confused12
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I want to buy a PPOR,
What is a PPOR. You used that in the other post as well.
Do you mean a PPR - Principal Private Residence?
Brendan
Interesting. That's a lot of house. I come from a background where my parents got severely burned in the Celtic Tiger so borrowing that much sounds like a lot..but the maths look okay. Is there any particular reason pension contribs become more worthwhile at 250kYou are young.
You have good savings.
You have a high income.
Buy a house to suit your needs.
You can comfortably borrow up to €350k.
The repayments on €350k at 3% for 30 years would be €1,500 a month.
If interest rates rise to 5%, the repayments will rise to €1,900 a month, still very comfortable.
You are single, so you can rent a room which will cover a good part of the repayment.
As you are saving half of your income, you can pay capital off the mortgage to bring it down to an even more comfortable level.
When you have the mortgage down to €250k , then you should start contributing to a pension.
Brendan
I see Ireland as my long-term home, definitely.You say that you want to travel, but I am assuming that you see Ireland as your long-term home?
If you are not sure where you are going to settle down long-term, then maybe you should not buy a home at all.
Let's say you decide to work and do further study in America and then choose to settle in America. It would be handy to have the €200k to buy a house there. If it's tied up in a house in Dublin and you have a mortgage, it might make it hard to buy there.
But I don't think that the price of the house in Ireland matters. If you are not fairly sure that Ireland is your long-term home, then don't buy at all.
Brendan
Agreed. I'm looking at blackrock/sandymount/monkstown areaYou probably need to decide what area in Dublin you want to live as the type of property 550k (deposit + 350k mortgage) will get you across the capital will greatly vary.
Interesting. That's a lot of house.
I'm afraid 550k isn't a lot of house in those areas, though you may be able to get a decent 3 bed for that.I'm looking at blackrock/sandymount/monkstown area
Is there any particular reason pension contribs become more worthwhile at 250k
Type of employment: doctor, contractor
Do you have a pension scheme? no
Yes, I worked for a year in an Irish hospital so that's true, I would have a tiny pension somewhereI assume you've worked in an Irish hospital at some point, no?
Then you will have built up some public service pension entitlements.
I don't expect my earnings to increase, as I'm optimising now for free time and other projects. So I project my earnings will stay the same. But good point. I am paying rent at the moment, about 800 a month. Kids wise, maybe 2-3, but I don't have a partner so that's all speculation, might end up with none. That's part of the difficulty. I think it would be nice to find a middle ground where I got a place that would be nice to live in with a housemate or 2 at the moment, but that could also serve as a 'starter' family house maybeMaybe your should go bigger?
Do you expect earnings to change much over next twenty years? E.g. become a consultant or similar could double earnings?. Your mortgage would look very small if your income doubled.
Your area saving 2.5 per month, which seems that you can easily afford mortgage and pension.
How much (if any) rent are you paying? If you are paying rent that would make the numbers you are taking about even more comfortable.
Any idea on how many kids you might want in the future?
This was more or less my original thought. But when I started looking at places in Dublin for 200-300k the value wasn't great. The value isn't great above that either, but the places were more palatable. What's less appealing to me about that also is just the idea of having to go through the process again after selling etc. If I can keep it simple, I will. But the other side of that is I know it's possible to raise a kid in an apartment, but maybe not ideal. Having said that, I think I generally prefer houses to apartmentsIf I were you, I would buy an apartment (say 2 bed) and spend no more than 250-300K. Presumably you are single and still want to see the world. A large mortgage might limit options at this stage. A smallish apartment will provide you enough base you can call home and will help you consolidate funds (mortgage instead rent). You can sell this and use it as lump sum when ready for family home..... and a big mortgage..
