Can I afford to buy a home?

W

waterman

Registered User
Messages
37
Hello,
I’m looking for opinions regarding buying a home:
Income (after taxes/pension):
[table="head"] -|Weekly|Monthly|Yearly
Income 1|-|Eur 1980|Eur 23,760
Income 2|Eur 268|-|Eur 13,936
SWA|Eur 75|-|Eur 3,900
Child Allow|-|Eur 130|Eur 1,560
Total|-|-|Eur 43,156
[/table]

Average Weekly income: Eur 829.92


Savings:
  • Approx Eur220k (majority in cash, 10k in shares)
  • Own small area of land, approx 1 hectare.
Budget Breakdown:
Expenditure|Weekly|Monthly|Yearly|Total
Rent 1|100|-|-|5,200 Rent 2|102|-|-|5,304 ESB 1|-|66|-|800 ESB2|-|34|-|400 Oil 1|-|-|1,500 Oil 2|-|-|750 Mobile & BB|-|55|-|660 Mobile 2-|30|-|360 Saving AC 1|-|500|-|6,000 Saving AC 2|-|100|-|1,200 Food|100|-|-|5,200 Clothes|-|80|-|960 Diesel|40|-|-|2,080 Petrol|20|-|-|1,040 Car Insur 1|-|-|700 Car Insur 2|-|-|500 Car tax 1|-|-|255 Car tax 2|-|-|180 Car service 1|-|-|400 Car service 2|-|-|400 Holiday|-|-|1,500 Presents|-|85|-|1,020 Other|40|-|-|2,080 Childcare|50|-|-|2,600 Charity|5|-|-|260 Satellite|-|-|300 Total|-|-|-|41,649 Average Weekly spending: Eur 800.94 I currently work away from home, only home at weekends, hence the 2 rents/ESB/cars/oil. No other debts/loans. CC bill paid off every month. I do not plan working away forever and I would like to buy a family home near to where my spouse and child live – spouse has roots there and also my parents need help and spouse helps them (doctor/hospital appoints). Due to the fact that we have good savings built up over the years (50% inherited) and we are paying rent I think now might be a good time to buy. I do not though, want to use all our cash to buy a house. I would like to keep some for future rainy days. My job like most is not secure, I’ve already been made redundant twice since 2009 each time I have been lucky to get work quite quickly again. I feel in a position where I could make a cash offer for a home (this would be a home and not an investment). Would this be a wise idea? What are the differences between making a cash offer and getting a mortgage? I don’t think I’m classed as a first time buyer due to the fact I own some land (I bought land as an investment it’s not near where we live), hence the reason I was never in a rush to buy before the end of 2012 (Mortgage interest relief). Also, in the near future my spouse would like to finish work to concentrate on raising our child (hopefully children) so from looking at the numbers I posted above if she stops work we could not continue to live the live we are leading. I have budgeted for me working only (earning Eur500/week) and we could live on this. What do people think/would do in my position? What other expenses would I need to factor into my budget and there approx costs, assuming we were to buy a house e.g property tax, house & contents insurance, up keep?
WM
 
Waterman,
You have shown evidence of your ability to budget and save. From this thread you obviously take large financial decisions seriously. You are already past many of the hurdles that result in people getting into serious financial difficulty.

In terms of buying a house, you are clear on the location that you wish to live in the medium to long term. You are clear on your space and personal needs so you are less likely to buy something that will not suit you in 2/3 years time. Whether house prices rise or fall, it would appear that there would be non-monetary benefits accrued by acquiring a home.

There are other factors to consider about the timing other than price. In many areas there is very limited supply so people are not waiting because they think that they will get a property cheaper, they are waiting for suitable properties to come on the market. Other factors such as area development plans or decisions on infrastructure location may also mean that it is beneficial to wait.

From a future financial security perspective it makes a huge difference whether you are looking at houses for €200k or €800k.
 
Well you are in the extremely fortunate position of having a very large sum of money at your disposal and zero debt.

If you buy a house mortgage free and you get employment close to where you live then it would appear your spouse will be able to pack in her job and you can live on your wage. You'll have no rent/mortgage, no childcare costs, lower oil/ESB costs, lower petrol/diesel costs but also lower savings.

Your ability to get a mortgage (if you decided to go down that route) will depend on factors such as your age which you don't mention. But you have a fantastic savings history so should be approved for something.
 
Hi all,

Thanks for your replys.

This purchase would be for at least 5 years, hopefully a lot longer. We'd be looking in the 150k range. Our agaes are early 30's.

Biggest problem - not a great selection in the area we are looking in.

Thanks.
 
If your job is precarious, is it really a good idea for your wife to give up her job. With an additional child comes more costs and going forward there are ongoing costs associated with bringing up children.
 
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