Parents problem with me buying

G

ger1983

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Hi we are currently in the process of buying a home for myself, two children and my soon to be wife.

Now we are getting a 3bed detached house in countryside very close to beach and several villages plus has nearly a full acre and house structure/windows in good condition built in 1999 all for 95k. It is what we always wanted.

But my mother absolutely hates the idea and reckons we will be in debt the rest of our lifes and house prices will eventually fall totally she reckons such a house for 20k to 30k! I think she being a bit dramatic.

My mortgage plus insurance will be 200euro less than my current rent.

My job is as secure as you can get I not working in what I qualified in but hope that will change in time.

So is my mother just stuck in the past??
 
Yes

It's a modest mortgage. Do your homework though. Check the property price register and make sure you're not overpaying. Do your own stress test, what would happen if mortgage interest rates went up? They are at an all time low at present. Best of luck. J
 
@ger1983 there are a lot of advantages to renting over buying and I would be an advocate of that for many years.

One of the advantages obviously in renting is full use of an asset without the financial risk or the ownership risk. The cost of renting is rougly 8-10% of asset value and this is much higher than in past.

Cannot actually say that interest rates would go that far - they will definitely rise - the question is by how much.

I think we are close to the end of house price falls and in fact the latest statistics show very moderate rises in a small number of areas despite a very large spanner in the works with the banks and whether they are lending or not.

One decisive element is whether you intend to live here for considerable period.

Your mother is merely seeing the devastation visited when the mantra 'buy now as it will be higher tomorrow' and she obvioulsy feels 'dont buy as it will be lower tomorrow' - and whether there is pent up demand is something I cannot of course comment on.

What is the estimated rental for this property pm v your mortgage? That would be the final deciding factor and would dovetail with what @John Jo is flagging.
 
Folks

The ban on discussing house prices is still in place. Please edit your posts to remove such speculation.

Thanks

Brendan
 
Finances are only one aspect of buying vs renting. I rented for years and it was mostly a nightmare, impossible to get landlords to do anything more than the absolute minimum required.

At 95k, it already sounds as if you're getting the house much cheaper than build cost.

Sounds like you have your head and your heart set on the house. That's what's important, not your mother's view of the property market.
 
ger1983 said:
So is my mother just stuck in the past??
Click to expand...

With knowing your income level there is no way of saying if a 95K mortgage is reasonable or not.. If we go back to your mother's time, a before the Celtic Tiger, a sensible mortgage application was one where the applicant had saved 10+% of the price and was looking borrow about 2 to 3 times their annual income over at a max. 20 years. This is till the kind of situation that exists in mainland Europe and I'd suggest is a good set of rules to go by. How do you stack up on that?

Another question is do you have a rainy day fund build up - enough cash to cover your family's living expenses for say at the very least 3 months?

As to price, no one can tell you what it will be like in 5, 10 or 15 years time, yes there is a lot of property around, but the economy will eventually pick up as well... If you are buy a home rather than make an investment, then negative equity should not be a concern as long as your finances are in order.

If you can tick all the boxes for:

- Have rainy day fund
- Mortgage is 2 to 3 times annual income and for 20 years or less
- Not buying for investment
- Stable job

Then your mother should not have much to worry about, if not then perhaps she has good cause, since she knows a lot more about your situation than we do.
 
You are a grown adult and you should make your own decisions. If this move makes sense to you then go for it.
 
Surely this is a decision between you and your "soon to be wife".
Mothers have built in concerns about their sons but with a little re-assurance they either get over or accept them
 
i think you need askaboutmummy.com

ok, just joking. buy the house. seems like you know that yourself but are just looking for some comfort.
 
Ah.... mothers :)

Coming from someone who is literally about to become one, I sympathize a little more with my own and my husbands. Mothers worry about literally everything! You will always be your mothers baby and she will worry about you until the day she dies, whether there is reason to or not.

Thank her for raising her concerns, but tell her your heart is in this house and you and your family don't want to wait any longer to have your own home. Explain how it is a good investment for your family, ticks all your boxes, is affordable for you and makes you happy. As long as your mother knows you are happy, can afford the house and live a comfortable life, her worries should ease somewhat. Might even be nice to point out that when the times comes, she might also be living by the sea ;)

(Note: Only mention last part if you plan to follow through, otherwise forget it! Mothers also forget nothing!!).
 
What sort of a deposit are you putting down? As long as it's 10% or more, you do have a cushion.

Regarding the Emergency Fund, as a FTB myself, I know it's difficult to have this in place on purchasing your first home - having just saved up for the deposit and buying costs.

When you move in, my advice would be to save that 200 euro difference between mortgage and rent in an Emergency Fund and ONLY use it for emergencies.

By that, I mean that, for example, you shouldn't have a 2000 euro fund built up and decide that you want a back boiler installed in the fire (something quite a lot of people are doing these days). This isn't a TRUE emergency - a true emergency is losing your job or being temporarily out of work (that back boiler won't be much use when your starving and can't afford fuel for the fire.
 
ger1983 said:
But my mother absolutely hates the idea and reckons we will be in debt the rest of our lifes and house prices will eventually fall totally she reckons such a house for 20k to 30k! I think she being a bit dramatic.
Click to expand...

Too points. First, even those who bought at the top of the boom will not be in debt for the rest of their lives assuming they can still make their mortgage repayments. That is where the stress testing comes in and should cover 90%+ of situations. There will always be major life events that can change that, and that is where your insurance comes in.

Regarding a house for 20k-30k, it isn't beyond belief. There are houses around Ireland right now that are worst less than ZERO! All the arguments about build costs are irrelevant since those costs are sunk, gone, never to be recovered. No one wants a house with no services a million miles away from where they work.
 
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