Avoid mortgage or up price range?

Empty_Space · 18-11-2019 10:36pm #1

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 · 18-11-2019 10:40pm

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

That would be my major deciding factor

randomname2005 · 18-11-2019 10:41pm

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 · 18-11-2019 10:42pm

What age are you?

I think I'd mortgage up in that scenario

listermint · 18-11-2019 10:43pm

Aye new poster with 300k in savings

Sounds.. original

18-11-2019 10:44pm

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 · 18-11-2019 10:45pm

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 · 18-11-2019 10:45pm

bilbot79 wrote: »

What age are you?

I think I'd mortgage up in that scenario

35

Gael23 · 18-11-2019 10:46pm

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

drunkmonkey · 18-11-2019 10:49pm

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 · 18-11-2019 10:50pm

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 · 18-11-2019 11:03pm

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 · 18-11-2019 11:11pm

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 · 18-11-2019 11:35pm

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 · 18-11-2019 11:37pm

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

Empty_Space · 18-11-2019 11:45pm

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 · 18-11-2019 11:48pm

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.

18-11-2019 11:54pm

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 · 18-11-2019 11:57pm

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 · 19-11-2019 12:05am

Is it not possible that OP has inherited 250k?

S/he never said "saved".

Empty_Space · 19-11-2019 12:05am

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 · 19-11-2019 12:06am

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 · 19-11-2019 12:29am

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 · 19-11-2019 12:33am

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 · 19-11-2019 7:58am

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 · 19-11-2019 8:23am

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 · 19-11-2019 9:11am

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.

19-11-2019 10:27am

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 · 19-11-2019 10:36am

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 · 19-11-2019 11:19am

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 · 19-11-2019 11:30am

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

Empty_Space · 19-11-2019 11:32am

pwurple wrote: »

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.

I've also looked at the help to buy scheme. It's only for 70 percent loan to value, so presumably I'm ruled out.

Or is there any way around this like take out large mortgage and pay back high amount quickly. I'm sure that wouldnt work in my favour.

pwurple · 19-11-2019 11:52am

Empty_Space wrote: »

I've also looked at the help to buy scheme. It's only for 70 percent loan to value, so presumably I'm ruled out.

Or is there any way around this like take out large mortgage and pay back high amount quickly. I'm sure that wouldnt work in my favour.

Yes, you're ruled out of help to buy, because, in fairness , you don't need it.

Yes, you can take out a variable mortgage and overpay it, no problem there, they are flexible. I've done it myself on a couple of mortgages to pay them down fast. Any bonus I got at work I dump into a mortgage, a bit of savings, rent a room out to a lodger, pop it all in. The first mortgage I took out was a 25 year, paid it down in 8 years.

One thing I will say, just in case you are getting that 300k from other loans, credit union etc, a mortgage is about the cheapest loan you can ever get. Look at your rates. If you think you can clear the mortgage quickly, it's usually much cheaper than a term loan.

SozBbz · 19-11-2019 1:48pm

I would take the loan OP. Buying something you're fundamentally unhappy with is a bad idea. If the market shifts badly, you could be stuck in that house or have to take a loss to get out of it.

You have no other loans. I'm someone who doesnt like the idea of buying stuff I can't afford out of pocket, but property is different. I've never had any other loans beyond my mortgages, not even an over draft. I also clear my credit card each month, so i do understand the aversion to buying things on credit, but you need to think of a house as capital expenditure, not current expenditure.

handlemaster · 19-11-2019 2:24pm

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.

Deffo go for it

GreeBo · 19-11-2019 2:45pm

listermint wrote: »

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

images?q=tbn:ANd9GcQnb80vmpui8ehfEaZaON8bIdJlyMQort8o8aoY4ix9TlgiMem8&s

Paul_Mc1988 · 19-11-2019 3:20pm

listermint wrote: »

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

Saved 110k over 4 years while saving for a mortgage and I'm only 30 and she's 28. We were not even being frugal. We could have done 150k in those years but enjoyed life a little. We put it all down on the deposit and went sale agreed three months ago.in full on frugal mode at the moment and saved another 11k since then to put into it.

Just because you cant do it doesn't mean someone else is lying.

antix80 · 19-11-2019 3:34pm

Imagine you had a 200k mortgage on a house worth 250k, you lost your job and you had no savings... well that's the worst case scenario.

Unlikely to happen of course.

Do you have all that money in cash? If it's in shares, etc, well house prices might fall but so will most investments. So if you're thinking of buying imminently, and house prices seem to have slowed.. you should consider moving it to cash.

19-11-2019 3:56pm

Empty_Space wrote: »

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.

hi OP, I am in much the same position. I still sometimes think I should just buy something cheap, but the value just isn't there.
I am looking at 400 K-ish, which would be a 150K mortgage. I decided I want to live somewhere I like rather than put up with somewhere I'm not mad about.

I agree with the size though.....I would be happy with 2 bedrooms, but 2 bedroom houses are so small, with no storage, I will possibly end up with a 3 bed, just for the extra size and storage.

meijin · 19-11-2019 6:24pm

Empty_Space wrote: »

I'm finding any adaquatley sized places very grim and am now thinking of just buying large property and leaving rooms idle.

if you get a bigger place, you can rent out a room, and get up to 14K a year tax free

Wildly Boaring · 19-11-2019 6:40pm

OP I wouldn't be in such a huge rush to take out the 200k mortgage personally.

I would quite happily take out somewhere between 80 and 120k.
Over 35 years looking at what 500 a month and overpay fairly savagely early days, can always throttle back when necessary.

Anything taking your fancy at the 400k level?

To get 300k together and then take out 200k mortgage would bug me TBH.
Maybe just me

antix80 · 19-11-2019 8:08pm

meijin wrote: »

if you get a bigger place, you can rent out a room, and get up to 14K a year tax free

Given the op's savings i doubt househaring is an option. I wouldn't like to pay 500k to tolerate someone.

But you raise a good point, and if that's the plan op would need to consider if the house lends itself well to someone sharing.. Noise through ceiling/walls, number of bathrooms, a 2nd living room... Ideally it would be as self-contained as possible.

antix80 · 19-11-2019 8:16pm

Wildly Boaring wrote: »

Anything taking your fancy at the 400k level?

I think the problem is 400k is a reasonable amount in dublin for a couple on a decent salary to obtain in finance.
(50k avg x 2 * 3.5) + a decent deposit. So too much competition.

Empty_Space · 19-11-2019 8:25pm

Wildly Boaring wrote: »

OP I wouldn't be in such a huge rush to take out the 200k mortgage personally.

I would quite happily take out somewhere between 80 and 120k.
Over 35 years looking at what 500 a month and overpay fairly savagely early days, can always throttle back when necessary.

Anything taking your fancy at the 400k level?

To get 300k together and then take out 200k mortgage would bug me TBH.
Maybe just me

Not a lot at 400k really grabbing me.
In fact the I keep seeing places towards 600!. I won't go that far though.

Renting a room not really considered but would be a nice option.

Avoid mortgage or up price range?

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