Thinking about buying a house

[I{U}Ireland]

Age: 30
Spouse’s/Partner's age: 25

Annual gross income from employment or profession: 50k
Annual gross income of spouse:n/a

Type of employment: e.g. Private Sector

In general are you spending more than you earn or are you saving? Trying to Save

Rough estimate of value of home
Amount outstanding on your mortgage: n/a, renting at 1150pm
What interest rate are you paying?

Other borrowings – n/a:
We spend around 1000 pm


Do you pay off your full credit card balance each month? Yes

Savings and investments: Savings of €6000 and $10000
have €600dd going into the savings a/cc each month

Do you have a pension scheme? No (is PRSI a pension?)

Do you own any investment or other property? No

Ages of children: 3 years and another one coming in August

Life insurance: No


What specific question do you have or what issues are of concern to you?

- I am looking for a general advice for making things better?
- I am thinking about buying a house, the house should be min 4 bed rooms to suite a family, I work in Dublin so it should be close enough, ideally we like Ashbourne but I do not think we can afford it, so perhaps navan...

Any advice?

 

[ClubMan]

Are you maximising the deposit returns on your savings (regular and lump sum) towards the house? Can you save more or is €600 p.m. the best you can do? You will probably need c. 8% of the purchase price of any house so that gives you some idea of what you'll need to save.

You probably really should have general life assurance cover given your situation (couple with only one earner and (soon) 2 kids).

 

[Mpsox]

Clubman is correct. The days of 100% mortgages are largely gone and realisitcally to be able to buy a 4 bed house in Meath, you are going to be looking for a deposit of €20-€3k for starters, this is before costs of buying/moving etc.
Secondly, on your salary, you may be on the borderline for many lenders, yor're talking a multiple of 5-6 times your salary.

You may be better off to put your head down for 12 months and try and save more. You should also ensure you are using your tax entitlements correctly, eg, are you using your wives TFA if she is not working. Also you should be entitled to a medical card.

You should also remember that you are going to be getting around 5k in childrens allownace etc next year and should include that in any mortgage application

 

[I{U}Ireland]

Are you maximising the deposit returns on your savings (regular and lump sum) towards the house? Can you save more or is €600 p.m. the best you can do?

I have regular and lump sum with AIB

I am trying to save more but I am not sure if I will be able as we r thinking to join my first child into a creche...

You will probably need c. 8% of the purchase price of any house so that gives you some idea of what you'll need to save.

I am thinking to buy end of this year and so I think I will have about €10k and the $10k so I hope this would be enough

 

[I{U}Ireland]

You may be better off to put your head down for 12 months and try and save more. You should also ensure you are using your tax entitlements correctly, eg, are you using your wives TFA if she is not working. Also you should be entitled to a medical card.

I have a Quinn health insurance for me and my family from my work, I am not entitled to a medical card

I do not think that I am using TFA (I do not know what is TFA)
my tax is being taken care by the company I am working with

 

[ClubMan]

I have regular and lump sum with AIB

At what rates? Check the Financial Best Buys forum lists and www.itsyourmoney.ie for the best rates on offer. Go where you can get the best return. Don't stick with your regular bank just out of inertia or loyalty.

I am trying to save more but I am not sure if I will be able as we r thinking to join my first child into a creche...

Would there be a community creche option open to you? They are normally a lot cheaper. On a more general point do you keep a spending diary and/or budget and strictly manage your expenditure so as to maximise your savings (within reason) towards the house?

I am thinking to buy end of this year and so I think I will have about €10k and the $10k so I hope this would be enough

Why $10K? Is it in US shares or something? €10K + $10K is c. €16,500 at the moment. Allow a few grand to cover legal conveyancing and other house purchase fees and you might generously say that c. €14K is your 8% deposit in which case your budget is c. €175K. Doesn't sound like that would buy you much near Dublin? Would you qualify for any subsidised housing scheme (e.g. affordable and social housing etc.)?

 

[ClubMan]

I do not think that I am using TFA (I do not know what is TFA)

Tax Free Allowance aka Tax Credits these days. If you are married then make sure that you are on joint/aggregated married taxation. Backdate any claims for outstanding tax reliefs if necessary. You may qualify for the Home Carer's Tax Credit. See the Taxation forum key posts for more on common tax credits etc.

my tax is being taken care by the company I am working with

Don't assume that they or Revenue will always get it right. You need to check these things yourself in case you end up under or overpaying tax.

 

[I{U}Ireland]

Why $10K? Is it in US shares or something?

it is in an account earning low interest in my home country I am
hoping that the $ would be better to move them here

€14K is your 8% deposit in which case your budget is c. €175K. Doesn't sound like that would buy you much near Dublin? Would you qualify for any subsidised housing scheme (e.g. affordable and social housing etc.)?

I sent my details to a broker and he told me that I can borrow up to €320K

 

[ClubMan]

I sent my deails to a broker and he told me that I can borrow up to €320K

€50K gross looks like about €41.5K net in your situation. As mentioned above you should get CB and ECS so let's include that to add €4K CB and €2.2K ECS to give €47.7K. €320K would be c. 7 times net earnings which sounds on the high side. While some brokers/lenders may say that you can may be able to borrow that amount you need to consider for yourself if such a level of debt is actually manageable and suitable for you personally. Especially with two kids and all the expense that that entails. Sounds to me like you would be stretching yourself. Another way to look at it is that a €320K mortgage would require monthly repayments of c. €1,900 over 25 years, €1,700 over 30 years or €1,600 over 30 years without adding in mortgage protection life assurance.