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Low paid academic - will I be able to get a mortgage?

  • 18-11-2019 6:55am
    #1
    UCDAlum
    Registered Users Posts: 5 ✭


    I am a 39 year old postdoctoral researcher and I want to move back to Ireland and buy a house. A postdoctoral contract is not permanent, it lasts 1-3 years. I'm trying to weigh up whether it is financially feasible to continue on in academia or will I be forced to move to industry where the pay is generally much better. I want to stay in academia if it is feasible.

    I earn 2.500 Euro a month from a postdoctoral fellowship, i.e. this is what my employer pays into my bank account every month. I have about 35,000 Euro total in my bank account.

    I have no idea about finances or mortgages. How will the banks view someone of my age and financial situation, will I be able to get a mortgage? If so, what kind of amount would the bank be willing to provide?


Comments

  • #2
    Dav010
    Registered Users Posts: 14,000 ✭✭✭✭Dav010


    https://www.citizensinformation.ie/en/housing/owning_a_home/help_with_buying_a_home/paying_for_a_home.html


    I would start by reading the above on mortgage rules in Ireland.

    Like everyone else, it really depends on where you want to live. With some exceptions as laid out in the linked article, lenders will lend up to 3.5 times your annual income. Given your wage and the amount you have for deposit, you may be limited to a mortgage of just over 100k, which might buy you a small house/apartment in a rural town, but will not buy anything close to a University, especially in Dublin where the average property price is around €380k if memory serves me.

    Also be aware, rental prices here are crazy, if you can even get a rental property. Your ability to save while paying rent may be restricted.


  • #3
    fits
    Registered Users Posts: 13,248 ✭✭✭✭fits


    Are you single?

    It can be possible to get a mortgage with consistent contract employment. I managed it. My partner has a permanent contract however. Try to find a good broker.

    Have you a long term plan to get off post docs? Still a work in progress for me. Not the easiest road at all.


  • #4
    Bdjsjsjs
    Banned (with Prison Access) Posts: 82 ✭✭Bdjsjsjs


    UCC used to offer help with mortgages. Think it was cut.


  • #5
    is_that_so
    Registered Users Posts: 32,136 ✭✭✭✭is_that_so


    UCDAlum wrote: »
    I am a 39 year old postdoctoral researcher and I want to move back to Ireland and buy a house. A postdoctoral contract is not permanent, it lasts 1-3 years. I'm trying to weigh up whether it is financially feasible to continue on in academia or will I be forced to move to industry where the pay is generally much better. I want to stay in academia if it is feasible.

    I earn 2.500 Euro a month from a postdoctoral fellowship, i.e. this is what my employer pays into my bank account every month. I have about 35,000 Euro total in my bank account.

    I have no idea about finances or mortgages. How will the banks view someone of my age and financial situation, will I be able to get a mortgage? If so, what kind of amount would the bank be willing to provide?
    I imagine they all have mortgage calculators so you should be able to at least get a quick indicator by putting in your details.


  • #6
    _Brian
    Registered Users Posts: 18,473 ✭✭✭✭_Brian


    Maybe this is wrong but most people sell their soul to industry when they are young and try earn as much as they can, get a mortgage, maybe start a pension early and front load or with some money for the long term.

    It’s easier to do the hard graft when you are younger and then step down to academic work after maybe 10-15 years when a slower pace suits lifestyle better too.

    That’s how I did it anyway, worked soulless 12.5 hr rotating shifts with a 2.5hr commute for 13 years but the money was awesome.

    I’m late 40’s now and earning half what I once was but in a position where time off and flexibility are more valuable than cash in the paycheque.


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  • #7
    deRanged
    Registered Users Posts: 3,744 ✭✭✭deRanged


    Bdjsjsjs wrote: »
    UCC used to offer help with mortgages. Think it was cut.

    that's gone a very long time.

    Try the on campus bank (presuming you have one). I was in a similar situation on research contracts, and was able to get a mortgage. The on campus branch was familiar with the contract situation, and with a good savings record and plenty of documentation on the contracts they were happy enough to give a mortgage right in the middle of the recession.


