# How best to manage money now, to prepare for looking for mortgage in future



## Milko (15 Aug 2010)

Age: *27*
   Spouse’s/Partner's age: *28*

   Annual gross income from employment or profession: *€19,000*
   Annual gross income of spouse:*€2,000*

   Type of employment: e.g. Civil Servant,  self-employed *Both full-time students, income is scholarship, grant and part time work.*

In general are you:
(a) spending more than you earn, or
(b) saving?
*More-or-less breaking even*

   Rough estimate of value of home *n/a*
   Amount outstanding on your mortgage: 
*What interest rate    are you paying? *

   Other borrowings – car loans/personal loans etc *none*

   Do you pay off your full credit card balance each month? *yes*
   If not, what is the balance on your credit card? 

   Savings and investments: *~€37,000, currently sitting in useless accounts*

   Do you have a pension scheme? *no*

   Do you own any investment or other property? *no*

   Ages of children: *none*

   Life insurance: *no*


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

*Both currently full time students, just about managing to live on income of around €21,000 between us for day to day living, but if something bigger comes up (car repairs, holiday), we dip into savings. That's ok - the reason for the savings was to help fund us through college. Savings have just bulit up in previous years (i.e. not regular savings deposits, just accumulation due to earning>spending), through laziness/stupidity they are just sitting in very low interest accounts earning more or less nothing.

In a couple of years we will both (hopefully) be finished college, and both earning (hopefully), although we are unlikley to earn well (probably be lucky to both start around €35,000). At that point we will be starting to think about all the stuff we can't afford to think about now - mortgage, pension, potentially kids.

At the moment we are working out what accounts to put our savings into. We're thinking approx €25,000 into a ~18 month fixed term, €8,000 into something with a notice period (i.e. one of the 40 day ones), and the remaining €4,000 in an even shorter notice / left as a buffer for the current account to cover when our income isn't quite enough. The reason for the 18-month term is that we may need to start living off these savings in about 18 months, as the scholarship is likely to run out without renewal beofre I finish college. I've looked into the various acounts and can work out what ones are suitable, so that's no problem.

My main question is - what suggestions do you have for our money at the moment which will give us the best chance of getting a mortgage when we go looking when we start earning? i.e. I know the banks will be looking for evidence of regular saving - we could put away a bit each month, but realistically this would be at the expense of our lump sum savings, so doesn't seem worht it - the bank would see through that plan. Ditto evidence of successfully having paid back a loan - neither of us have ever had a loan and don't plan to unless we need to - so no point taking out a loan just for the sake of proving you can pay it back, is there?

So is there anything in particualr we can do? Or just do somehting sensible with the lump sums and then when we start earning start saving regularly and hope that that's evidence enough of our money-managing?

Sorry for long post, thanks.


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## so-crates (27 Aug 2010)

Hi Milko,

I think the sensible thing to do would be to maximise your return on your current savings. Having said that if you were able to put even €5 pm into a CU account it would keep the habit up. Your savings plan does seem like a good one (I don't think that you want any risk as the savings will be needed within the medium term) but is there any chance that you could finish your course of study or your thesis in the next 18 months?

On the trial loan, it is actually a good idea to take one out at some stage. Evidence of repayment is important. I did a similar thing and took out a small loan (for less than €1500) that I didn't strictly need but was for a specific purpose in order to demonstrate repayment of a loan and to have a record. Perhaps though it would be best to leave that until after you have completed college.


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## chlipps (29 Aug 2010)

Look at the best buys in the deposits section and get your savings making some money

Dont be in a panic to buy a house... plenty time for that as you are both still young... best you both get established in good work positions (hopefully they will be available)...best that you are both happy with your work positions before ever considering a mortgage as if either of you want to move elsewhere then not easy to sell, move etc... i suggest you rent away for awhile furtehr and not have the mortgage burden

Best of luck


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