36 single looking to buy a house

[harmlessdonkey]

Age: 36
Spouse’s/Partner's age: N/A

Annual gross income from employment or profession: 110K
Annual gross income of spouse: N.A

Monthly take-home pay 5k

Type of employment: e.g. Civil Servant, self-employed: Full-time private sector

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

In general, I am saving. I did have saving goals and started a small rainy day fund, but I have since decided that I want buy a house as my landlord will end the lease when level 5 is over. So I have diverted the 15k I have saved to a be a deposit for a house. I have got 30k from HTB scheme also if I buy a new house this year. I will also move back to my parents for a few months rather than rent a new place. So I will save 2.5k per month for a deposit and new home expenses.

Rough estimate of value of home N/A
Amount outstanding on your mortgage: N/A
What interest rate are you paying? N/A

Other borrowings – car loans/personal loans etc
Car loan 530 per month. 2 years left then the car is fully paid for (171) I intend to keep it for a few more years after that and keep saving the €530 as if I was still paying the loan.

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: As mentioned above 15k for home deposit.

Do you have a pension scheme? Yes. Although I think I would like to contribute more

Do you own any investment or other property? No

Ages of children: N/A

Life insurance: I have 4x salary from employer but none privately. I expect I will need Life Insurance or Mortgage protection for the house.

My goal is really to buy a house in the short term.

Then I would like to make sure I am providing enough for retirement as I am very concerned about being broke when I am 65. I don't plan to retire early, but I want to retire at 65. I have 70k in the pension pot so far and I am only adding 5% matached by employer 5% per month.

 

[KOW]

Age: 36
Spouse’s/Partner's age: N/A

Annual gross income from employment or profession: 110K
Annual gross income of spouse: N.A

Monthly take-home pay 5k

Type of employment: e.g. Civil Servant, self-employed: Full-time private sector

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

In general, I am saving. I did have saving goals and started a small rainy day fund, but I have since decided that I want buy a house as my landlord will end the lease when level 5 is over. So I have diverted the 15k I have saved to a be a deposit for a house. I have got 30k from HTB scheme also if I buy a new house this year. I will also move back to my parents for a few months rather than rent a new place. So I will save 2.5k per month for a deposit and new home expenses.

Rough estimate of value of home N/A
Amount outstanding on your mortgage: N/A
What interest rate are you paying? N/A

Other borrowings – car loans/personal loans etc
Car loan 530 per month. 2 years left then the car is fully paid for (171) I intend to keep it for a few more years after that and keep saving the €530 as if I was still paying the loan.

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: As mentioned above 15k for home deposit.

Do you have a pension scheme? Yes. Although I think I would like to contribute more

Do you own any investment or other property? No

Ages of children: N/A

Life insurance: I have 4x salary from employer but none privately. I expect I will need Life Insurance or Mortgage protection for the house.

My goal is really to buy a house in the short term.

Then I would like to make sure I am providing enough for retirement as I am very concerned about being broke when I am 65. I don't plan to retire early, but I want to retire at 65. I have 70k in the pension pot so far and I am only adding 5% matached by employer 5% per month.

Harmlessdonkey,
I would guess that after pension contributions you would take home a little over 1200 euro p.w or nearly 5k euro pm. I dont know how long you are on this type of income. Apart from car payment and rent you do not state that you have any other significant expenses.
If this is the situation I would suggest you forget about buying a property near term. Start a money diary and over the next number of months see where your income is going. If your not happy to do this get someone to do it for you.
5k take home per month and lets just say 1500pm for car and rent. Where is the other 3.5k or 875 euro p.w going
. If it is the case that your savings are 15k and you are going through 850 euro pw you need to address your spending or you may end up working until your 90.
If you even spent 400 euro pw after car and rent you would have 480X52=23500 in a years time. Maybe you need to add a little more detail but the information to date suggests your on a very good income but for whatever reason blowing your hard earned cash. How much exactly are you saving per month?

 

[RedOnion]

I saw your post earlier, but I wasn't sure what specific questions you have?

In terms of getting a mortgage, there's some general advice. Banks will want to see proof of affordability. That can be your regular savings, and rent taken together. So make sure you have proof of your rent being paid, and then when you move home increase your savings by the amount of rent. You'll need that regular savings pattern for 6 months. Ring-fence the money, and don't dip into it for other things.

The other big thing is the car loan will count against you. The banks tend to look at it as a 530 per month commitment, which reduces your affordability (that's the payment on a 140k mortgage over 30 years!). Your intention might be to keep the car forever, but people tend to keep changing their cars so that might be factored in.

You might get more responses if you ask specific questions.

 

[Brendan Burgess]

1) Pay off the car loan now, unless it's at a zero % interest rate.

2) Forget about contributing to a pension other than what you need to contribute to get the maximum from your employer. Your absolute priority is to buy a house so you should be maxing available cash.

3) After paying off the car loan, you won't have much for a deposit. So start saving hard.

4) With €110k, you should be able to borrow about €350k. But to buy a house for €400k, you will need a €40k deposit. So you need to save €3k a month for just over a year.

5) What is the target price of the house you want to buy? If it's less than €400k, you could buy it earlier.

6) If it's over €400k, you might consider joining forces with a friend to buy a house jointly. For example, you might have a friend who has the deposit, but not the earnings. If you go down this avenue, set a 5 year deadline to sell the house, so you can go your separate ways.

 

[evil_g]

6) If it's over €400k, you might consider joining forces with a friend to buy a house jointly. For example, you might have a friend who has the deposit, but not the earnings. If you go down this avenue, set a 5 year deadline to sell the house, so you can go your separate ways.

That sounds like a terrible idea.

