I am considering making an offer to purchase a holiday home in the south of Ireland, we have two small children and hope that we would make good use of the property over the next 5 to 10 years. I am a little concerned about the affordability aspect and whether there are hidden costs that I haven't factored in.
Net income - €3800 per month
Non-mortgage debt - €0
Value of PPR: €240k
Mortgage on PPR: €154k @1.15%
Monthly repayments - €515
Home insurance:€384
Property Tax: €374
Water Charges: €260
Annual Cost: €7198
Savings - €125k (will be used for purchase)
Purchase Price of Holiday Home - €195k
Approval for mortgage of €69,500 @3.6%
Estimate monthly repayment: €346
Home insurance:€265 quote received
Property Tax: €315
Water Charges: €260
Annual Cost: €4992
Combined Cost: €12,190 p.a. or €1015 per month.
Adding a stress test of 5% would add about €7,500 to that total or a monthly outgoing of €1633.
My question is whether a 5% stress test is reasonable, should it be more?
Are there costs I'm not taking into account (legal fees, survey and stamp duty are anticipated for the house purchase).
Is there a rule of thumb in terms of how much of your monthly pay should go towards servicing a mortgage?
Am I foolish investing all my savings in a single investment?
Net income - €3800 per month
Non-mortgage debt - €0
Value of PPR: €240k
Mortgage on PPR: €154k @1.15%
Monthly repayments - €515
Home insurance:€384
Property Tax: €374
Water Charges: €260
Annual Cost: €7198
Savings - €125k (will be used for purchase)
Purchase Price of Holiday Home - €195k
Approval for mortgage of €69,500 @3.6%
Estimate monthly repayment: €346
Home insurance:€265 quote received
Property Tax: €315
Water Charges: €260
Annual Cost: €4992
Combined Cost: €12,190 p.a. or €1015 per month.
Adding a stress test of 5% would add about €7,500 to that total or a monthly outgoing of €1633.
My question is whether a 5% stress test is reasonable, should it be more?
Are there costs I'm not taking into account (legal fees, survey and stamp duty are anticipated for the house purchase).
Is there a rule of thumb in terms of how much of your monthly pay should go towards servicing a mortgage?
Am I foolish investing all my savings in a single investment?