Advice for FTB worried about amount we are borrowing

Our rent has not gone much over the years up coz we are good tenants, never late with the rent and we have the house immaculet....better than it was when we moved in plus the neighbours love us & have said to the Landlord we are lovely to live beside....which is really nice!. He has actually said to us before that when we do decide to go he will be sorry to see us go! (well I'd say more for the money aswell!)
 
As others have said any movement in property prices - in either direction - is of no interest unless or until you want to move so that's a red herring. If the house is affordable at +2% rates then you should be OK. Are you both fully funding SSIA's? If so that's an additional €500 towards your cash flow when they mature.

You and your family need a home. If this one fulfills your requirements and you can afford it then go for it.

Sarah

www.rea.ie
 
Your rent hasnt gone up because the market has dictated prices and if there was truly a shortage of housing rents would have risen by far far more,im sure your landlord would increase rent if he could but he knows what the market is saying is the price to rent.
 
The rents in Dublin have not risen much in years , on average, because the demand is basically not there. So why are house prices so high ???? . Either rents go up to long term averages, unlikely with us building so much or house prices come down. or both simultaneously .

Find me the type of house you rented in 2000 and how much does it cost to rent now Mag ???

see http://www.daft.ie/ for the data.
 
No, we don't have SSIA's..when that started out I paid little or no attention to it and we were expecting our first child & money was tight so we kept what we had....we had it hard for a number of years so we know what it's like to REALLY struggle. I think that's the main reason we are worried about the new house, but hubbie has great job now in secure multinational so over the past 2 years fortunes have really turned around for us and we have ourselves to thank for making it work too!
 
Why not print out all these responses . . .if your husband is freaking out it might help to reassure him.
I agree, if you're stress tested and you want the house, go for it. You sound like you would do your sums and know for sure if you would be able to manage.
 
many multinationals will be leaving here in years to come ,how would you cope if one of you couldnt work or couldnt find work?
 
ah for gods sake, I know the rents have not increased much allright but I think you do help your case if you behave properly where you live & the Landlord knows his propery is not being abused.
 
Mag2006 said:
ah for gods sake, I know the rents have not increased much allright but I think you do help your case if you behave properly where you live & the Landlord knows his propery is not being abused.
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Thats why I said go to www.daft.ie for objectivity sake.

Do you not remember how often rents rose in the late 1990s when there WAS a shortage ??
 
bearishbull said:
if rent was a five hundred euro a month should they still buy at 440k? " if they can afford to buy they should" is the worst financial philosphy i've ever heard.
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You can make arguments against the Irish mentality to own property at all costs which I fully subcribe to but the simple fact if that she found a family home that she likes, wants to own a property and is willing to pay the asking price if she can afford it. So why shouldn't she buy?
 
bearishbull said:
many multinationals will be leaving here in years to come ,how would you cope if one of you couldnt work or couldnt find work?
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Maybe you might want to drop bull from your name and stick to bearish!!You really do believe we are on the cust of armageddon don't you..
 
well she has to eat lidl food! i wouldnt give up my organic and marks and spencer food just to own and not rent (i'll rent and save money to invest in a diversified portfolio thats not exposed to the irish property bubble)
 
Sunny said:
Maybe you might want to drop bull from your name and stick to bearish!!You really do believe we are on the cust of armageddon don't you..
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fail to plan ,plan to fail.
 
Mag2006. I don't think feeling stressed about buying a house worrying about a crash etc is at all unreasonable. I was freaking out about mine when i bought it and then freaked out again when i moved in and discovered any slight problem still thinking should i have bought or not. I kept lookin at the paper noticing certain areas where houses were appreciating much quicker than mine (which hasn't moved that much). I finally relaxed and started to enjoy my home - which is what it is at the end of the day. Once you've bought you can stop looking feverishly at all those property pages and realise why you bought was to have a house for you and your children. BTW i enjoy the site speculating about property prices but it freaks me out too.
 

Home values don't come into the equation? Why not? "Affordability" is a buzzword bandied about by the banks to keep this property bubble driving forward.

There's a serious risk of negative equity at the moment - alot of the data points to this so sticking your head in the sand because scare-mongerers have been wrong until now is not the way to deal with it. Nobody has a crystal ball, but you have to take this risk into account when the potential cost is massive. Buying now at 440 versus buying at 400 in a years time (10% drop) could cost up to 100k in interest/capital over the life of the mortgage. Likewise, it could cost just as much if prices keep going up and you wait - again, that's a risk that needs to be evaluated.

There's also the risk of negative equity coinciding with some other unfortunate event. I know that, if worse comes to the worst, I'd like the option of selling up and removing the costs of servicing a mortgage if I had to, preferably with a few quid left over to help out. So not having any intention of selling up is very different to being forced to sell up.

Having said all that, OP and hubby seem to have their finances in good order (real-life stress testing their finances, as opposed to theoretically on a bank managers computer) so the decision is mostly about managing these risks. For a start, feeling this is their "house for life" helps - they're not jumping on the bottom rung just for the sake of it. The intangible value to their family life is also a factor - being able to decorate the kids rooms, having their own garden to play in, etc.
 
If a recession leaves them with one €38000 income (half their €76k) and a 6% interest rate mortgage they will have to pay it every month anyway

a 420k mortgage for 35 years at 5.00% is €2120 a month
a 420k mortgage for 35 years at 6.00% is €2400 a month
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€2400 x 12 is €29,000 which leaves them €9k a year to live on(before tax and prsi) and run a car + the big chilters allowances (for the next 2 years only) about €5000 a year and then dropping to €4k and then €3k as they reach 6 years old.

I trust its not an Interest Only Mortgage Mag because those figures are for repayment mortgages ????

The rent would only be 12 x €1200 or €14400 a year which leaves them hell of a lot lot better off as it is not tied to the interest rate.

Oh Well . Who really knows why people do what they do ???
 

As CCOVICH said this probably isn't the thread for this discussion but I would be interested in reading what data is suggesting that neagative equity is a real serious risk at the moment. Maybe post it on the relevant thread. It is always a good debatable topic!
 
With that size mortgage I care less about negative equity and more about what happens if they are down to the one income only, even if only for a while.
 
2Pack said:
With that size mortgage I care less about negative equity and more about what happens if they are down to the one income only, even if only for a while.
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I bought my place on my own. If I get made redundant, I am screwed. Down to zero income!! Don't regret it though!
 
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