35 year old renting but should I buy

M

mileurista

New Member
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2
Age:
35
Spouse’s/Partner's age:
N/a - I'm single

Annual gross income from employment or profession:
€105,000 base + €17,000 bonus (back in 2019 I was on €44k with no bonus)

Type of employment:
Private sector employee - I.T.

Expenditure pattern:
Definitely a 'saver'

Rent/Mortgage
Renting a house off a relative and I share with a friend. We pay €500 each.

Other borrowings – car loans/personal loans etc
None

Do you pay off your full credit card balance each month?
Yes - Sometimes I overpay but that isn't a good strategy

Savings and investments:
~€100k in savings account earning 3.4% (90k), 3.5% (10k)
€18k in stocks (lost 3k on the market never mind the 10k of paper profits)
£4.5k in savings account earning 4.25%
£3k in stocks (lost 1k)

Do you have a pension scheme?
I'm putting in 20% (AVC) and my company is matching me up to 10% so 20+10=30% (currently have 56k in current pension plan and 77k in my old one). I know I'm in the High Growth Portfolio (ie 5 risk value with 7 being the riskiest) and that it lost 3k in value last year.
Also waiting to hear back from the UK Pension to make voluntary contributions but I should get the full amount.

Do you own any investment or other property?
No.

Ages of children:
None.

Life insurance:
Yes via company plan and is 4 times my salary.

What specific question do you have or what issues are of concern to you?
I know myself the best thing I should be doing with my money is buying a house but I haven't as my rent is so low and I can walk away at any time as I am tempted to quit my job and go traveling/backpacking for a while.

I have looked into how much I could get as a mortgage. I could buy a house worth 567k (including the 10% I would put in) according the AIB calculator. Two houses beside mine sold last year for €500k so I could buy something similar but my repayments would be €2,174 a month and minus the rent a room relief (1,167) it would be paying €1,007 but that is double what I am paying at the moment. I'm also not 100% sure where I want to live as even last year with my ex we talked about moving to her country (EU) and then I might try and go fully remote with my next job.

I already have a case study of a friend of mine was in a similar situation back in 2019 but he bought and was still able to leave his job and go traveling but between help from his family and other means his repayments are covered by the rooms he has rented out. If house sales in his estate are to by his house has increased massively in value since then.

I also don't own a car just always rent when I need one even though I'm been tempted to buy many times I just cannot justify it over renting.

I do have a bad habit of buying expensive last minute flights with last minute accommodation prices added to that.
 
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How much are you regularly saving each month? Probably a fair bit -€2K pm given you have probably made the majority of your savings since 2019. So I would be inclined to purchase that house.

-your rent may not stay €500 pm forever, circumstances change.
-as people get older they don’t like sharing as much
-when you retire and have no income it is nice to know you will no longer be paying rent or mortgage.
-if you go travelling you sound as if you still plan to work and you can use your wages to fund your travel and rent to fund your mortgage.

There are pros and cons to any decision you make, but buying a house will allow you to grow your wealth, plan for the future & not impact your lifestyle decisions. You can only make a decision based on what you know now, it can be impossible to predict everything that may happen, but it should not stop you making any decision either.
 
In most cases, buying a house is the correct thing to do.

There is society and peer pressure to buy a house which is hard to resist.

But I think that in your case, being young, free and single and with cheap rent, I think that this is a case where you should not buy a house for the moment at least.

It should be part of your long-term plan, but not your short-term plan as your future is too uncertain.

In the meantime, I think you should invest in equities. When your plans to buy a house harden and you want to buy within two years, then switch back from equities into cash.

Brendan
 
Buy a house, rent out a couple of rooms.

You can get c.€1,100 per month tax free through rent-a-room which will pay a big chunk off your mortgage.

Life can change very fast, you have a good income & perhaps not so good spending habits. Paying down a mortgage is a better investment than last minute expensive holidays.
 
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Clamball said:
How much are you regularly saving each month? Probably a fair bit -€2K pm given you have probably made the majority of your savings since 2019. So I would be inclined to purchase that house.
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Roughly saving 2k a month. I had around 40k in savings back in 2019 but then I wasn't working for a year (was traveling) but yeah most of my savings have come in the last 3 years. My salary has jumped over the last few years 2021-€80k (3k bonus), 2022-€86k (15k bonus) and this year I got promoted which gave me 105k.

Clamball said:
-your rent may not stay €500 pm forever, circumstances change.
-as people get older they don’t like sharing as much
-when you retire and have no income it is nice to know you will no longer be paying rent or mortgage.
-if you go travelling you sound as if you still plan to work and you can use your wages to fund your travel and rent to fund your mortgage.
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I've only had this house in the last 3 years before that I was at the will of the market but still managed to find a place to rent for 600e a month back in 2019 but maybe now I'd be paying 800-900e if not more for the same place I had back in 2018-19. If I was paying 1300 a month (like my ex is) to share an apartment l would be looking to buy. The only thing is I do like the area I am living in as it's a very short hop into the city but yet still quite quiet. If I was to buy I guess I would have to move a bit outside of the city or don't get the first time grant and buy a second hand house.
Brendan Burgess said:
Where are you earning these rates?
Are they accessible if you do need to move fast to buy a house?
Are they safe institutions?
Is that an introductory rate?
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Yes the 3.4 is only for 6 months with Advanzia Bank I had it before in Lightyear and Trade Republic the smaller amount is with BFF Italy via Raisin on a 6 month term. Everything is backed by the deposit guarantee scheme.
Brendan Burgess said:
But I think that in your case, being young, free and single and with cheap rent, I think that this is a case where you should not buy a house for the moment at least.
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Sums up my own thoughts tbh. I'm making a trade off buying now to be more flexible in the future.
Brendan Burgess said:
It should be part of your long-term plan, but not your short-term plan as your future is too uncertain.
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Oh it if I didn't have this cheap rent I would be looking to buy.
Brendan Burgess said:
In the meantime, I think you should invest in equities. When your plans to buy a house harden and you want to buy within two years, then switch back from equities into cash.
Click to expand...
While I like the idea of being able to liquidate my assists quickly I am a bit unsure of investing in equities based on my past performance. I skill I need to learn is knowing to sell and take my profits instead of getting greedy.
DannyBoyD said:
Life can change very fast, you have a good income & perhaps not so good spending habits. Paying down a mortgage is a better investment than last minute expensive holidays.
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Definitively a better investment financially but I'm also investing in enjoying my personal life too but one is more easy to follow than the other.
 
mileurista said:
I know I'm in the High Growth Portfolio (ie 5 risk value with 7 being the riskiest) and that it lost 3k in value last year.
Click to expand...
At your age you should probably be in a higher-risk portfolio as over decades the return will be greater.

Otherwise I think you need to first decide if you want to travel or not. If you do it, it's probably a bad idea to be a homeowner in Ireland at the same time and you should put it off until you are back.
 
This is a no brainer for me. You're 35 and not fully aware of where you want to be in the short term never mind the long term. Buy a house. There are thousands of people like you who for one reason or other (and no fault of their own) will never be able to buy a house. I don't care how cheap your rent is; rent is dead money as far as any 35 year old is concerned.
 
I have been in similar position to you and i agree with those posters that suggest hold off on buying and go travelling.

I bought at similar age, and whilst i dont regret it and it was a great decision at the time, your circumstances a re bit different.

Theres value to being your age, single, financially comfortable and fairly footloose.

If i were you, id go travelling and enjoy a year then come back and reassess.
 
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