 

[RedOnion]

But to buy a house for €400k, you will need a €40k deposit. So you need to save €3k a month for just over a year.

The OP seems to be pinning their hopes on the enhanced help to buy scheme, which will provide 30k towards deposit if they buy a qualifying property before the scheme runs out.

 

[NoRegretsCoyote]

6) If it's over €400k, you might consider joining forces with a friend to buy a house jointly. For example, you might have a friend who has the deposit, but not the earnings. If you go down this avenue, set a 5 year deadline to sell the house, so you can go your separate ways.

I would recommend against.

AAM is full of stories of now-estranged people who once bought houses together.

Rent-a-room scheme up to €14k a year tax free would make much more sense in OP's circumstances.

 

[Brendan Burgess]

I would recommend against.

I would recommend considering the option.

But it's unlikely to be a good idea.

Brendan

 

[Thirsty]

The joint-buyer option can work well *provided* you make sure to build in an exit strategy.

Agree re the 'rent-a-room', no brainer for any FTB.

 

[harmlessdonkey]

Thanks all for the advice so far.

To add, I have been mortgage approved for a 396k + 45k deposit (30k HTB + 15K saved). I am have the HTB as an option but I am not going to buy a new house just to avail of the HTB. If I don't find a suitable one by Dec I will fall back on a second hand which will mean I will need to increase my saved deposit.

Current expenditure is brought right down. For a long time I was very flaithulach with money. I have started keeping a budget in YNAB (ynab.com) software to try and understand what I was spending money on. I have been able to cut right back where I can save 2k per month. I cut out a lot of spending on things like buying the latest phones and TVs etc.

I'll take on-board the advice to pay down the car loan faster. Also advice taken to not increase the pension contributions until I have achieved my goal of owning a house. However, once the time comes what should I be doing in terms of contributions for my age? Employer contribution is maxed out already.

What else should I be considering in terms of getting properly provisioned e.g. is employer income protection of 66% sufficient, employer death in service of 4x salary enough (considering I have no family I expect so), I think I'll need mortgage protection insurance (is this better in my circumstances than a life policy) I also see there's an option of defined illness cover, is this worth it and what quantum of cover would you consider if you were in my shoes?

Then savings post house, what should I be thinking of doing? I will start accruing for usual things like home maintenance, replacement white goods etc. But I would like to build up a next egg in case I need money for an emergency or something.

I think I'm a little directionless, is it worth me speaking with a financial planner or is that something out of my league?

I noticed someone posted asking me what I do for a living, I was going to PM them but the post seems to be gone. If that person wants to PM me, I am happy to discuss.

 

[RedOnion]

I think I'll need mortgage protection insurance (is this better in my circumstances than a life policy)

Mortgage protection and life assurance are the same thing. Just a mortgage protection policy, typically, is set up to reduce in line with the projected mortgage balance. It works out cheaper to have a 396k policy, reducing to 0 over 30 years than providing for to full amount for the full term.

I also see there's an option of defined illness cover, is this worth it and what quantum of cover would you consider if you were in my shoes

The way I look at this is if you get a specific illness (it must be in the list provided by the insurer) that will most likely kill you, but not straight away, it'll pay a lump sum. in my view, the cover is expensive and the list if covered illnesses is always reducing for new policies. I think income protection is more important, which you already have through work.

is employer income protection of 66% sufficient

It's probably sufficient if you've no family. Just check for yourself if the 66% is in addition to social welfare illness benefit, or if they reduce payment to account for it.
And then, could you live on that amount for an extended period? 1 year, 2 years, etc.

I'll take on-board the advice to pay down the car loan faster.

Actually, if you've already got proper mortgage approval with the car loan, I'd hold off paying it down quickly. But that depends on which lender it's with and if they asked about your existing loans. Getting your deposit together is more important.

 

[harmlessdonkey]

Mortgage protection and life assurance are the same thing. Just a mortgage protection policy, typically, is set up to reduce in line with the projected mortgage balance. It works out cheaper to have a 396k policy, reducing to 0 over 30 years than providing for to full amount for the full term.

Thanks, yeah I suppose I was thinking do I need extra life cover beyond just to cover the house? I don't think so, but if circumstances change would it have been cheaper to get it now when I am relatively young and healthy. Probably not.

The way I look at this is if you get a specific illness (it must be in the list provided by the insurer) that will most likely kill you, but not straight away, it'll pay a lump sum. in my view, the cover is expensive and the list if covered illnesses is always reducing for new policies. I think income protection is more important, which you already have through work.

Thanks.

It's probably sufficient if you've no family. Just check for yourself if the 66% is in addition to social welfare illness benefit, or if they reduce payment to account for it.

Thanks, I'll look into that.

Actually, if you've already got proper mortgage approval with the car loan, I'd hold off paying it down quickly. But that depends on which lender it's with and if they asked about your existing loans. Getting your deposit together is more important.

Yeah, I have full mortgage approval with the car loan declared. Car loan is with UB so depending on their exit schedule the loan might be sold or paid off by the time they exit.

 

[RedOnion]

Thanks, yeah I suppose I was thinking do I need extra life cover beyond just to cover the house?

Well, if you think about it, life assurance will only pay out when you die. At that stage you, personally, shouldn't have a use for the money!

So it comes down to whether you'll have people you want to pass money on to; a partner, spouse, children, etc.

 

[sadie]

If you save 2k per month by December you would have 33k saved. Does your first home have to cost €400k?
Also if you do not have private health insurance that is something to consider as there is a loading after age 34.
New houses seem to be more expensive generally than their 2nd hand counterparts. The HTB scheme can sometimes seem like a 'help to buy a more expensive house because I'm restricted to new houses' deal.