We may be in a position to buy next year (I’ve sold a house that I inherited which will give us a deposit of circa 160k - sale closing in October as buyers moving back from abraod). Had we no pther mortgages, this would be great as we both earn quite well but we both bought appartments before we met. Mine is not in negatvie equity (or at least very little) but my husbands is to the tune of about 200k. With 2 kids, the appartment we live in is a bit cramped. Our plan is to rent out that apartment and hopefully get as small a mortgage as possible (banks allowing) to buy a 3 bed near good schools and hopefully not too much of a commute from Clonskeagh (big ask I know). We will look at Northside too though as I think that there’s potentially more value to be found there.
We had thought of renting someplace but renting a family home will cost us more than buying and I’m concerned that we could end up using money from the sale of my Mum’s house on rent over the years and end up not being in a position to buy any type of family home.
You certain you’re not just making an assumption there?
I rent a 3 bed house of (I think) about 90 square metres in ranelagh for 1500 a month.
There’s no way that I could buy that for 300k currently and that would only be a yield of 6%.
Looking at it another way, 1500 a month would only be mortgage payments for 256K, over 25 years at 5% interest. That would also involve paying 193k in interest. There is no way in hell I’d get it for 256k now - so the mortgage approach would involve higher than 1500 a month over the course of the loan, IMO. You do get an asset at the end of the mortgage but you’re paying for it in the extra interest payments and maintenance costs over renting IMO.
You also don’t have to decrease your savings lump sum just because you’re renting.
If you’re forced to use some of your savings then you would have been in even more trouble if you didn’t have those savings but a monthly mortgage out-going equivalently sized to your rent.
There’s also no maintenance costs, no property/household charge or loss due to (possible) further property falls, if you’re renting.
Unfortunately I also don’t see how you can buy if you have two out-standing mortgages for apartments which are in negative equity to a greater degree than your lump sum.
Sorry I worded the bit about eating in to the savings badly.
Rents for the type of house we are looking for seem to be considerably higher than the repayments on any mortgage that we would be looking for - even factoring in interest rate rises. Also, 160k in October 2012 is quite likely to have less buying power, even if put on long term deposit, in 10 years time.
I’ll be 60 in 20 years time and don’t really fancy apartment living or still renting at that stage. It is really when my working life will come to an end (in about 25 - 28 years hopefully) that I would be hoping to live in a house that we like in a nice area without still paying a grand or more in rent at that time. That is when any monetary nest egg would really get eaten into.
Now (and I know that there are very different schools of thought on this) seems to be a time where some value can be got.
The pinsters here have much more knowlege than I on this - so that’s why I’m looking for their thoughts on it.
Shop around for rental and always ask for a discount. Lots of places have high asking rents and are languishing for several weeks on Daft before going for lower rents than asking. Other places are snapped up within hours of being listed - I am renting and still get a Daft alert, sometimes I see something interesting in an email and by the time I call up about it the house is gone.
One possibility in your case might be to sell ‘your’ apartment, take the 160k deposit and buy a modest house on your salary alone, leaving your husbands NE apartment out of the equation completely. I don’t know if banks will treat married couples separately like this, but it might be worth trying if you are intent on buying.
This is a good recommendation. Banks will look at your total mortgage repayments, for the two apartments and any house you may want to buy, compare that to your income (excluding rental income) and expect you have a certain amount left over to live on based on your family size. If you can offload your apartment at a negligible loss, you’re in a much stronger position.
Banks won’t consider couples independantly for family homes but will for investment properties.
Thanks a lot for the replies. It might be an idea to sell my apartment - it’s a one bed that I bought about 15 years ago which I’ve rented out since I moved in with my hubbie. The rent covers the mortgage but it’s a hassle - although the tenant I have is great. It’s been let out continuously for the last 4 years (last 2 to the same tenant) - would the banks be inclined to take any of that in to account?
We’ll probably sit down with a mortgage broker or financial adviser once everything is final with the house sale and money received in October to see what they ahve to say.
Where you are in the market for a house - and have equity to put into it so that your mortgage won’t be crippling - then rent can be a lot more expensive than buying. Sure, it depends on what you want to rent - there’s an awful lot of crap out there (including Seomras!). But anything decent is a hot property.
I’m renting a great house at the moment, and while it’s not bad rent for the property - it’s at least €300 a month more than a potential mortgage would be.
This is the biggest con that the VIs ever managed to pull. The cost isn’t simply rent vs mortgage. Owning a house means you have to pay for the maintenance and upkeep (recommended to budget 3% of the value of the home per year), insurance (both life and building), household charge and soon to be property tax (which will be much higher than the current 100Euro). Given all those, on a 200k house the mortgage needs to be circa 300 pm less just to break even!
Lots of places put it between 3 and 4.5% a year of the rebuild cost. Lower if the house is newer. My 300pm figure above is based on the maintenance costs over the initial 5 years of home ownership and is what I’m planning for. I expect (read: hope) they’d drop off beyond that as things start to going into a longer replacement cycle. I expect rents to adjust accordingly for the household charge so haven’t include them there.
I initially did think it was high until you look at a ten year period then start averaging the costs you expect over that time. When I did it I included costs for yearly alarm maintenance, boiler maintenance, window cleaning twice per year, gutter cleaning once per year, at least one replacement of either a dishwasher/washing machine/fridge/freezer during the 10 year period. 1 electric shower. 1 by partial inside repaint (discretionary but once every ten years for younger generations seems to fit). 1 x painting exterior. 1 x minor damage such as roof damage, burst pipe, electrical fault (I have major ones covered on the insurance but this covers the excess too). Carpets/wooden floor maintenance or replacement.
There is costs involved in having a garden too but I haven’t worked them out.
You can go further into it if you want to compare against a rental by including wear and tear on items like beds, mattresses, couches, cookery and cutlery, smaller kitchen appliances, basically anything that you’d normally call a landlord to replace. All these bits are
Just to be clear, the costs would be lumpy in so far as some months there will be nothing, other months, say an appliance replacement would be above the average. Some of the longterm landlords on here would probably be able to provide a better percentage value.
Thanks so much for your replies. Sandyford does look like a place worth checking out but hubbie isn’t keen as thinks that there were a lot of properties built there during the boom without the corresponding infrastructure. Is that the case for any folks living there?
Do people think that there’s more value to be found in places like Rathfarnham, Terenure or North of the Liffey? I’d love to live somewhere like Skerries but the commute would be just too much.
It will depend on sums at the end of the day when everything closes with the house sold since we’re not in a position to do anything until then. No point in looking for a house to rent until we decide if we’re actually in a position to (or it makes sense to) buy (and sell the apartment which ticks along nicely paying for itself).
This site is a mine of information - and indeed opinions. I’ve become addicted!!
Again, thanks to everyone for all of the info. It’s great and a lot of food for thought.
AIB’s policy is that 50% of rental income will be taken into account if the LTV on the property is less than 50% and it’s considered to be in a strong rental area (Dublin & Cork). Otherwise none of it will be taken into account. As another poster has already pointed out, any mortgages you retain will severely impact your ability to borrow further funds. They’ll be stress tested at over 6% as they’ll be treated as BTL mortgages and that’s along with stress testing your potential mortgage. There’s only about 4 banks lending (BOI, UB, AIB and KBC), you’re almost better off dealing with them directly, they’ll all require the same documentation apart form their own tailored salary certs. A broker will charge you a fee if you get a loan offer and you don’t take it up whereas a bank won’t.