Advice - buy to let or remain saving?

B

buzz55

Guest
Hi all,

I would like your advice/opinion on the following.

I am 26 years old, currently earning €25k per annum, have c. 5k in savings, no outstanding debts.

At the moment I am paying rent of €350 per month + saving €370 each month with the credit union, which I intend to increase to €500 per month in May.

From various posts on this site, it seems I could get a mortgage of 160k or thereabouts. My partner is self employed and we are not in the position to buy anything where we live at present (Co. Galway). I have been toying with the idea of buying a property in Co. Cork for 130k and renting this out. If I took out the mortgage over 25/30 years, the pay back per month should be manageable even if I was without tenants for short periods.

I suppose what I'm wondering is should I go ahead and buy to let, with the idea of selling up in about 5 years time + buying a family home, or should I just continue saving 500 per month towards a bigger deposit?

What are the pros and cons of buying to let, and what other expenses should I allow for?

Thanks very much

buzz
 
Bear in mind that by buying you lose your first time buyer status - and consequently the benefits that derive from this in terms of preferential rates of stamp duty, mortgage interest relief etc. - even if the initial purchase is a buy to let. In many cases this is reason enough for first time buyers not to buy investment properties as their first purchase. Have you ruled out the possibility of saving more towards buying where you are currently located?
 
A similar house in the same estate as the one I'm currently renting is up for sale for over 325k. Without moving quite a bit away, there is little or nothing coming on the market for less than 250k mark, and I will not get a mortgage for this amount. Partner is a contracting in the software business, so this can be unsteady. The way I see it is the longer I wait, the higher the prices are going to get whereas at least this way I would be on the property ladder in some way... and if I did manage to sell for a profit in a few years time, at least I'd have a bit of a lumpsum to throw at a bigger house. I guess I just think that property is a better investment than saving but maybe I'm not taking all in to consideration?
 
As well as Clubman's post do also be aware that lenders are not keen on FTBers buying investment properties - your maximum advance would be limited to 85% and term 25 years.

Sarah

www.rea.ie
 
Why are they not keen to lend to FTB's for investment properties? Is it because there is no history of repayment? Surely if it was a saleable house, there shouldn't be that much of a problem with the lender - ie if worst came to the worst they could always just sell it on?
 
Why are they not keen to lend to FTB's for investment properties? Is it because there is no history of repayment?

I reckon this is one reason alright.

Surely if it was a saleable house, there shouldn't be that much of a problem with the lender - ie if worst came to the worst they could always just sell it on?

Yes - but lenders are generally inclined to use foreclosure only as a very last resort due to the hassle and bad press that it can generate.

In anticipation of the usual criticisms from certain quarters that people are being too negative or dealing with things from first principles please note that some of the posts above are simply highlighting issues that may be relevant and worth considering.
 
"please note that some of the posts above are simply highlighting issues that may be relevant and worth considering"

I will indeed take this on board Clubman. It is exactly this kind of advice and pointing out things that I may not have considered that I am looking for - a pros and cons list if you like.

If there is anything else that I should consider, please post! I'm very much a novice so need to check out all angles!

Thanks.
 
Just getting my retaliation (not against you!) in first! :)

If you are seriously considering buying to let then you should at least read the to apprise yourself of some of the issues that will be relevant.
 
You must log in or register to reply here.
Back
Top