Advice on Purchasing home with Savings

Hi im a College Student with 15k in the Bank savings earned through working while in College. Job is now gone so no hope of saving more for another 2 years.

Most ive ever had and wont have the chance to work again for a couple of years till i graduate. Im studying Software and expect to have no problems getting into a decent job when i graduate. My plan was to keep this 15k as a deposit for my first house. Im in Waterford so houses i fancy are averaging about 90-100k now.

Im wondering should i make my money work for me in the meantime. I was thinking of investing in an Apartment in Roscommon or Galway which is going for 15k.

1 : Could i use this apartment as a deposit on a Mortgage for a house in Waterford in a couple of years if i own it in full with no Mortgage?

2 : Would i be missing out on some kind of Tax breaks / First time buyers schemes if i buy it?

3: Any better suggestions on how to invest 15k for 2 years?

When you say invest in an apartment for 15k, what do you think is going to happen over the couple of years that you own it?

And why do you think the apartment is 15k in the first place? Probably because no-one wants to live there?

These are just thoughts, I'm sure someone will be along to run you through exactly why this is a bad idea...

Apartment is in a decent area in Roscommon or Galway. Rent is getting about 400 a month.

Cant post links as ive just registered but if you go to daft and search for 3 bed Apartment in Roscommon theres one for 15k.

As for Galway theres plenty of IT jobs that way and could potentially end up moving there in 2 years. Rent until then.

Hi Chris

The transaction costs of buying and selling property are high. Legal fees of at least €1k each way. Furnishing and maintenance. Estate agent's fees on selling of at least €1k.

While you have the property, you will have to pay management charges, property taxes, water charges etc. You would not be long using up the €5k a year in annual rent.

If you want to buy a house when you finish studying, it could take you some time to sell the apartment. No, you can't use the apartment as a deposit.

As you will be studying for the next few years, you should keep the cash available in case you need it.

A deposit account would be the best option. If you want to take a bit of risk in the hope of higher returns, you could buy around 5 blue chip shares. But over a two or three year period, these could fall significantly and you could lose a big part of the deposit on your house.


You seem to live in Waterford and want to buy in Roscommon? In general, it's a bad idea to buy an investment property in an area which you don't know. There may well be problems with that estate or apartment block which locals would know about but you would not. If the tenants don't pay their rent or want a light bulb changed, are you going to drive from Waterford to sort it out?

2 : Would i be missing out on some kind of Tax breaks / First time buyers schemes if i buy it?

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I don't think so, but the government is always meddling in the property market, so it's quite possible that first time buyers might have some incentive at some future stage. Another good reason for you not to own property.

Brendan

Thanks for the detailed answer Brendan. Definitely the most important point is not being able to use it as a deposit. Thats a deal breaker.

My plan wasnt to sell it. I was hoping to rent it out or live in it myself if work brought me down that way. Apartment is 25 odd minutes drive from IDA technology Park in Galway which is a big IT hub and could very likely get work there.

When you say Blue Chip shares could you give me some info on that. Where do i buy them? Ill probably go the Deposit account route but wouldnt mind a look.

Thanks