Broker says, don’t buy one property, aim for two!

I

icb

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I’ve always loved the idea of security/stability/not overstretching myself factoring in the, who knows what the future holds mantra!

The broker I have spoken to has different ideas!

Monthly in
€7,600 (net average over past 12 months, expect it to be a bit less over next 12 months)

Monthly out
€400 rent
€400 social (eating out/netflix/cinema)
€100 lunches
€65 Elec/heating/broadband
€8 prepay phone
€15 Netflix/YouTube Premium/Prime

Credit card limit €15k with nothing owed

Marital status single

Savings €270k

House prices are certainly rising

Mortgage broker has said it wouldn’t be financially prudent to use €270k to purchase circa €400k home

Instead, they have suggested working towards purchasing two homes, offsetting taxes owed on rental property profit against interest owed on mortgage.

I guess the security/mindset benefit of one home with low low mortgage hasn’t been factored in here!

So I’m curious to hear any and all advice/comments!

Thank you.
 
icb said:
it wouldn’t be financially prudent to use €270k to purchase circa €400k home
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Let's say you own a house worth €400k and you have a €130k mortgage.

Would you borrow €300k to buy an investment property worth €300k?

I presume you wouldn't.

With an income of around €120k , you could borrow €300k fairly comfortably.

But maybe buy a €500k house as your home.

But if a €500k house would be better, then go for it.

Any increase in value is free of CGT. And the income you get from it in terms of extra enjoyment is not taxed.

But if a €400k is your forever home, then that is fine. Buy it. Max your pension. Pay down your mortgage.

Brendan
 
Terrible advice.

Can I ask why you're using a broker? I don't know your personal situation but your financial situation appears to be incredibly strong, I would suggest going straight to the banks that offer the best terms. You look like you're looking to borrow less than 1x annual gross salary so most banks would be delighted to offer you a mortgage.

in your position, I would consider taking the max possible mortgage that one of the cashback banks will give you then immediately after you receive the cashback, pay down the lump sum of your cash (including the cashback amount). Go variable rate and overpay as much as possible while maxing your pension contributions. You'll be mortgage free in 3-4 years, decent pension pot building and complete freedom to do what you want!
 
you have 270k ,buy a house you like with this no mortage ,You can then think about a mortage for a buy to let next year
 
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Brendan Burgess said:
Let's say you own a house worth €400k and you have a €130k mortgage.

Would you borrow €300k to buy an investment property worth €300k?
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Ok wow, no, no I would not.

Brendan Burgess said:
But if a €400k is your forever home, then that is fine. Buy it. Max your pension. Pay down your mortgage.
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I'm 34, I have not yet started a pension! (my employer does not provide a pension scheme so it's something I have (foolishly) put off for a long time)

Brendan Burgess said:
And the income you get from it in terms of extra enjoyment is not taxed.
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As time goes on, this aspect is becoming more and more appealing to me.



As always, thank you Brendan.
 
Marc said:
Not quite the worst advice I’ve ever seen but it’s a contender.

Get a proper financial planner, buy a house you can afford and start a pension.
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I'm with AIB, in relation to a proper financial planner, do people typical use someone within their bank? (I have an accountant I have used for general advice/submitting correct CGT etc)
 
DazedInPontoon said:
I for one am shocked that someone who sells mortgages to earn his living is trying to sell 2 instead of 1. Shocked I tell you.
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Yes, even in relation to one property, the family home, he still had a strong feeling against using a large amount for the deposit, but then many factors can deem that to be reasonable or simply self serving!
 
wheeler dealer said:
you have 270k ,buy a house you like with this no mortage ,You can then think about a mortage for a buy to let next year
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I'm (still) hoping to buy in Dublin, so to get somewhere I'd like and mortgage free, I'd need another great year or two. (I'm getting more conscious that as my deposit grows, the type of house/area grows too, so I'll end up in the same loop, every year waiting another year!!!!)
 
2blacklines said:
Terrible advice.

Can I ask why you're using a broker? I don't know your personal situation but your financial situation appears to be incredibly strong, I would suggest going straight to the banks that offer the best terms. You look like you're looking to borrow less than 1x annual gross salary so most banks would be delighted to offer you a mortgage.

in your position, I would consider taking the max possible mortgage that one of the cashback banks will give you then immediately after you receive the cashback, pay down the lump sum of your cash (including the cashback amount). Go variable rate and overpay as much as possible while maxing your pension contributions. You'll be mortgage free in 3-4 years, decent pension pot building and complete freedom to do what you want!
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Initially, when I first sought out the broker, my financial position was a lot weaker, but yes, I feel direct with the bank is now best.

The max mortgage to avail of max cash back sounds super, an avenue I'll certainly consider.

Thank you
 
2blacklines said:
Go variable rate and overpay as much as possible while maxing your pension contributions.
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Not great advice as in most cases variable rate will be higher than the fixed rate on offer.

It varies by bank but any breakage fee will only be for the amount you are paying off, not the whole balance. It makes no sense to have the whole mortgage balance on a (higher) variable rate just to have the flexibility of paying off small portions of it.
 
NoRegretsCoyote said:
Not great advice as in most cases variable rate will be higher than the fixed rate on offer.

It varies by bank but any breakage fee will only be for the amount you are paying off, not the whole balance. It makes no sense to have the whole mortgage balance on a (higher) variable rate just to have the flexibility of paying off small portions of it.
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+1 and many fixed rates these days allow you to pay off a percentage every year without paying any penalty.
 
Congrats on finding a place in Dublin to rent for €400 . How did you do that ! Are you connected to the owner in some way ?

I agree with advise not ti become a landlord !
Buy the house you want with cash and mortgage as needed !
How stable is your employer if dint even have a pension scheme ?
 
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Gordon Gekko said:
I struggle to see why one would not use a broker.
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Interesting, can you expand on this please?

I guess it’s good to be able to have multiple options/applications sent in on your behalf?

Saving some of the legwork etc

But I’d love to know more!

Thanks
 
mtk said:
Congrats on finding a place in Dublin to rent for €400 . How did you do that ! Are you connected to the owner in some way ?

I agree with advise not ti become a landlord !
Buy the house you want with cash and mortgage as needed !
How stable is your employer if dint even have a pension scheme ?
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Oh, I’m living outside Dublin for now.
My employment is stable, I’m permanent and they’re in good standing financially.

But I take nothing for granted / nothing as a given! I think that’s why I’ve tunnel vision focused on saving as much as possible for as long as I could
 
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