# How can I afford to buy?



## ngwrbc (5 Nov 2008)

Hi All, 

This is for a friend, any suggestions appreciated.

age 32, Single - earns 38k p.a & approx €3k bonus p.a
No debts / no loans
Approx 3k in savings (after clearing small loans)
Paying 450 Rent monthly
Saving 600 monthly now (can save more!)

In current market when 100% mortages are no longer available is there any solution to someone looking to borrow around 190k / 200k for the full purchase price of a property. Someone suggested €10k personal loan from Credit Union but i'm assuming this will affect borrowing potential then for mortgage. 

Thanks in advance for any input.


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## Mr DT (5 Nov 2008)

Solution= Save for a deposit!

Whats the rush? 
If they can save 790 a month for two years they will have a 10% deposit.


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## ngwrbc (5 Nov 2008)

Mr DT said:


> Solution= Save for a deposit!
> 
> Whats the rush?
> If they can save 790 a month for two years they will have a 10% deposit.


 
Well yes that of course is a solution!  Issue is having to move out of rental accomodation, getting another place (not sharing) will be more or less the same as paying a mortgage, would prefer to buy and pay own mortgage!


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## deedee80 (5 Nov 2008)

can your friend not move into another shared accommodation while saving, there should be plenty out there!  It is not advisable to take out a loan as deposit for a house.


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## Mr DT (5 Nov 2008)

ngwrbc said:


> Well yes that of course is a solution! Issue is having to move out of rental accomodation, getting another place (not sharing) will be more or less the same as paying a mortgage, would prefer to buy and pay own mortgage!


 

They have no deposit, they have very little savings, they have no option but to save. Unless family and friends would gift them money......

Borrowing for a deposit would indicate they haven't a financial clue which is not a good position to be in when they are looking at making one of the biggest financial desicions they will ever take!! 

It could be argued within 2 years more value could have returned to the market so they would be in a good position with a 10% deposit.


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## Delphi (5 Nov 2008)

Would your friend consider affordable housing? Your friend would only need 3% deposit


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## Raskolnikov (6 Nov 2008)

ngwrbc said:


> getting another place (not sharing) will be more or less the same as paying a mortgage, would prefer to buy and pay own mortgage!


I'm a bit lost here.

Rent is only €450 a month. You do realise that even having a relatively small €200,000 mortgage will cost you nearly €1,000 a month?


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## Flax (6 Nov 2008)

I agree with the other posters that your friend should continue saving rather than buy now. Also it looks like house prices are going to continue to decline, so this is not necessarily a bad thing.

Could your friend get a part-time job to supplement her income? This would obviously help speed things up.

She could try [broken link removed] or http://www.jobs.ie/Jobs.aspx?Categories=&Regions=&Keywords=&PartTimeOnly=1


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## sam h (6 Nov 2008)

I had a friend who borrowed her deposit from the credit union....I said she was mad, she should save & do it the right way. But she went ahead and bought, got in 2 lodgers and had the deposit paid off fairly quickly. If she had waited the 2 years to save, she would have had less income (lodgers) and the price of the house had risen significantly. She kept the lodgers for about 4 years & now has the house to herself.  Bear in mind the market is different at the moment & capital gain is not likely.

I'm not advocating it as it would not be my way, but she certainly felt like she had done the right thing & it was hard to argue in hindsight.


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## DubGus (9 Nov 2008)

sam h said:


> I had a friend who borrowed her deposit from the credit union....I said she was mad, she should save & do it the right way. But she went ahead and bought, got in 2 lodgers and had the deposit paid off fairly quickly. If she had waited the 2 years to save, she would have had less income (lodgers) and the price of the house had risen significantly. She kept the lodgers for about 4 years & now has the house to herself. Bear in mind the market is different at the moment & capital gain is not likely.
> 
> I'm not advocating it as it would not be my way, but she certainly felt like she had done the right thing & it was hard to argue in hindsight.


 
A couple of things have changes lately:

1. House prices going down (140,000 people already in negative equity)
2. Net emigration (no lodgers)
3. Job security levels very low

Do the maths and you will understand that the OP needs to save his/her deposit before thinking about buying unless he/she is a gambler that likes to bet on very high odds.

Cheers,

DubGus


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## brazen_dude (9 Nov 2008)

I agree with Dubgus.... Rents are coming down like anything ... In suburb Dublin areas rents were down by atleast 10 to 13%. So getting lodgers in the current env is also a competition between owners.. In my view, better to wait and save the deposit than paying interest on it...


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