Should we borrow €460k on an income of €84k ?

I'm very surprised that you can get a mortgage of 560k on a total salary of 85k.

Are you sure this is correct burger?

THat is nearly 7 times what you are on.

That seems mad. (I do acknowledge you are not going to take the full 560k - I'm just shocked it was offered in teh first place)

qwertyuiop: yeah 560K i was told over the phone, nothing in writing though. and yeah i was shocked too. we were even offered more if we went fixed for 5 years with one bank!!!! crazy i think.

davidoco: yeah its worth looking into that davidoco thanks for the info. i have done a quick check on daft and a 4 bed is looking for 1700 p/m and its only about a 5min walk from the house for sale!!!

bamboozle: i purposely applied a high rate just to see where it left us at the end of mortgage payments and house bills. i know that there are lower rates but for the purpose of the exercise i applied a high rate. its hypothetical at the moment and i would hope that if i bought the house that i would not pay full price. i was talking to a fwe people i work with and they have mentioned that they have found that some agents that 'plant' people in a viewing to up the price. dont know if its true or not but just thought it was worth mentioning.

again thanks for all the replies.

burger1979

Howitzer said:

Brendan, you used to advise young people to go interest only in the early years of their mortgage and increase their payments later on when their incomes had increased. Are you rowing back from that position given that it only made sense in a rising market or just in this particular case given the nature of the OPs employment type?

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I have looked through my posts in this thread and I have not referred to interest-only?

It is bamboozle who is recommending it in this case, not I.

It is an interesting topic, so I have opened a new thread on it here

Done a scan of daft.ir last night and the most i can see asking to rent in baldoyle is 1700-1800 p/m for a 4 bed. but also thinking that doesnt mean that they have to mortgage the whole house to pay for it. the people who offered 480K might have money stored elsewhere and use that to fund the purchase of the house.

Hi Burger

You don't only look at the mortgage portion of an investment to work out the return, there is still lost opportunity of any funds used to purchase the house.

i.e. Why purchase an investment property earning a return of around 4% when you can get 5%+ sitting in a bank account.

Paddy

paddyodoors said:

Hi Burger

You don't only look at the mortgage portion of an investment to work out the return, there is still lost opportunity of any funds used to purchase the house.

i.e. Why purchase an investment property earning a return of around 4% when you can get 5%+ sitting in a bank account.

Paddy

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I second that. Say investor has €150,000 in cash. Mortgage of 350k interest only covered by rent. Equity in house would have to rise or they are losing money. Would be better off putting that 150K on deposit.

Investor would pay €20,000 in stamp duty so total cost €500,000.

My wife and myself have recently taken on a mortgage of 330k on a 475k house, our combined income is 90-95K/year, have no other loans (no car loans, credit card borrowings etc). I would not like to have put more into the mortgage because after all expenses and bills there is not a huge amount left for savings. My wife will soon be out on maternity leave and things will be tighter from then on, reduced income while out and childcare after that. Before you borrow just look at your situation closely, will your income fall if you are starting a family? What will childcare cost? Can you still manage all these on your combined income (reduced and full)? If its a family home you are buying all the talk of rental income means nothing, you wont be an investor in the rental market you will be a home owner, huge distinction.

john m said:

..... If its a family home you are buying all the talk of rental income means nothing, you wont be an investor in the rental market you will be a home owner, huge distinction.

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The topic of rent came up because an investor had seemingly put in a bid on the property that OP was interested in, and suspicions were raised for the OP because it seemed odd for an investor to be bidding on this house.

If it was possible would i be able to list out my projected income/expenditure on the said mortgage - moderator?

i dont mind listing out the figs that i have worked out for further scrutiney by others.

Burger,

One thing that you may want to consider - and in some ways it is nothing to do with finances - is the buzz that can be got from buying your first house. I just noticed that in one reply you mentioned that you REALLY wanted this house....

It's often very easy to become convinced that "this is the only house for me", and head off down the road of believing that if you don't get this one, then every other house that you look at for the rest of your life will be a disappointment. People (myself included) can spend far too much money because they believe they are paying not just for a house, but also a "home". The crazy prices are explained away by a feeling that you're not just buying bricks and mortar, but also intangibles like happiness, childrens birthday parties, growing old together, etc etc.

Remember - you're not buying happiness. No matter where you buy or what you spend, the "home" bit will follow along in due course. Try as dispassionately as possible to figure out what the bricks and mortar are worth to you, and forget about the rest. I know it's a cliche, but there really is other houses out there....

If in doubt, remember the Garth Brooks song about property investment: "sometimes I thank God for unanswered prayers". And good luck.

Well said Outspann i.e. in relation to excessive sentimentality and that thet there are other houses out there. However what not just offer 420000 for that house and see what happens what you got to loose Burger.

outspan: the heart is flutter with this one alright. i know that there are more houses out there and although we really like it we are prepared to walk away from it if its not right financially or otherwise. we have aeye on a few other houses as well. i shall now leave the office with gareth brooks in my head too.....thanks

television: do you not think 420K is too low and will be laughed at? the house has been on since christmas.

thanks for the replies again.

burger1979.

deedee80, quick question, your mortgage is €368k and your repayments are €1,500 net of interest relief, did you get a very good interest rate as your repayment is much lower than I am paying for more or less the same mortgage, perhaps the mortgage term is longer, mine is 20 years, thanks

Yea probably but I would wait for another month. If its still on the market go in with a much lower bid. This is not a rising market so its not as if your going to pay more in a month.

television said:

Yea probably but I would wait for another month. If its still on the market go in with a much lower bid. This is not a rising market so its not as if your going to pay more in a month.

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Be careful here - if it is a good house in a desirable location, waiting another month may not increase the price through the market rising - but does allow more time for new entrants to the market - i.e. another interested party may appear and could bid the price up.

its best to get in now with a low bid and hope they owners are keen to sell. Definetely take no heed of the offer "overheard" look at other properties in the area and get the average price - then offer lower.

I'd go in with an offer now to show you are interested but be realistic - state to the agent you are prepared to pay x but are also looking at other properties - so will move on if they are not prepared to accept your price.

10% below the asking/average mkt price gives you good flexibility - but don't then increase your offer too quick or by too much or you will quickly be reeled in by the professional sales agent

Paddy

Good point paddyodoors. Makes a lot of sence.

paddyodoors good point alright i will be looking at other houses in the area and see what they are going for i was thinking of offering 450K. we have done some sums again and think we can stretch to 470K max(mortgage would then be 430K) at that point it will be no more but i am prepared to walk away before then if necessary.

BROOKINGRe: Should we borrow €460k on an income of €84k ?
deedee80, quick question, your mortgage is €368k and your repayments are €1,500 net of interest relief, did you get a very good interest rate as your repayment is much lower than I am paying for more or less the same mortgage, perhaps the mortgage term is longer, mine is 20 years, thanks

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Hi Brooking,

yes our mortgage is over 35 years so that is why its cheaper, as we are both in our mid twenties we thought we might aswell stretch it out!

Also if you are going to bid you should seriously think about getting someone else to put the offers to the estate agent. From experience, if you are emotionally involved in a house, it is REALLY easy to get sucked in and up your offer. Just think getting it for 20k less could mean a new car for someone. Get a calm unexcitable friend to do it for you as in making a short simple phone call to the agent without going into discussions and get the to come back to you with the answers.

I cant help thinking that who ever is selling that house would so love to get 470000 and would happily take 430-440 and run. But what do I know.