Looking to future house purchase-money budget

[TUSKAR]

Age: 33

Annual gross income from employment or profession: €41,000K PER ANNUM GROSS OR €2,7OO A MONTH AFTER TAX

Type of employment: PAYE worker
In general are you:
(a) spending more than you earn:No
(b) saving: Yes

Rough estimate of value of home: None( Renting €320 A Month)
Amount outstanding on your mortgage: NONE

Other borrowings – car loans/personal loans etc: NONE Overdraft of €940 to-day, should be back to zero in two weeks. From say September onwards avoid using overdraft to show clean bank statements for six months plus.



Do you pay off your full credit card balance each month: YES
Savings and investments: €18,500 In a bank Account.(12 Months ago I had only €5k saved and started saving from late Sept onwards)

Do you have a pension scheme: None

Do you own any investment or other property: No

Ages of children: None

PRESENT PLAN

• Buy a house say July 2010.
• Estimate deposit needed €18,500(8%) plus €2,500 legal fees €21K.
• If possible try to have 1 years repayment €12k saved in advance and ring fence if any thing was to happen after JULY 2010.

Does the above plan make sense?

 

[Mpsox]

Assuming you're a first time buyer, then it makes reasonable sense. However bear in mind You'll need to furnish and decorate the house and will need to fund that

 

[Raskolnikov]

No help needed here - it sounds like an eminently worked plan.

The only thing question I would have is why you wouldn't just use the €12k to reduce the mortgage you intend on drawing down. In the long-run, you'll save yourself several thousands in interest payments.

 

[chlipps]

Tuskar .. this sounds like good plan... I agree with you on having 12k to hand to cover any misc expense that may arise

Note from a tax relief at source (TRS) point of view you would be better to buy house at start of year as you lose the first 6 months TRS of 2010 if buy in july... trs works on calendar year.