I think it would be nice to find a middle ground where I got a place that would be nice to live in with a housemate or 2 at the moment,
If you worked less than 24 months after 2013 you don't have an entitlement. You can apply for a refund of contributions which gets taxed at 20%. Better to do this sooner so that you get the benefit of an investment return. If you ask for it in 20 years you'll just get the nominal amount, at best +CPI, I don't know the precise rule.Yes, I worked for a year in an Irish hospital so that's true, I would have a tiny pension somewhere
But when I started looking at places in Dublin for 200-300k the value wasn't great. The value isn't great above that either, but the places were more palatable.
Buy a house that would do you for the long term, that you can see yourself living in for 10-15 years at least. Many got stuck in homes that did not meet their needs after the Tiger crashed. After that follow the advice from Brendan and the others. Pay down the mortgage and invest in your pension. As long as you keep debt levels low and keep earning well you should have the ability to adapt to whatever life throws at you.This was more or less my original thought. But when I started looking at places in Dublin for 200-300k the value wasn't great. The value isn't great above that either, but the places were more palatable. What's less appealing to me about that also is just the idea of having to go through the process again after selling etc. If I can keep it simple, I will. But the other side of that is I know it's possible to raise a kid in an apartment, but maybe not ideal. Having said that, I think I generally prefer houses to apartments
There are lots of people who bought starter or intermediate homes and got stuck in them after the collapse.
This is overrated. Estate agents, stamp duty, solicitors, removals, etc are no more than 5% of the cost of a house move in Ireland. I'm of the view of "buy what you need now". 5% isn't going to put you off in future if your needs really change.It’s also a hassle and a cost to undertake property transactions
But unlikely to be the case anymore. Ireland 2003-2008 was one of the biggest property bubbles ever recorded anywhere in the world. Lots of my friends bought houses at silly prices. But there is no model that suggests anywhere near the same level of overvaluation today.
This is overrated. Estate agents, stamp duty, solicitors, removals, etc are no more than 5% of the cost of a house move in Ireland. I'm of the view of "buy what you need now". 5% isn't going to put you off in future if your needs really change.
I think buy a house for approx €500K in an area you wish to live in, with a €350K mortgage, using €150K of your savings. Rent out 1/2 rooms under the rent a room scheme. According to Brendan’s calculation you will easily afford the mortgage, repayment of €1500-€1900 per month. If you like the house use it as your PPR until you want to travel, have a family and want to move to a bigger house.
If you want to travel then rent out the whole house while you are away.
If you end up with a partner and family then use the house as your PPR until you decide to move to a larger / different area.
If you work abroad and decide to live and purchase a home there, then you can make another decision to sell the Dublin house or keep it as a place to retire back to if you ever come back to Ireland.
Your future is uncertain.
Your present is reasonably certain.
So buy a house in which you wish to live now. Don't buy a house so that it might be a good investment. Don't buy a house because it might be easy to rent if you live abroad....
If you worked less than 24 months after 2013 you don't have an entitlement. You can apply for a refund of contributions which gets taxed at 20%. Better to do this sooner so that you get the benefit of an investment return. If you ask for it in 20 years you'll just get the nominal amount, at best +CPI, I don't know the precise rule....
If you want to live and work in Dublin long term it makes sense to own a house or apartment in Dublin. You have in your early 30s a net income close to double the average full-time worker. Positionally, you are pretty well placed.
Otherwise I largely agree with @Brendan Burgess - you should prioritise getting a property and paying down the mortgage. But I would put at least a small amount into an all-equities PRSA right away...
There are lots of people who bought starter or intermediate homes and got stuck in them after the collapse.
I am a strong believer in buying somewhere that’s somewhat future proofed.
It’s also a hassle and a cost to undertake property transactions, plus once you have more of a ‘forever home’, you become less concerned about wasting money on it.
Imagine all of those people in apartments during lockdown. And imagine if they have kids.
I wouldn’t buy an apartment even if I had Brendan Burgess’s money; in my view, and speaking as someone who owns one, they’re largely rubbish....
Buy a house that would do you for the long term, that you can see yourself living in for 10-15 years at least. Many got stuck in homes that did not meet their needs after the Tiger crashed. After that follow the advice from Brendan and the others. Pay down the mortgage and invest in your pension...
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