Should I bother with a mortgage?

Batattackrat · 01-03-2021 1:32pm #1

Young single and 34 years of age and currently renting. I got a approved for a rebuilding Ireland home loan on a 30 year mortgage. What im paying on rent is slightly lower than the mortgage payment.

The thing is though I'm having doubts as really don't want to be tied down to a 30 year loan and not been able to change location or take time of work if needed. I would be paying off the mortgage till I'm 64 and to say the least this would annoy the absolute crap out of me.

If I had kids and a missus I would definitely get a mortgage. Also will have a decent pension on retirement and will have the parents house when they pass away.(I know this is morbid but have to consider all possibilities).

What should I do?

2Mad2BeMad · 01-03-2021 2:26pm

Batattackrat wrote: »

Young single and 34 years of age and currently renting. I got a approved for a rebuilding Ireland home loan on a 30 year mortgage. What im paying on rent is slightly lower than the mortgage payment.

The thing is though I'm having doubts as really don't want to be tied down to a 30 year loan and not been able to change location or take time of work if needed. I would be paying off the mortgage till I'm 64 and to say the least this would annoy the absolute crap out of me.

If I had kids and a missus I would definitely get a mortgage. Also will have a decent pension on retirement and will have the parents house when they pass away.(I know this is morbid but have to consider all possibilities).

What should I do?

30years paying a mortage. Investing into a house that is yours and sell whenever you want to recoup most of the money you paid off.

Or burn away 30years worth of money on rent.

I know what I'd do OP.

Get the mortage stay with it. When you end up with someone else if the house doesn't suit your needs sell it and use whatever you get from selling as a deposit for the next house.

I'm not an expert but I'm currently blowing 2k a month on rent right now that's dead money. Desperately trying to find a house at least putting 2k off a mortage a month would technically save me money in the long term if I ever decided to sell and if I don't sell well then I have a roof over my head that I own.

Trigger Happy · 01-03-2021 2:33pm

Why 30 years? Go for a shorter term mortgage if you can afford it and then you will be mortgage and rent free sooner. You will save a lot in interest over the shorter term.

ongarite · 01-03-2021 2:39pm

It's rare that your rent would be less than a monthly mortgage repayment.
You must be in a house share, rent a room for this to be the case or in county, town with very low rents.
Most people's rent would be 50% greater than their future mortgage repayments so it makes financial sense to buy a home.

Threshold for rebuilding home loan is low so I guess you aren't high wage earner? Do you have any savings too?

Milena009 · 01-03-2021 2:44pm

2Mad2BeMad wrote: »

30years paying a mortage. Investing into a house that is yours and sell whenever you want to recoup most of the money you paid off.

Or burn away 30years worth of money on rent.

I know what I'd do OP.

Get the mortage stay with it. When you end up with someone else if the house doesn't suit your needs sell it and use whatever you get from selling as a deposit for the next house.

I'm not an expert but I'm currently blowing 2k a month on rent right now that's dead money. Desperately trying to find a house at least putting 2k off a mortage a month would technically save me money in the long term if I ever decided to sell and if I don't sell well then I have a roof over my head that I own.

Same situation (well kind of).
We burning 1600 a month on rent and estimated mortgage is about 1100.
That is saving of 500 give or take depending on value of house.

Going crazy on market nowadays.... however i would much rather own a property i can potentially sell if needed than pay someone else's mortgage for the same time.

wildwillow · 01-03-2021 2:53pm

Problem with continuing to rent is lack of security. Lots of people don't want the hassle of owning a house so I would have no issue with that. Not having a mortgage does mean that you are not building equity instead of paying rent.

You say you will have your parent's house. I'm assuming you are an only child, or do other family members hope for some inheritance too.

You need to take into account that they could, hopefully, have many good years ahead and then may need care home nursing, which will eat into the value of the house.

Also they don't owe you a house. They might want to sell and downsize or move to sheltered housing, or leave it to charity.

silver2020 · 01-03-2021 3:04pm

I can see where the OP is coming from.

Probably well paid and pension already set up.

Possibility of moving job location and currently happy with what rent they are paying.

Nice long term security of parent's house.

If you are thinking the job location may move within 5 years, then I'd do nothing as the purchasing costs and selling costs of a home is €10-€15,000. Add in decoration, furnishing etc, and you could be looking at €20k+ non recoverable expense and house prices are stable and may even fall back a little.

But I would open a savings account and try and put €1,000-€1,500 a month in every month and build it up. It would show consistent savings and if you ever did decide to settle down and want your own place you have a large deposit and probably get a lower mortgage rate.