  • #8
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,465 Mod ✭✭✭✭johnnyskeleton


    UCDAlum wrote: »
    I am a 39 year old postdoctoral researcher and I want to move back to Ireland and buy a house. A postdoctoral contract is not permanent, it lasts 1-3 years. I'm trying to weigh up whether it is financially feasible to continue on in academia or will I be forced to move to industry where the pay is generally much better. I want to stay in academia if it is feasible.

    I earn 2.500 Euro a month from a postdoctoral fellowship, i.e. this is what my employer pays into my bank account every month. I have about 35,000 Euro total in my bank account.

    I have no idea about finances or mortgages. How will the banks view someone of my age and financial situation, will I be able to get a mortgage? If so, what kind of amount would the bank be willing to provide?

    There are a few things that need to be ironed out before you get a mortgage. First of all, most banks want a permanent contract rather than a temporary one. They might make an exception as yours is a sort of permanently rolling temporary contracts type scenario, but that's not guaranteed.

    I don't mean to pry into where you are, but the situation in Ireland is different. Will your current employer be paying you to research while you are in Ireland, or will you be getting a job in Ireland. Ireland has relatively high taxes and some nasty ones like Universal Social Charge and PRSI which add up to quite a bit. So your net salary (i.e. that which is paid into your bank account every month) may decrease once you are tax resident in Ireland.

    Also, we have legislation governing temporary contracts as to when they can be renewed etc.

    Once you get over these two things, the banks will want to see that you've been in work and saving for 3-6 months in Ireland. They will need to basically see that you either pay rent or save money that is more than what you would pay on a mortgage if the interest rates increase a little bit (stress testing).

    Once all that is sorted, they should offer you between 3 and 4 times your gross salary i.e. before tax, not after tax. Then as a first time buyer they will typically want a 10% deposit on a property (more if it is an apartment, one bed etc).

    So with 35k of a deposit, you could be looking at a house up to 350k, but with a salary of c. 50k, you could borrow in the region of 150-200k. So You would realistically be looking at 185-235k.

    Banks can also give people an exemption whereby they bend the rules a little bit. But typically this is to increase the borrowings up to 4x salary.


  • #9
    GLaDOS
    Moderators, Regional East Moderators Posts: 23,199 Mod ✭✭✭✭GLaDOS


    I recently got approved for a mortgage as a postdoc. My partner is on a permanent contract though so that definitely helped.

    Talk to a broker and they should be able to advise you.

    Cake, and grief counseling, will be available at the conclusion of the test



  • #10
    Bdjsjsjs
    Banned (with Prison Access) Posts: 82 ✭✭Bdjsjsjs


    _Brian wrote: »
    Maybe this is wrong but most people sell their soul to industry when they are young and try earn as much as they can, get a mortgage, maybe start a pension early and front load or with some money for the long term.

    It’s easier to do the hard graft when you are younger and then step down to academic work after maybe 10-15 years when a slower pace suits lifestyle better too.

    That’s how I did it anyway, worked soulless 12.5 hr rotating shifts with a 2.5hr commute for 13 years but the money was awesome.

    I’m late 40’s now and earning half what I once was but in a position where time off and flexibility are more valuable than cash in the paycheque.
    What do you mean by step down to academic work? Academics tend to have awful pay for a long part of their career.


  • #11
    Woshy
    Registered Users Posts: 1,429 ✭✭✭Woshy


    My husband used to be an academic and was told that they do offer mortgages even if you are not permanent as academia is a career where few people get permanent positions. By the time we did apply for a mortgage though he was in industry so we never tested this out.

    I presume 2500 a month is about the 38k mark? Lending rules means you would only be offered 3.5 times that if you are applying just as yourself. It would be difficult to buy on that salary without a hefty deposit. You would be able to borrow about 135k


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  • #12
    _Brian
    Registered Users Posts: 18,473 ✭✭✭✭_Brian


    Bdjsjsjs wrote: »
    What do you mean by step down to academic work? Academics tend to have awful pay for a long part of their career.

