35 year old single in need of assistance

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bluepainter

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Age: 35
Spouse’s/Partner's age: N/A (single)

Annual gross income from employment or profession: €28,000
Monthly take-home pay €2,100 - €2,500 depending on overtime

Type of employment: e.g. Civil Servant, self-employed: PAYE Worker

In general are you: (a) spending more than you earn, or (b) saving? : Saving and paying off debt

Home: I don't own a home and am currently renting at €800 p/m

Other borrowings – car loans/personal loans etc

I have spent the last two years aggressively paying off credit card (3k) and personal loan (10k). Credit card is now cleared and I have €1200 left on the loan which will be paid off over the next 3 months.

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? €0

Savings and investments: €2,000 emergency fund in BOI savings account

Do you have a pension scheme? No, I will be looking into this over the next few weeks

Do you own any investment or other property? No
Ages of children: none

Life insurance: Insurance through work, not sure of the value

What specific question do you have or what issues are of concern to you?

I have spend the last few years getting my finances under control and paying off a credit card and personal loan that I had kept topping up. I now have the credit card cleared and the loan almost paid off with €1,200 left that will be paid off over the next few months.

I am currently renting and paying €800 per month but with rents dramatically increasing over the last few years I feel it's only a matter of time before I am completely priced out of the rental market. Apartments in the Shannon/Limerick/Ennis area look to be selling for around 125k and BOI's mortage calculator advised I can take a maximum of 98k (3.5x salary) leaving me with approx 30k needed to save for a deposit and stamp duty/fees etc.

I can save a maximum of €600 per month/€7k per year so this will take about 5 years of absolutely no discretionary spending by which time I will be 40.

I am single and likely to remain so.

I would like to ask if there is realistically any way that I can get a mortgage and if not, what other options do I have? Should I have any other financial goals?
 
Firstly, well done on getting yourself out of debt. That's a big step in achieving your goal.

You obviously want to get on the property ladder, few things that you may want to consider like house sharing would cut your accommodation costs in half? The other consideration is look to improve your income beit getting additional qualifications or get a second job. Alternatively you could look to buy a cottage in rural Co. Clare for under 100k and do it up over time?
The above may not be runners for you but maybe worth considering. Best of luck.
 
Is there any way you can increase your income?

Average earnings for FT workers, incl overtime, are 45k approx.

Can you upskill? Re-train?
 
If you do buy, purchase a 2 bed minimum and rent a room to help with the mortgage.

The only ways to make more money are:

- house share to get your rent down
- do more overtime
- get a second job
- retrain to get a better paying job
- don't go on any holidays, don't go out, live frugally for a few years

Can you give us a list of what you spend your income on. If you keep a spending diary you might notice where you are wasting money. Things like lunchs out or a daily coffee can add up to a sizeable sum.
 
I don't have any new advice on earning more money (other than what is suggested), but just wanted to add my congratulations on getting on top of the debt and thinking about the future. It isn't easy, especially when you're only accountable to yourself, so well done.
 
When assessing mortgage applicants, banks like to see a potential borrower demonstrate strong savings or credit history. If you can demonstrate your recent (6 months) credit card and loan repayment history, that can be seen as a positive.

There is a strong social life in Limerick with lots of sports and social clubs to choose from. Everything is accessible and decent property in a good location (Joseph Street, city entre for circa €125K as per property websites) is still affordable thankfully. As a single person, having that choice on your doorstep may be preferable, rather than living in a small town or rural village in Clare.

Additionally, there is a limited amount of discretion that lending institutions can use to breach the 3.5 x income limit. This is tightly managed, but it is available. Financially, it probably makes most sense for you to purchase rather than to keep renting long term. You can always avail of the rent-a-room relief scheme for additional income that is not liable for income tax, should you so wish. Again, living in a city will make that a very easy option. Why don't you talk to a mortgage broker to help assess your options ?
 
You should look at the Rebuilding Ireland scheme (i.e Mortgage from your Local County Council). You do need to show 12 months saving which is longer than the banks but if you qualify they can usually offer you more than the 3.5 salary that the banks can. I'm not sure how long the scheme will last for but it might be an option for you.
 
Definitely look into the rebuilding ireland home loan. You can apply for up to 5 times your income as a mortgage meaning you would only need the 10% deposit (and solicitors fees, stamp duty etc). You would need to show your rent being paid for the last 12 months and that you have been clearing your loans etc. They would take all that into account for your repayment capacity. It also has a fixed interest rate so no surprises down the line
 
In terms of building a deposit, have you done a tax review of recent years to see if you are entitled to any refunds. lots of people don't claim for things like health receipts. Companies like Taxback will do it for you (for a % or fee it should be said)

To be frank however, you need to increase your income. Can you get a part time job anywhere?
 
Well done on paying down the debt. This is a great achievement. Keep it up, you are on the right path. Looks like you need a bigger shovel. i.e. a side gig like pizza delivery or some evenings working in a bar/shop. This will give you some extra money. Alternatively, you could go shopping for a new job that pays a bit more?

Looks like you are almost on baby step 3/3(a)
I've been following Dave Ramsey's baby steps. He's a bit preachy but if you can get over that his advice is simple and solid.
  • Baby Step 1 – €1,000 to start an Emergency Fund
  • Baby Step 2 – Pay off all debt using the Debt Snowball
  • Baby Step 3 – 3 months of expenses in savings. Baby Step 3(a) Save up for a deposit on a home
  • Baby Step 4 – Invest 15% of household income into retirement
  • Baby Step 5 – College funding for children (doesn't apply)
  • Baby Step 6 – Pay off home early
  • Baby Step 7 – Build wealth
Steps 4,5 & 6 can be done at the same time.

Keep doing what you are doing and you will get there. You can definitely afford your own place. What you need is a bank that can see this. put together a file showing your ability to pay rent and your savings history . Then make an appointment with all the banks. I'm sure one of them will be able to underwrite a mortgage for you.
 
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Focusing on paying off your debts over the past few years was a good move, well done.

Regarding a mortgage, go in to your bank they will give you advice on how to prepare for mortgage application but saving 7k a year will be hard as you need to live a little too.

If possible, you should try and get a higher paying job.

Invest in yourself now and it will pay off in 2-3 years time.

You're only 35 its not too late to upskill, when your on a higher salary things will be easier regarding savings and your mortgage plans.

Good luck
 
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