So enjoy the freedom for now safe in the knowledge that if you do want to buy you have everything ready to go.

Batattackrat · 01-03-2021 3:05pm

Houses in my region are around 200K.

I earn 37K and get a 10% bonus. I could easily get 50K to salary in Dublin but not going down that route as now have a 5 minute drive to work and am living where I grew up.

I think maybe the best thing to do is just move home home for two years and save 1800 a month on top of what I have saved where I should be able to get a 20 year mortgage then.

I have 30K saved currently.

Batattackrat · 01-03-2021 3:11pm

Trigger Happy wrote: »

Why 30 years? Go for a shorter term mortgage if you can afford it and then you will be mortgage and rent free sooner. You will save a lot in interest over the shorter term.

If I could I would, would have no problem with 20 years

Potatoeman · 01-03-2021 3:42pm

Batattackrat wrote: »

If I could I would, would have no problem with 20 years

You can get the figures before you draw down. I dropped mine down to fifteen but could have done ten, though I wanted some wiggle room. The 35 default is mostly interest for the last ten-fifteen years. It’s a way to borrow more and spread the payments further so they are more manageable.

Smee_Again · 01-03-2021 3:47pm

So your choice is to pay a mortgage until you're 64, or pay rent until you're...

mick087 · 01-03-2021 3:50pm

30 years is a very long time to be paying for a home.

Maybe in a few years time you could up the payments then pay this off quicker.

The Mighty Quinn · 01-03-2021 3:52pm

Potatoeman wrote: »

You can get the figures before you draw down. I dropped mine down to fifteen but could have done ten, though I wanted some wiggle room. The 35 default is mostly interest for the last ten-fifteen years. It’s a way to borrow more and spread the payments further so they are more manageable.

Surely mostly interest for the first 10 years.

kiffer · 01-03-2021 3:58pm

Smee_Again wrote: »

So your choice is to pay a mortgage until you're 64, or pay rent until you're...

Also the mortgage basically gets proportionally cheaper over time, while rent increases...

So this year your rent is less than this mortgage, but over time the rent gets increased.
Two days before the rent pressure zone was declared my last landlord put the rent up by 25%... He justified it by saying he hadn't put the rent up in a few years.

Iodine1 · 01-03-2021 4:06pm

Your now 34. At 44 you won't qualify for a 30 year mortgage, you might have to take 20 at a higher figure again...which you may not have the income to justify. Buy when you can, you can always sell if you need to move.

The Mighty Quinn · 01-03-2021 4:13pm

Smee_Again wrote: »

So your choice is to pay a mortgage until you're 64, or pay rent until you're...

This is what tipped the pendulum for me really. I didn't like the idea of 'being locked into' a place. However, in reality, even renting, I didn't want to be hopping around any more, I'd done a lot of that for a decade.

It was the worry of what do I do when I'm 65, 70+ when rents spiral, and my income is down, and do I need to move to some backwater to afford to live etc.

dvdman1 · 01-03-2021 4:15pm

Your 34 years old, what makes you think when your 44 or 54 you won't have "kids and a missus" as you put it?

Smee_Again · 01-03-2021 4:20pm

The Mighty Quinn wrote: »

This is what tipped the pendulum for me really. I didn't like the idea of 'being locked into' a place. However, in reality, even renting, I didn't want to be hopping around any more, I'd done a lot of that for a decade.

It was the worry of what do I do when I'm 65, 70+ when rents spiral, and my income is down, and do I need to move to some backwater to afford to live etc.

It's probably something that a lot of people buying have had to balance, the freedom to pack a bag and move versus the security (and responsibility) of owning your own place.

I moved around a lot from ages 22 to 34, lived in 5 countries across 3 continents and even now at 37 wouldn't mind another move abroad if the opportunity presented itself but I still have a mortgage because who wants to be subjected to the rental market in Ireland now and never mind in 30 years.

StupidLikeAFox · 01-03-2021 4:32pm

Batattackrat wrote: »

If I could I would, would have no problem with 20 years

Sounds like you want the house but are worrying about the last 10 years (when you are 54-64). In that case I'd sign up, you can always overpay to get it down to 20 years later when you are in a better position and inflation has eaten up the repayments

Scoundrel · 01-03-2021 4:36pm

Take the mortgage right away all you're doing now is paying some other cnuts mortgage for them.

smokie72 · 01-03-2021 4:41pm

OP I bought my house in 2006 when I was 34 at the height of the boom. I took out a 30 year loan. The thought of paying a mortgage for 30 years at the time was the part i hated. Within 5 years the house had lost 50% of its value but it is now back up to its original value so Im not in negative equity anymore. I rent out a room which pays half of the mortgage and also have been overpaying it the past few years.

