about the financial dealing of the service provider?
That is their business.
I don't buy a car and say well I am paying off someone else's corporate borrowings!

Snakeblood · 01-12-2011 11:01am

TheFarneyman wrote: »

Well your paying off someone else's mortgage!

No. You're paying for the freedom to move to other accomodation if your situation changes, for handing over responsibility for maintenance of dishwashers etc to the landlord, and for somewhere to live. Dead money is the kind of frankly shortsighted and myopic talk that led to the property bubble in the first place. It's completely misinformed and wrongheaded.

Gurgle · 01-12-2011 11:07am

cvwallace wrote: »

I'm frankly sick to death of renting
I'm looking for a family home
my mortgage repayments will still work out less than my current rent, even allowing for up to 4% variance in interest rates.

Mad not to.

TheFarneyman · 01-12-2011 11:07am

Zamboni wrote: »

You are paying for a service.

Who cares about the financial dealing of the service provider?
That is their business.
I don't buy a car and say well I am paying off someone else's corporate borrowings!

I see your point but i think if you have the funds to buy your own property and have your own home (not living from lease/property to property), pay 20,000 towards your own house it far out-ways paying for a service.Especially if your monthly bills come to less than the rented accom which is the case in many situations,

dufferlover · 01-12-2011 12:48pm

Myself and my partner are in the exact same position. We've applied for agreement in principle on a mortgage with AIB and factoring in all additional costs our monthly repayments, at present interest rates, will literally be half of what we're currently paying in rent. The headline in yesterday's Indo did frighten me somewhat though. I guess at this point in time we should wait to see if we get agreement in principle and then sit down and discuss it.

D3PO · 01-12-2011 1:33pm

dufferlover wrote: »

Myself and my partner are in the exact same position. We've applied for agreement in principle on a mortgage with AIB and factoring in all additional costs our monthly repayments, at present interest rates, will literally be half of what we're currently paying in rent. The headline in yesterday's Indo did frighten me somewhat though. I guess at this point in time we should wait to see if we get agreement in principle and then sit down and discuss it.

agreement in priocinple means nothing these days. everythign has to be signed off by head office. Most of these do not convert into mortgage offers.

jsut be awar eof that before you get your hopes up on anything.

dufferlover · 01-12-2011 1:51pm

D3PO wrote: »

agreement in priocinple means nothing these days. everythign has to be signed off by head office. Most of these do not convert into mortgage offers.

jsut be awar eof that before you get your hopes up on anything.

You're totally right and trying very hard not to have great hopes because I do tend to lose the run of myself by times!

I'm presuming that it is best to get agreement in principle (even though that means feck all) before you go looking though? No point in us going looking at properties if we have zero indication as to whether we might get a mortgage or not, right?

SmartHass · 01-12-2011 1:59pm

It seems that its in your interest to buy, go for it and enjoy your home, Ive rented in the past and never liked it, bought in 09 against strong advice not to and I love my home. My rent was only about 100 less in the month, so to me it made sense.

Its another case of us NEEDING to turn a blind eye to sensationalist media, live for yourself and make your own decisions.

D3PO · 01-12-2011 2:03pm

dufferlover wrote: »

You're totally right and trying very hard not to have great hopes because I do tend to lose the run of myself by times!

I'm presuming that it is best to get agreement in principle (even though that means feck all) before you go looking though? No point in us going looking at properties if we have zero indication as to whether we might get a mortgage or not, right?

Absolutly however also note that most of the time when you do get an offer its much lower than that of the agreement in principle. so bear that in mind when you do go looking.

best of luck with it though

Idbatterim · 01-12-2011 2:32pm

i would be dropping 10,000 roughly in rent a year of dead money

thought this notion was thoroughly dead! Is it dead money if you save tens of thousands on a house by waiting, which might nearly double by the time you pay off the interest that could have been spent on kids education, holidays or god knows what else?

noxqs · 01-12-2011 7:28pm

People who claim rent is dead money I usually just write off as poorly educated in the subject matter. But I am fatigued trying to show people basic mathematics by now. There's too many fools who can't do basic back of the envelope math to understand why 'rent is dead money' is completely absurd.

dudmis · 02-12-2011 12:57pm

noxqs wrote: »

People who claim rent is dead money I usually just write off as poorly educated in the subject matter. But I am fatigued trying to show people basic mathematics by now. There's too many fools who can't do basic back of the envelope math to understand why 'rent is dead money' is completely absurd.

