Looking to Purchase Property in the next year

T

TUSKAR

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I have updated this from before and changed a few details.

Age: 34

Annual gross income from employment or profession: €41,000K PER ANNUM GROSS OR €2,670 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 in Dublin)


Other borrowings – car loans/personal loans etc: NONE Overdraft of €1k to-day, should be back to zero in two weeks to three weeks.


Do you pay off your full credit card balance each month: YES
Savings and investments: €27,000 In a bank Account

Do you have a pension scheme: None

Do you own any investment or other property: No

Ages of children: None

PRESENT PLAN(May feel comfortable with)

  • Buy a house(Max Price for property I would go €217 mortgage at 92% €200k max) 17k deposit
  • Pay legal fees out of cashflow est 2.5k
  • €10k in reserve to help in early stage repay(rain day fund)
  • 25 to 30 years max repayments
Factors to take into Account

I have hit 34 recently and feel life is paasing me by, the following are main issues going forward

1. Feel I need to grow up now and purchase a property for long term security(Residence)

2. I am single so I have put down roots no where. No place really feels like home. Kids are not on my long term plan at present

3. My paye Job is in Dublin city. Easier to get work in Dublin in long term.

4. To me buying a house will be a very big dececision and commitment.

5. I dont think I love Dublin enough to purchase a house their(Would not buy apartment either in Dublin).

6. I dont really know where I want to live long term.

Main Taughts on Position

1. Buy a one off house in the countyrside in Co. Cork(remote area for peace and quiet) 10 miles off M8 motorway turn off at Mitchestown.

2. Keep on Rental Flat in Dublin for 2 to 3 years as €340 at present is extremely cheap even to have a dublin Base going forward.

3. I know that a country home will have no real rental or resale value to an extent while a dublin propery could do rent a room or rent out house done the line

4. the mortgage interest for first time buyers i think is being withdrawn to an extent after 2011, tax relief would be handy for first few years

5. may have to purchase house in country and continue to work in dublin for 2 years at least



What would you do. Would you let you heart rule your head?

I am looking at my long term security and presently have no real security in rental accom.

In dublin you come home at night, and its not your place, if it was you could develop property to way you want it

thanks
 
Hi
I was in a similar situation as you. No matter what people say about Ireland's "house ownership mentality" it does bring a lot of security. You will have the mortgage paid off by the time you retire.

My only concern would be renting while paying off a mortgage. There will still be other bills (apart from the mortgage) associated with owning the house (including pumping money into it to get everything "right", esb standing charges and heating so it doesn't get damp, maybe higher travel costs from going home more often, any tax the government brings in, you won't be able to claim tax relief on rent anymore, house insurance (possible higher as house is vacant most of the week), and unexpected costs that mightn't be covered under your house insurance.) Your €4k pa rent is already dead money, and those other house expenses will also be dead money.
 
5. I dont think I love Dublin enough to purchase a house their(Would not buy apartment either in Dublin).
6. I dont really know where I want to live long term.
...
1. Buy a one off house in the countyrside in Co. Cork(remote area for peace and quiet) 10 miles off M8 motorway turn off at Mitchestown.
2. Keep on Rental Flat in Dublin for 2 to 3 years as €340 at present is extremely cheap even to have a dublin Base going forward.
Click to expand...
A few of your points above don't make sense:
5. fair enough, keep renting
6. fair enough, keep renting
1. why cork? is this "home"? is there a long term plan to move/live there? How will you earn a living?
2. 2-3 years is short term. I would say in the current market/environment you need to have a 10 year horizon
 
If you buy the one of house in Cork are you planning on living in it? If not then what is the point as you say you have the feeling that you come home in the evening and it's not your own place. If you continue to live in rented accommodation but have the house in Cork you will still feel that it's not your own place and will get annoyed have to pay out money for a house your not living in.
I would save hard and have as much money to put into the house initially. Then just keep looking at houses even go and view some in different areas. You may be surprised what you mind end up liking.
 
tuskar, i feel you do not know what you want execpt that you don't want to spend the rest of your life in dublin. if i was you i would buy a property in dublin as a stop gap, if you have to live there for the next few years pick a new estate that houses are reduced so that when you sell on it will be fairly new. find a spot where you want to call home, stop paying the rent, you could take in a lodger who would contribute towards your bills. without been too personal is there a partner to consider.whatever you do dont be paying dead money on rent and an empty house with a mortgage in the current climate, remember intrerest rates are rising,carbon tax on the way and you can be sure this government has to increases taxs in next budget.i have a simply saying but it is not easy to achiveve, find someone to love, find a job you love and find somewhere you love to live, these are in no particular order, find all three and you have it made. was in the same boat as you at 34, married baby and two houses later have it cracked.
 
