Good deal, any concerns?

D

dmos87

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Hubby and I have a combined take home pay of just over 3,200 per month. All outgoings come to 1,180 per month at present - this includes petrol, tax and insurance, food shopping, phone bills, sky, literally everything other than optional spending (nights out, etc). Keep in mind we're due our first child in December.

Found a gem of a bungalow on 1/3 acre that is on the market looking for a quick sale. Owner working abroad and doesnt want the tie. Its an older property but in great condition, 2 bed one bath. Asking price is 140k, and the sale includes furniture. House is in good condition. Obviously we would try and get this for as little as possible so I would hope to land at 110 - 120k to sale agree.

We're thinking long term here, and doing calculations to fix for 3 years on a 35 mortgage (for now) at a 4.8% APR gives a mortgage monthly payment of approx 430 euros, incl TRS, which means we would want to buy before end of the year. With baby coming, we're reluctant to use all of our savings towards a deposit, but would be comfortable definitely with 10% and will cover solicitor fees comfortably. The aim would be to extend out the kitchen, and build on a further bedroom with ensuite over time, but for now it suits our little family.

Anyone see any problems/ issues / anything I'm not seeing? Id be interested to know if it's possible to see if planning was applied for before on the property, as if we couldn't extend at all it would make me pause and reconsider. Does anyone know if the county council could tell me this??
 
Hi dmos87,

Firstly, well done on being in this financial position and also congrats to you on your pregnancy.
Your numbers seem to add up, ie you have approx. 2k spare per month available to pay the mortgage. How will that look once your baby arrives ie how much will you receive during your maternity leave? Evidently your outgoings will increase slightly once the baby arrives.
Regarding the house improvemnts you should give your local council a call and give them the details of the house that you are thinking to purchase and give them an outline of the work you are thinking to do. They should be able to give you a verbal update on whether these plans are likely to be approved.
Also, have a look at what your immediate neighbours have done with their houses, that will also give you an idea of what will be possible with 'your' house.
Finally, I definately think it's a good idea to keep as much of your savings as possible for the renovations - apparantly the banks are not very willing to give large home improvement loans on top of mortages, so the more of your money you can put up the better. Also, any loan you get would be likely to a short term personal loan, the rates on these are currently quite high in many institutions, so this would seem to be another reason to keep your savings.
Good luck with it all!
 

Work will pay my usual wage for the initial 6 weeks of maternity, following which I would be receiving state maternity pay for 20 weeks from mid/ late December (rate of 262 per week I believe). After that returning to work (if we buy, otherwise I may take some additional unpaid leave depending on how ready baby and I are for the change). I am very fortunate to have my mother very eager to mind her grandchild and costs will be minimal as my husband and I work different hours so while I will be of course paying her to do so, it will be at most 6 hours a day. There will obviously be more outgoings and I estimate to be down approx 550 per month during maternity leave, which given the maths done I am ok with.

The plan is to do work on the property over time - with extending the kitchen first priority as its very small. Ideally WITHOUT loans - we would wait until we have the money saved before going ahead with work. Given the mortgage repayment amount and our low outgoings I do believe this is possible, and we are both in permanent positions with no fear or redundancies whatsoever. I think given we are young and very nervous about buying, investing in a small property such as this with big potential is out best way to get our feet on the property market.
 
You dont mention your ages, but it seems to me that a 35 year mortgage is perhaps a throw back to the celtic tiger madness (I got a 35 year one myself). By stretching the term to make the monthly repayments manageable, blinds us to the final cost and the fact that as we age our earning power might lessen. Just a thought.
Good luck wiith your pregnancy, house choice, etc
 
Kitty said:
You dont mention your ages, but it seems to me that a 35 year mortgage is perhaps a throw back to the celtic tiger madness (I got a 35 year one myself).
Click to expand...

we're both 25.

Also, I should note we plan on fixing for three years so that when the time comes to go variable we have a firm figure of our outgoings, and will have kitchen completed and ideally the additional bathroom and bedroom (all going well). I have absolutely no intention of having a mortgage in 34/35 years time.

We plan on reducing the term over time and by making lump payments as we go along. Its simply for now to ensure we are not overstretching ourselves over the next three years and to ensure the work can be completed on the property without loans. Once the work is done, all our additional income will go toward clearing it, and of course we hope we will be on better incomes eventually to do this comfortably. Given the mortgage amount we'd be looking for I think it doesn't really get much better.
 
I'd go for a mortgage term as short as possible, with some leeway built in.

Recently took out a mortgage and went for 15yrs. I think its always better to see light at the end of the tunnel, eh?

Imagine if you could see yourself mortgage free at 40.

Wish you all the best for December.
 
If you're thinking about having kids, don't forget to factor in extra costs and reduced income for a significant period of time.
 