The difficulties with renting are not just financial.

I've been renting now for 20 years (it hurts to even write that ;-). In the last 10 years, I have moved house on average once a year. In some cases it was our decision to move and the flexibility renting provided was appreciated then.

However, I have also been told that our house was being sold 2 days after arriving home with a newborn baby. So while renting can provide benefits, it is also a very insecure situation, particularly when you have children. And then theres the fact that a rented house is never yours to do up and make nice etc etc.

So, we too are looking to buy our family home now and will jump once a house we like comes on the market. I know the market hasn't hit bottom yet, but I am factoring in non-financial factors into our decision.

(sorry if I've gone OT)

TheFarneyman · 02-12-2011 2:22pm

dudmis wrote: »

The difficulties with renting are not just financial.

I've been renting now for 20 years (it hurts to even write that ;-). In the last 10 years, I have moved house on average once a year. In some cases it was our decision to move and the flexibility renting provided was appreciated then.

However, I have also been told that our house was being sold 2 days after arriving home with a newborn baby. So while renting can provide benefits, it is also a very insecure situation, particularly when you have children. And then theres the fact that a rented house is never yours to do up and make nice etc etc.

So, we too are looking to buy our family home now and will jump once a house we like comes on the market. I know the market hasn't hit bottom yet, but I am factoring in non-financial factors into our decision.

(sorry if I've gone OT)

A lot of people reading into saying its "dead money" but at least some people see the benefits of family life/owning your own property and improving your standard of living! Or maybe some people (noxqs) aren't educated enough to read the full post!!!!!

Snakeblood · 02-12-2011 3:04pm

TheFarneyman wrote: »

A lot of people reading into saying its "dead money" but at least some people see the benefits of family life/owning your own property and improving your standard of living! Or maybe some people (noxqs) aren't educated enough to read the full post!!!!!

You're missing the point. People aren't arguing the value of the benefits of owning your own home, you were discounting the benefits of renting, by calling it dead money. Going on the defensive is silly.

not even wrong · 02-12-2011 5:06pm

TheFarneyman, you have missed the point. The argument isn't over "buying now" versus "renting forever", the argument is over "buying now" versus "buying later once everything has shaken out".

My own view is that in general buying is a better option than renting. However, under the specific circumstances of Ireland over the past 10 years, with first a massive bubble, then followed by the current situation of falling houseprices, uncertainty over taxes on home ownership, financial crises, massive unemployment and emigration, renting is a far safer option for the time being.

Villa05 · 02-12-2011 5:41pm

To anyone considering buying. I would be very wary of a euro breakup. Were Ireland to leave (kicked out of) the euro and revert to the punt.

The punt would most likely devalue by 50% against the euro, this in effect would double your debt which would remain in euro's.

Be very careful and keep your powder dry

Supercell · 02-12-2011 6:55pm

Villa05 wrote: »

To anyone considering buying. I would be very wary of a euro breakup. Were Ireland to leave (kicked out of) the euro and revert to the punt.

The punt would most likely devalue by 50% against the euro, this in effect would double your debt which would remain in euro's.

Be very careful and keep your powder dry

Thats an unknown though, what may happen is that your debt is converted into Punts 1:1 on the date of changeover. Though if you are on a euro/ecb tracker that might not happen. That said even if you had a euro tracker mortgage the punt would have to devalue by about 50% relative to make it more costly than a variable rate punt mortgage in all likelihood given the different in variable and tracker mortgage rates (which would probably increase post breakup, interest rates in the previous punt era were around 10% or more IIRC).

Posy · 03-12-2011 6:17pm

I bought this year, just down the road from my previous rented accommodation and my mortgage repayments are over €400 less per month than my rent, for a nicer house! My rent was €1200 a month, so if I had held off for another two years, that would have been 30k spent in rent I could have had paid towards my mortgage!

cvwallace wrote: »

I'm frankly sick to death of renting; I've moved between 6 rented houses in the last 9 years and had issues with all bar 1 landlord whenever it came to basic maintenance..
I'm looking for a family home, not somewhere I'll be looking to sell over the lifetime of the mortgage..
my mortgage repayments will still work out less than my current rent

To be honest, from the highlighted bits in your post, it sounds like you want to buy- if you want a family home that's yours, that you can decorate as you want, and the security of not living lease to lease, do it!

FTB To buy or not to buy?

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