If I was renting the house I would be paying double the amount per month easily. When my mortgage is paid off hopefully within the next 10 years (overpayment plus a lump sum pay off) my house will be an asset. I can sell it/downsize it and put any savings from it towards my pension if I want to.

Everyone is different. I would not like to be renting when I'm retired. It's a great feeling of security to have your own roof over your head and be in control of your future.

Batattackrat · 01-03-2021 4:55pm

dvdman1 wrote: »

Your 34 years old, what makes you think when your 44 or 54 you won't have "kids and a missus" as you put it?

Simply put, I don't want either.

bocaman · 01-03-2021 4:55pm

Home ownership doesn't suit everyone but on balance I'd advise you to get a mortgage. The couple who live next door to my brother are paying more than double in rent what he's paying for his mortgage.

Potatoeman · 01-03-2021 5:04pm

The Mighty Quinn wrote: »

Surely mostly interested for the first 10 years.

Yes. You’re paying the interest at the start but by reducing the term you cut the years off the end. The longer term adds more interest over the period, so reduce it as much as you can.

saabsaab · 01-03-2021 5:08pm

Batattackrat wrote: »

Simply put, I don't want either.

A lot of lads said that when I was younger but most ended up married!

Iguarantee · 01-03-2021 5:15pm

Batattackrat wrote: »

Simply put, I don't want either.

Not everyone is suited to a wife, kids, mortgage.

Find what works for you, that should be your goal, people here (myself included) can only tell you what we did or didn’t do. Ultimately it isn’t tailored advice for you.

Personally, I’d speak with a financial advisor, in particular one that doesn’t work in a bank so that you’re getting independent advice as opposed to bank propaganda.

For the record, I’m glad I have a house and I don’t mind my mortgage because it’s so low. I did think that the bank was utterly f*cling useless throughout the entire process though.

In Ireland you’ll likely get two different opinions from
people:

(1) buy a house as quick as you can you fool!!!!

(2) move to <insert foreign country name> its waaaay better than Ireland

decreds · 01-03-2021 8:45pm

2Mad2BeMad wrote: »

30years paying a mortage. Investing into a house that is yours and sell whenever you want to recoup most of the money you paid off.

Or burn away 30years worth of money on rent.

I know what I'd do OP.

Get the mortage stay with it. When you end up with someone else if the house doesn't suit your needs sell it and use whatever you get from selling as a deposit for the next house.

I'm not an expert but I'm currently blowing 2k a month on rent right now that's dead money. Desperately trying to find a house at least putting 2k off a mortage a month would technically save me money in the long term if I ever decided to sell and if I don't sell well then I have a roof over my head that I own.

Or buy right now and be caught holding the bag, that would piss you off alright.

OP if you can, wait it out until 2024. You will likely snap something up cheap and if you save a decent amount before the mortgage required will be significantly lower.

Smee_Again · 01-03-2021 8:46pm

decreds wrote: »

Or buy right now and be caught holding the bag, that would piss you off alright.

OP if you can, wait it out until 2024. You will likely snap something up cheap and if you save a decent amount before the mortgage required will be significantly lower.

Why do you think house prices will be cheaper in 3 years?

decreds · 01-03-2021 8:48pm

Smee_Again wrote: »

Why do you think house prices will be cheaper in 3 years?

Biggest recession in history on the way (we're currently in it but it will get worse), job losses, lowered confidence and most importantly SF coming to power in 2024 will add new supply and we may see a huge brain drain as no high value people will want to stay.

riclad · 01-03-2021 10:26pm

if you are worried about paying the loan in 20 years time, you can rent out 1 room,
See revenue ie ,rent a room scheme, its tax free up to 14k approx

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rent-a-room-relief/what-conditions-must-be-met.aspx

if you live in a city its likely your rent will increase every few years

01-03-2021 10:56pm

There are different ways of looking at it. Pros and cons. One con, i would like to mention, as it's not really being explained well here, is that if you get a mortgage and then decide in a few years "feck it, im off to live in xyz", you can indeed sell the house. However, the first few years (decade?) of a mortgage is just paying interest, really. You do pay down the balance, of course, but not by a lot.

So you won't really be selling the house and getting back what you paid for it (well, you might, sell it for what you paid for it, but again, most of the money you'll have spent on the mortgage is interest, so you won't "own" as much of a share of the house as you think, and as such, any 'refund' of the difference owed back to you, won't be as great as it may seem).

If you decide to feck off to the other side of the country or world, you always have the option of keeping the house, though, and renting it. You might not actually profit at all, but the mortgage should be hopefully getting covered in the background for you, and you've somewhere to return to.