There are pros and cons to fixing. One of the big cons which has arisen in recent years is that the rate you get after the fixed period ends may not be as good. For example, if you take out an UB SVR mortgage now, you can qualify for a dicount by opening a U First account. If you fix, you won't qualify for the discount at the end of the fixed period.

People don't really understand the advantages of a 35 year mortgage. In your position, you should get as long a period as possible. There is absolutely nothing to stop you making higher monthly repayments. So you contractually have a 35 year mortgage, but can make the payments appropriate to a 20 year mortgage. If things get worse, then you can reduce your repayments at your discretion and not have to go through MARP.

At this important stage of your lives, you should not be living on starvation rations. I am not suggesting that you blow your money, but there is no need to be paying off your mortgage as quickly as possible when the money might be better spent on improvements to the house.

Some lenders charge less for a lower LTV rate. So putting most of your savings up for the deposit might well get you a lower mortgage rate. Then if you make the repayments based on 35 years, you can start building up your savings again for the extension.

It's quite possible, that when you are ready for the extension, the lender will give you a top-up loan if you need one. It might be worth asking them about that now.
 
Just an update regarding the planning office. The Cork County Council website is fantastic - we've been able to search back as far as 2000 to see if any planning was applied for on the property and it was not. I then called them to query prior to 2000 and was advised there is nothing since the property was built. An excellent sign for us, as the majority of houses in the area are either new builds or have extended several times to existing dwellings. I was also able to see their planning applications online and could see that all were granted with ease, and only one was asked to modify their extension in a minor way. Going by the research and seeing the size and specifications for some of the extensions done, I would truly be shocked if what we would like to do was not approved. Its very basic stuff, and the land is there, not obstructing anyones view (property surrounded by trees on all sides). We would not be building upwards.

Thank you all for the feedback regarding the mortgage term. We would be looking for a 30 - 35 year mortgage so that for the next 5-10 years while we complete all this work, we are not overstreched to pay the mortgage and we can instead focus on completing the works needed on the house and raising our child comfortably.

Its important to us both that we can still put some savings away all through this work so that when the house is completed, we can then focus on reducing the term and making lump payments. Having a mortgage repayment of around 400 a month gives us the freedom to do this.
 
Securing a mortgage can be tricky. Although your story sounds entirely reasonable, if you go in looking for a 35 year mortgage and tell them all about extending and and that you're expecting, they may put you through the wringer. If I was in your position I'd be thinking of applying for a 25 year mortgage, I'd say the house is turnkey, I wouldn't mention extensions or children (indeed my wife would stay away from the bank altogether). Perhaps I'm paranoid but that's how I'd play it.
 
We are taking out a mortgage at the moment, we went for 30 years, with things so volitile at the moment it seems best to keep the repayments low as possible (we could afford 20 years if we really had to) and if we can make overpayments in the future rather than be tied to 20 years and if rates go up or our income drops we are safe rather than stretching ourselves and having to ask the bank to stretch our term or go interest only.

If we can afford to pay it back in 20 years we will but id sooner not be tied to it and be able to save and have an option to overpay if i have the extra money
 

The only issue is the bank will be sending out an engineer to value the property and will see that its not turnkey. I'll also need to sign mortgage papers, I assume in the bank, but fortunately I am not showing too much yet and I can easily disguise it. Either way, financially I feel we are sound regardless of the baby. I've run our figures for all possible scenarios, including the loss of both jobs. We would still be able to afford the mortgage.

We saw the property again last night - this time with a view to noting all works that would be obviously needed to be done to the property should we buy. Insulation is a big cost (older house, need to insulate from the inside and loose some room space, two new external doors (front and back), new internal doors needed (all are very old) sealing in the double glazed windows they have put in but failed to seal off, change windows on the back of the house to Double glazed, there was a lot... Definitely not afraid of the work and still very keen on the property, but we were realistic as to how much it would cost to get the house Winter-ready for this year and then for the additional work once the weather clears up next year.

We have decided to make an offer, but we've gone in very low at 70K. Excited to see what happens, but I have no doubt this first offer will be refused so we'll see how we fare out. With the additional costs we need to put in, I would not be happy going over 95K.
 
 
Be careful with your estimates for work required. I was speaking to an experienced architect recently. He was buying a suburban house, and came up with his own estimates for a small extension, new kitchen, new bathroom etc - nothing outrageous. He then got in a surveyor to do a final costing before they made the final decision. The architect's own costing was €80k and the surveyor was €150k. It's very easy to make a significant error on such estimates.
 

Thanks Complainer for the input, this is a big fear of mine too! My parents were stung badly pre-recession for an extension and bathroom renovation and I've learnt from it to be overly cautious. The great thing about the extensions we have planned out in our minds is that they're not essential and we can do them on our own schedule. The kitchen in the premises while small is adequate and has all thats needed, the same goes for the bathroom. Pipe Dreams but we'll get by without if they can't become a reality
 
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