# Opportunities brought about by recession



## regvw (14 Mar 2011)

*Age:* 34
*Spouse’s/Partner's age:* 31
*My Annual gross income from employment or profession:* €64,000 (current)
- reasonably secure
*Spouses Annual gross income from employment or profession:* €28,000 (current)
- reasonably secure


*Type of employment:* Full Time PAYE (Both)

*In general are you:
(a) spending more than you earn, or
(b) saving?*

* (a) *Saving regularly

*Other borrowings – car loans/personal loans etc
*No loans or credit card debt. 


Mortgage 190,000
Current Value of house 150,000
BOI Variable rate Mortgage currently 839 per month


Savings and investments: €61,200
Banks            47,400
Credit Union   2,500
Shares           11,300
*Total               61,200*
Do you have a pension scheme? Yes 

*Do you own any investment or other property? 
No
*
Ages of children: 1 child of 1.5 years old

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

1.  We have our own site and have just lodged a planning application to build a new house. I’m not trying to build anything fancy. It looks like I can get the house built for about 170,000. The bank said they will give us the mortgage. Now here come the questions. 
(a)  Are we mad to even consider building in this current climate? 
(b)   Would I be as well off to sell our current house if I could for 150,00 ??. My new mortgage would be 210,000. If I rent out the house I will get between 600 and 700 for the house. I know there is tax implications for renting out houses so would prefer not to rent it out if that was the best option.
2. Most of our savings are in Irish banks, we have done nothing to negate the risk of a default or punt nua coming on etc. Should we be worried or what is the best option for us here, should we be moving part of our savings out of Ireland etc. 
I was considering asking a financial advisor about these concerns, but I’m not sure if it is their area either ??

Any help would be greatly appreciated.
Reg


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## Brendan Burgess (15 Mar 2011)

Many people bought a new house without selling their existing  house and they are still stuck with their old house and have a  financial nightmare, so sell your own home before you start building. 

If you like your current home, then stay in it until you are ready to  build. When you are coming close to getting ready to build, then put  your home on the market. You have no idea how much you will get for your  current home until you actually sell it. You have to make sure that  getting less than €150k won't upset your finances. 


If you are building a house on your own site, then it is likely to be your dream home and the house which you live in forever. 

You have a short-term negative equity problem and there are problems borrowing money at the moment, but long-term you are in a very good position. 

I don't think you should build the house until you have more cash saved. Why not build something fancy as it's going to be your dream home? 

If you are worried about the safety of cash in an Irish bank, then the safest place for it would be to pay off your mortgage. Against that, you may need the cash to start the building.


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## goingforgold (15 Mar 2011)

I don't agree with Brendan that you are in negative equity. You have over 60K in savings and have negative equity of 40K in your current property so therefore you essentially have equity of 20K. 

I think this is important as there are some people out there who like to use the phrase negative equity as if it's the only buzz word around. Some people are genuinely in negative equity and should be treated differently to those who are not in terms of getting assistance etc. But that's a different debate so rant over

Anyway apart from that I believe you are in a very good situation. You have secured a mortgage which is great. I would look too at selling your existing property before building. A lot of hassle in renting. Take your time and make the correct decision for you and your family.


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## regvw (15 Mar 2011)

Thanks Guys, I would concur thst the best option would be to get my current house sold first. I could gamble and start the build and hope I will have my current house sold before I am finished the build. 

As regards my savings query, I dont think I will add this to the morgage I really want to hold onto my savings, I;m just worried that something terrible will happen if I just leave them in Irish banks


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## Bronte (16 Mar 2011)

I think you're in a good situation too.  Being a landlord is not for the faint hearted.  A mortgage of 210 K on 'secure' income of 92K is very reasonable.  

You and your spouse are doing all the right things, saving and not overextending.  After you've the house built, you need to start saving towards your child's education and look at both your retirement plans etc.

On a side note your thread title made me think the thread was about completely something else other than money makeover.


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