I don't agree that renting is dead money, though. You're paying for a service. The logic that renting is 'dead money' can be applied to absolutely anything (haircuts are dead money, netflix is dead money, etc.). You're paying for a roof over your head and you retain the ability to pack your bag and wander off wherever you want.

What age are your parents? You said you're living where you grew up? So is the plan that when they die, you'll live in the family home? If so, is it worth burdening yourself with a mortgage if you reckon you'll have somewhere to live, anyway?

There are a million ways of looking at it, but you really have to decide yourself. A good question would be, although you're currently renting and have the option to pack a bag and go anywhere you like... how likely is it that you will actually do that? If it's pipe dream "one day" stuff, then that's a lean towards the mortgage. However, if you do see yourself getting up and going, then obviously a mortgage isn't necessarily the best idea at the moment.

Andrewf20 · 01-03-2021 11:05pm

Mortgage all the way. In 10 years in all probability, your salary will have increased + your mortgage monthly bill will have reduced + the value of the property will have risen which will give you a lump sum if you sell.

You will hopefully find yourself in a much better financial place relative to rents which will likely rise with inflation.

Something like this:

Now: Mortgage = 1000eu/month or rent 1000eu/month (salary = x)
10 years: Mortgage = 750eu/month or rent 1400eu/month (salary = x + 20%)

01-03-2021 11:17pm

Andrewf20 wrote: »

Now: Mortgage = 1000eu/month or rent 1000eu/month (salary = x)
10 years: Mortgage = 750eu/month or rent 1400eu/month (salary = x + 20%)

The payment on the mortgage doesn't reduce. Not unless you pay a lumpsum off it or extend the length of it.

EDIT: Sorry, I see how you're trying to phrase it now. 1k in todays money will be worth less in 10 years.

jimmycrackcorm · 02-03-2021 12:09am

Batattackrat wrote:

If I had kids and a missus I would definitely get a mortgage. Also will have a decent pension on retirement and will have the parents house when they pass away.(I know this is morbid but have to consider all possibilities).

There is a downside in that if you split with the Mrs then it's likely you won't have a house but still paying a mortgage.

The J Stands for Jay · 02-03-2021 12:19am

[Deleted User] wrote: »

(haircuts are dead money, netflix is dead money, etc.).

Hair clippers and DVDs ftw

Iodine1 · 02-03-2021 10:39am

decreds wrote: »

Biggest recession in history on the way (we're currently in it but it will get worse), job losses, lowered confidence and most importantly SF coming to power in 2024 will add new supply and we may see a huge brain drain as no high value people will want to stay.

Recession yes but SF adding more supply? That's wishful thinking in the extreme. Local councils don't want the hassle with social houses and that's why they are not building them. Any they do build will be for direct provision people now. Developers will only build when there is a profit, so recession = no further building. On top of this is a consistently growing population so maintaining a shortage. Better "snap" up that bargain soon as there are plenty of people looking for it.

riclad · 02-03-2021 3:02pm

lets say you are paying rent 1000 per month,
the mortgage is 1200 per month.
the advantage of a mortgage is you know how much it will cost you,
as long as you pay the mortgage you will not be at the risk of eviction.
for the last 10 years rents have increased .
we have seen booms and recessions,over 30 years,
in the long term house,s tend to increase in value.
A landlord can just say i need to sell the house, you ,ll have to move out in
a certain time.
do you think you,ll be in the same job in 10 years time.
A mortgage is a LONG term committment,
a bit like getting married .

decreds · 02-03-2021 9:25pm

Iodine1 wrote: »

Recession yes but SF adding more supply? That's wishful thinking in the extreme. Local councils don't want the hassle with social houses and that's why they are not building them. Any they do build will be for direct provision people now. Developers will only build when there is a profit, so recession = no further building. On top of this is a consistently growing population so maintaining a shortage. Better "snap" up that bargain soon as there are plenty of people looking for it.

I do not think all the supply added will be from SF, i predict by end of 2022/2023 our incompetent government will realize their days are numbered and will ramp up the supply in a last ditch effort to win votes. By then it will be too late, with more supply on board when SF come to power plus covid recession and likely SF doing more economic damage than good it's a recipe for disaster.

I was not aware that new council builds are reserved only for direct provision, wtf, why is there not uproar about this? The Irish are being played. Do you have a link?

