First timer buyer

K

king_of_me

Guest
Hi,

I'm just finishing my PhD this year, and starting my new job in September. I'll be earning about 40000 PA.

Having read a bit online, the most banks will offer is about 4 times your earnings, which would limit me to about 160,000 + deposit.

That means I'd have very little (read: no choice) when looking to buy a house.

I know this questions probably been asked a thousand times, but would anyone have good advice for a novice?

Thanks,
M
 
Establish a regular savings habit. Try to avoid short-term loans and credit cards. Keep your current accounts from going overdrawn. Consider buying jointly with a friend or relative.
 
My Account has never been overdrawn. I've manage to save a few grand all through college.

I'd hope to put together a deposit of between 10 and 15 thousand over the next year or so. Would the banks consider lending me ~250,000 with my level of income?

I wouldn't be in a position to buy with a relative at the moment.
 
This just shows how stupid things have got. A well qualified person on a good salary can't afford anything on the housing market. Full Stop.

Why oh why should people resort to sharing when buying? My advice would be to rent, save as much as you can or move to a country where your qualifications and salary would allow you to buy a home, if that's you priority.
 
The problem is not your salary - the problem is the market - but the market is 'correcting' itself!!
 
I understand the market is correcting itself, and I've been following the prices downwards for the last year.

I plan on saving for the year, and then considering my options.

I suppose my question here is (before I talk to a morgage broker), is looking for 250,000 on my income very unrealistic?
 
king_of_me said:
I understand the market is correcting itself, and I've been following the prices downwards for the last year.

I plan on saving for the year, and then considering my options.

I suppose my question here is (before I talk to a morgage broker), is looking for 250,000 on my income very unrealistic?
Click to expand...

One of the reasons that prices have gone the way they have is because the salary multiples guidelines we hear so much about are normally based on 2 incomes not 1.

But don't be in a hurry to buy and save as much as you can.
 
thought about affordable housing?....its a good option in this current housing market, top end is 40grand and youll get a good offer of a property....

The income test

  • Single income household
If your gross income (before tax) in the last income tax year was 40,000 euro or less (effective January 2006), (previously the limit was 36,500 euro), you are eligible.
 
If your job is state sector and permanent that could up the amount they'll lend you. Also if your salary is likely to increase steadily.
 
king_of_me said:
My Account has never been overdrawn. I've manage to save a few grand all through college.

I'd hope to put together a deposit of between 10 and 15 thousand over the next year or so. Would the banks consider lending me ~250,000 with my level of income?

I wouldn't be in a position to buy with a relative at the moment.
Click to expand...

Hi King_of_me,

I don't want to sound negative, but how do you expect to be able to repay a 250,000 euro mortgage with 40k salary?

To repay an annuity 250k loan in 35 years (I assume you're under 35) it will cost you around 1300 euro per month. This will not include Home and Life Assurance, and house maintenace. Think about what's left of your net salary and ask yourself, can I live with it?

The bank won't lend you what you ask for, they will lend you what they reckon you will be able to repay and 250k is too much for your salary.
On a different note 15k deposit (assuming 92% LTV) will be enough for a property of 187k, if you intend to borrow 255k you will need 22k deposit upfront.

You have 2 solutions at the moment:

1. Affordable housing
2. Keep on saving for 2 years, raise 25k, and hope the market goes belly-up

Cheers,

DubGus
 
To repay an annuity 250k loan in 35 years (I assume you're under 35) it will cost you around 1300 euro per month.
Click to expand...

wouldn't it be closer to €1100 with mortgage interest relief? You can also rent a room up to 10,000 pa tax free. By all means only go with what you are comfortable with, but it isn't out of the question to service this loan on your salary.
 
Hi MrMan,

you are right, with TFR it will be closer to 1100 than to 1300 but this is not the point I'm trying to make.

40k per annum are 2,500 per month now even the low estimate of 1100 euro represents 44% of the disposable income. Such percentage is very high. Yes you can rent a room tax free for up to 10k, but are you always going to be able to rent a room? What happens if your lodger doesn't pay for a couple of months. What happens if the ECB rate goes up 1% or maybe 2%?

Cheers,

DubGus
 
DubGus,

I agree with you in that people should be cautious and factor in the possible negatives, definitely don't go for a house if best case scenario has you just covering your house bills, but he will only be starting out so there is scope for higher income and the rental factor will definitely be there if less people are entering the market. Personally I would go for it but only if the property was right, the mistake many people make is they find their budgets limit and look only for things in that range no matter whether the property actually suits their needs.
 
groom said:
One of the reasons that prices have gone the way they have is because the salary multiples guidelines we hear so much about are normally based on 2 incomes not 1.
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And because Irish people have been paying way way over the odds and continue to pay still a lot more than properties are worth!


DubGus said:
Hi King_of_me,

I don't want to sound negative, but how do you expect to be able to repay a 250,000 euro mortgage with 40k salary?

To repay an annuity 250k loan in 35 years (I assume you're under 35) it will cost you around 1300 euro per month. This will not include Home and Life Assurance, and house maintenace. Think about what's left of your net salary and ask yourself, can I live with it?

The bank won't lend you what you ask for, they will lend you what they reckon you will be able to repay and 250k is too much for your salary.
On a different note 15k deposit (assuming 92% LTV) will be enough for a property of 187k, if you intend to borrow 255k you will need 22k deposit upfront.

You have 2 solutions at the moment:

1. Affordable housing
2. Keep on saving for 2 years, raise 25k, and hope the market goes belly-up

Cheers,

DubGus
Click to expand...

No. 2 point here looks well on the way to happening so I agree keep saving (you should be able to save a lot in 2 years on your decent salary so hold off, especially if you're in no rush and enjoy the lower prices :D
 
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