# Can I afford a mortgage?



## Bubblebunny (3 Dec 2007)

Hi,

I would be grateful for any advice.

I earn 31k. No bonuses etc. But permanent position with future possibility of promotion.

The mortgage would be 200k

My current rent is €400 a month

I save c. €700 a month, but very occasionally dip into part of this if necessary.

I have c. 12k in savings & also about 1-2k in the savings account I dip into.

I will need to buy everything in house from scratch

I have no other loans

It is an AH house

Is it feasible, or am I biting off more than I can chew?

Thanks for any advice


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## ClubMan (3 Dec 2007)

According to Karl Jeacle's mortgage calculator €200K over 30 years at 5% would be c. €1,073 per month excluding mortgage protection life assurance etc. Obviously a longer term would mean lower monthly repayments albeit at the expense of higher long term interest costs.

According to www.taxcalc.eu €31K gross (I presume?) is likely to be c. €2K p.m net. You are already paying €400 in rent and saving €700 so it doesn't sound infeasible. However many lenders may baulk at an income multiple of almost 7 and a mortgage cost of 50%+ of net income.


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## tessy (3 Dec 2007)

You're set and ready to go i reckon!!
€200k on your money is fine id guess but i think they normally ask for a band of €45,000 per year altogether in earnings..mayb u should see if you can get someone to go in with you on it?mayb a 70/30 thing?call it an investment?

Im not one to know or talk though!believe me...


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## ClubMan (3 Dec 2007)

tessy said:


> €200k on your money is fine id guess


Really? Even with an income multiple of c. 7 and mortgage repayment costs (excluding life assurance etc.) of 50%+!? Maybe you mean OK for _AH _but not necessarily for a mortgage?


> but i think they normally ask for a band of €45,000 per year altogether in earnings..


Who - lender or local authority?


> mayb u should see if you can get someone to go in with you on it?mayb a 70/30 thing?call it an investment?


Surely having an investor involved would be in breach of the _AH _rules?


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## Bubblebunny (4 Dec 2007)

Thanks for the advice

I will be doing it over 28-30 years - alone, no investor

I have been offered the money (and more) by a few lending institutions, but just because they are willing to give it to me doesn't mean I can necessarily pay it back (and eat!).

I guess a fixed rate would be better considering I don't have any spare cash to be playing around with?


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## moondance (4 Dec 2007)

I guess everyone is different when it comes to spending and amount of money you can live on.

I'm on around the same salary as you Bubblebunny and I bought an apartment and got a mortgage of 155K over 35 years (which I'm planning on paying back quicker and it's a tracker mortgage). I had 30K in savings so used 20K of that towards purchase and kept the other 10K. My repayments are 770 per month (before mortgage interest relief) and I find it all quite manageable. 

So whatever you decide I wish you the best of luck. 

You just need to try and do out a monthly budget to see what you can afford and don't forget bills, management fees (if applicable), legal fees, food, heating, extra money at Christmas and unexpected expenses (eg medical, weddings, etc).


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## bamboozle (4 Dec 2007)

Why not arrange say 70% of mortgage on a fixed rate and 30% on variable rates, at least this way you have somewhat predictable cash flows and as you’d be 30% variable you will benefit from any reductions in interest rates (and as you’d be 70% fixed if rates do go up you would be benefiting even more by having the majority of your mortgage fixed)

No doubt this advice will be torn to shreds by another poster but I feel it’s a good way to hedge while having some control over your outflows.


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## Bubblebunny (4 Dec 2007)

bamboozle said:


> Why not arrange say 70% of mortgage on a fixed rate and 30% on variable rates, at least this way you have somewhat predictable cash flows and as you’d be 30% variable you will benefit from any reductions in interest rates (and as you’d be 70% fixed if rates do go up you would be benefiting even more by having the majority of your mortgage fixed)
> 
> No doubt this advice will be torn to shreds by another poster but I feel it’s a good way to hedge while having some control over your outflows.


 
Thanks Bamboozle. I am going to go to mortgage broker today and look into my options


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## Maine (7 Dec 2007)

Bubblebunny said:


> Thanks Bamboozle. I am going to go to mortgage broker today and look into my options


 
What is the rush ? ?

By paying only 400 a month you are getting a cheap rent deal which allows you to save 700 a month.

Property prices are only going down at the moment.

So your saving are going up and property coming down so why change that.....1 year from now and you may have say 8000 more in savings and property you want to buy may have gone down 10k .....thats 18,000 better position

Also keep your FTB status.

200k mortgage means you pay 11,000 a year in interest only to live in that property.  Now you pay 4,800.  That means it costs you to 6,200 to buy rather than to rent if the property does not go up in value.


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## colsku (2 Jan 2008)

Where's your affordable house!?


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## Calico (2 Jan 2008)

Maine said:


> What is the rush ? ?



I guess the fact that the OP has been offered under the AH scheme makes it more of a one-time opportunity? Also, property prices will most likely not fall far enough to match AH levels.


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## gally74 (2 Jan 2008)

one or two things,

firstly your in a strong position, given the current market, are you sure you cant get the property cheaper, you will also insulate yourself against some future price drops.

secondly you have shown to yourself that you can live on the rent plus your savings,

would you consider renting out a room to a friend or current flatmate,

secondly you should talk to the banks on their own, as well as a mortgage broker


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## Maine (2 Jan 2008)

Calico said:


> I guess the fact that the OP has been offered under the AH scheme makes it more of a one-time opportunity? Also, property prices will most likely not fall far enough to match AH levels.


 
These schemes are always around in one form or another.

No rush.......a sharp property fall would be good for all


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