In the past 4 years in Dublin, I have about spent about €15,000 in rent. I have to admit that I did consider buying a house at that time for a short term period until I figured out what I wanted out of life. If I had bought, I would be way deeper than €15,000 in negative equity (maybe 3 or 4 times that). 4 years ago, I was single and didn't know where I would end up settling down. Now I have a girlfriend for almost 3 years and have the flexibility to decide where we would like to live plus we intend to travel together for a few months. If I bought 4 years ago, I wouldn't have had these options. During that time, my "dead money" also meant that I didn't have to worry about painting the house, replacing the broken dishwasher, renewing the house insurance, etc...

Regardless of whether you think house prices go up or down in future, I would continue to rent in your situation. I would not just buy a house just because you have hit a certain age especially when you don't know where you want to settle down. This line is the one that convinces me you are thinking of buying a house for all the wrong reasons - "Feel I need to grow up now and purchase a property for long term security"

You may meet the partner of your dreams tomorrow and your plans could dramatically change. Renting gives you the flexibility to take advantage of that.
 
TUSKAR said:
1. Buy a one off house in the countyrside in Co. Cork(remote area for peace and quiet) 10 miles off M8 motorway turn off at Mitchestown.

2. Keep on Rental Flat in Dublin for 2 to 3 years as €340 at present is extremely cheap even to have a dublin Base going forward.

3. I know that a country home will have no real rental or resale value to an extent while a dublin propery could do rent a room or rent out house done the line

4. the mortgage interest for first time buyers i think is being withdrawn to an extent after 2011, tax relief would be handy for first few years
Click to expand...

If you remain living in Dublin, the house in Cork will not be your principal private residence so won't qualify for mortgage interest relief. (Although if you rent out the property 75% of the mortgage interest is deductable as an expense).
 
TUSKAR

Point 1

Do not buy a house unless you are going to live in it.

I repeat, Do not buy a house unless you are going to live in it.

Just in case, there is any misunderstanding, Do not buy a house unless you are going to live in it.

1) You lose your first time buyers stamp duty exemption
2) you don't get tax relief on your mortgage - unless you rent it out
3) it limits your capacity to buy a house when you know where you want to live


Point 2

One of the greatest financial myths, repeated again in this thread, "rent is dead money". This is brilliantly corrected by Raul.

Rent is not dead money.

I repeat, Rent is not dead money.

If you want to study this idea more, read this thread.

With a mortgage, all you are doing is renting money. As a tenant, you are renting property.

Point 3

You should feel far more secure with €27,0000 in the bank than sitting in an apartment worth €200,000 with a mortgage of €350,000.

Your rent seems very low at the moment. Would you consider just paying more rent and getting a flat, or a house or an apartment which you really like?

Security is only an issue when house prices are threatening to rise so quickly that you won't be able to get on the housing ladder. This doesn't seem to be a threat at the moment. So there is no hurry to buy.
 
tenchi-fan said:
Hi
I was in a similar situation as you. No matter what people say about Ireland's "house ownership mentality" it does bring a lot of security. You will have the mortgage paid off by the time you retire.

.
Click to expand...

Owning a house with a 30 year mortgage only feels secure when you can afford the mortgage and you are not in negative equity.

There are a lot of people who believed this sort of advice a few years ago who feel very far from secure now.
 
rosemartin said:
tuskar, i feel you do not know what you want execpt that you don't want to spend the rest of your life in dublin. if i was you i would buy a property in dublin as a stop gap,
Click to expand...

Noone should buy a property as a "stop gap". Brendan's advice is sound.
 
It sounds to me like the real issue here is that you dont feel happy / comfortable in Dublin.

Buying a house in Cork (I assume that's your home) that is going to sit idle will not solve this problem. Even though you'd end up with a house in Cork, you wont won't be living there. Okay, you might stay there when you're there at weekends but it won't be a home - it'll just be an empty souless place i.e. it won't solve the real problem.

Maybe you should consider if the real issue is whether you're happy in Dublin - if you're not, maybe take some steps towards getting a permanent move back to Cork?

Also very much agree with the previous respondants who pointed out that buying a place in Cork and renting in Dublin will seriously limit your options going forward.

Best of luck
 
There is an alternative if you don't feel that Dublin is home, why not buy a house down the country and commute?. Depending on where you work, Kildare/North Laois/Carlow/Wicklow/wexford are all potentially an hour a way. That way you'd keep your job and get the non-Dublin lifestyle you want.
 
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