Iodine1 · 03-03-2021 1:17pm

decreds wrote: »

I was not aware that new council builds are reserved only for direct provision, wtf, why is there not uproar about this? The Irish are being played. Do you have a link?[/QUO

I didn't say "reserved". But they are not building much/ enough at present. Now we have a new regulation passed that "direct provision" is to end and those people are to get "own door houses/ apartments" in I think 4 months? after arriving here. And that's the popular issue now, so that will mop up a lot of the available social houses. Housing pressure will only increase in the coming years.

silver2020 · 04-03-2021 10:12am

riclad wrote: »

A mortgage is a LONG term committment,
a bit like getting married .

At least its a lot easier to extricate yourself from a mortgage

silver2020 · 04-03-2021 10:23am

Iodine1 wrote: »

I didn't say "reserved". But they are not building much/ enough at present. Now we have a new regulation passed that "direct provision" is to end and those people are to get "own door houses/ apartments" in I think 4 months? after arriving here. And that's the popular issue now, so that will mop up a lot of the available social houses. Housing pressure will only increase in the coming years.

This is the problem reading into fakebook theories and rags like the daily muck. They don't tell you the truth.

1 - there are about 3500 family units on the list that do not have a permanent place of residence. They are not "homeless". Whilst their living conditions are not perfect, they have a temporary place to live.

2 - These 3500 family units include people who have been in direct provision and are now officially in Ireland. It includes a lot of traveller families (about 800 was the figure last year) and it includes people who have had to move out of previous homes for various reasons including anti social behaviour, abuse and also end of leases

3 - The vast majority of people in direct provision are very well educated and would make positive contributions to society - both in terms of diversity and also in terms of tax contribution. - Become a volunteer and you will have your eyes opened.

4 - a large number of those on social housing lists are scavengers. They take take take at every turn and contribute nothing to society. Those who work or want to work and contribute to society should always be pushed higher on such lists as they are more deserving of a socially rented home

5 - Housing pressure will not increase in coming years. There's a huge amount of building now taking place (slowed due to covid), but expect output to go towards 40,000+ very quickly

decreds · 04-03-2021 11:02am

Iodine1 wrote: »

decreds wrote: »

I was not aware that new council builds are reserved only for direct provision, wtf, why is there not uproar about this? The Irish are being played. Do you have a link?[/QUO

I didn't say "reserved". But they are not building much/ enough at present. Now we have a new regulation passed that "direct provision" is to end and those people are to get "own door houses/ apartments" in I think 4 months? after arriving here. And that's the popular issue now, so that will mop up a lot of the available social houses. Housing pressure will only increase in the coming years.

Makes me sick to my stomach reading that, what is the logic behind that? We are in the middle of a housing crisis and deeply in debt but are now opening the floodgates to welfare tourists who will just leech off our resources and not contribute.

I know plenty of hard working talented immigrants paying huge rent and this is an insult to them and an absolute mockery to the Irish people who contribute and are struggling.

Batattackrat · 04-03-2021 1:01pm

OP here, feck it decided that I will start looking at houses after the AIP from rebuilding Ireland home loan.

I think it was just last minute worries about getting the mortgage and be tied in for so long but definitely be worth it in the long term after Been in 13 different rental properties in my life time.

Be great to have a place I call home home and can rent out rooms as well so no a brainer really.

Thanks for the feedback folks

mrasgar · 04-03-2021 1:50pm

All the best to you OP, it sounds like you have done your share of renting and it's time for a long-term decision.

I'd agree with most here, and will add that:
- Renting is good for the short-term and when you're not sure of your eventual plans (just make sure you're saving as much as you can every month).
- But once you have a bit of stability and certainty, pay that deposit and buy an affordable house with a long/30y mortgage that allows overpayments (and try to pay it off in 5-10 years, if your savings are less than the house price). You will have more freedom, in being able to make changes to your home and less hassle dealing with agents and landlords. And once it's paid off, you will no longer have to spend 1000s each month on rent/mortgage so you'd be *much* better off compared to most people who have been convinced in recent decades that it's normal to be paying for a house for your whole working life.

decreds · 04-03-2021 5:49pm

Batattackrat wrote: »

OP here, feck it decided that I will start looking at houses after the AIP from rebuilding Ireland home loan.

I think it was just last minute worries about getting the mortgage and be tied in for so long but definitely be worth it in the long term after Been in 13 different rental properties in my life time.

Be great to have a place I call home home and can rent out rooms as well so no a brainer really.

Thanks for the feedback folks

Fair play to you for coming to a decision.

Just some advice, make sure it's a forever home if that is possible as there is a strong chance you may be in negative equity with this purchase within a few years. So if you plan to sell within 10 years, this may not be the best gift to your future self.

Wish you all the best.

Should I bother with a mortgage?

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