    Yea, I’m not disputing that.
    However if you get into industry is a different beast. If you don’t know that you will at some stage. Anyway, that’s not the thrust of the conversation nor my point.


  • #13
    SozBbz
    Registered Users Posts: 1,889 ✭✭✭SozBbz


    Op you need to keep in mind that at 39, the term of any mortgage will be limited, and this will decrease with every passing year.

    Also, you've not said where in Ireland you're looking to buy or if you're single/have any dependents.


  • #14
    riclad
    Registered Users Posts: 8,184 ✭✭✭riclad


    look at www.daft.ie , area, eg cork, dublin where you want to live.
    open a bank account, save money every week,
    you,ll need to live here a certain amount of time before getting a loan.
    banks lend 3-3.5 times your salary.
    mortages are 25 years at least.
    prices vary widely from county to county,
    city to city.
    you can get advice from a mortgage broker.
    in most area.s a 1bed apartment is cheaper than most houses .most people buy a house in their 20,s or 30,s .
    Its easier to buy as a couple vs single person.
    banks expect you to have deposit saved, 10 per cent of house value.


  • #15
    jlm29
    Registered Users Posts: 3,818 ✭✭✭jlm29


    riclad wrote: »
    mortages are 25 years at least.

    This isn’t quite true, the mortgage will need to be paid back by retirement age, in the OPs case it would be around 25 yrs If they get it now, but if it takes them. Few years to get mortgage ready, that roll reduce their term accordingly


  • #16
    riclad
    Registered Users Posts: 8,184 ✭✭✭riclad


    Go and see a broker, in 2 or 3 years time you might not be able to get a loan. the average wage in ireland is 38 k approx


  • #17
    UCDAlum
    Registered Users Posts: 5 ✭UCDAlum


    Thanks for all the information, it is very useful in figuring out where I stand.
    fits wrote: »
    Are you single?

    It can be possible to get a mortgage with consistent contract employment. I managed it. My partner has a permanent contract however. Try to find a good broker.

    Have you a long term plan to get off post docs? Still a work in progress for me. Not the easiest road at all.

    I am single yes. My plan is to actively look for asst prof. positions now and to consider next year to be my final year in academia if I don't get the opportunity to move past the postdoc stage. I don't think I will ever get a mortgage otherwise.
    _Brian wrote: »
    It’s easier to do the hard graft when you are younger and then step down to academic work after maybe 10-15 years when a slower pace suits lifestyle better too.

    I would consider the workload to stay at the cutting edge of STEM research to be hard graft itself with seven days a week spent in the office.
    jlm29 wrote: »
    This isn’t quite true, the mortgage will need to be paid back by retirement age, in the OPs case it would be around 25 yrs If they get it now, but if it takes them. Few years to get mortgage ready, that roll reduce their term accordingly
    riclad wrote: »
    Go and see a broker, in 2 or 3 years time you might not be able to get a loan. the average wage in ireland is 38 k approx

    Yes as bad as my current situation is, in a few years it will be even worse. I don't know if the banks have a cut-off age for mortgages but I can't imagine they would be keen on lending 200K to someone on low pay in their mid-40s.


  • #18
    jlm29
    Registered Users Posts: 3,818 ✭✭✭jlm29


    UCDAlum wrote: »
    Yes as bad as my current situation is, in a few years it will be even worse. I don't know if the banks have a cut-off age for mortgages but I can't imagine they would be keen on lending 200K to someone on low pay in their mid-40s.

    It’s not so much that they won’t lend it, it’s just that you’ll be more limited. My OH was late 40s when we got our mortgage, so we have a 19yr term, to allow it to be paid back by the time he’s 65. It didn’t matter to us because we weren’t borrowing much, but you’ll also have to meet affordability criteria, so will be limited in terms of what you can borrow


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