Mortgage affordability- buy or keep renting/saving

T

TOB76

Registered User
Messages
12
Age:
32
Spouse’s/Partner's age:
30

Annual gross income from employment or profession:
45000
Annual gross income spouse:
28000

Type of employment:
Both Civil service

Rough estimate of value of home
Renting at 320 a month

Other borrowings – car loans/personal loans etc
Car Loan: 12,000 at 280 a month


Do you pay off your full credit card balance each month?
Pay in full

Savings and investments:
3000 Savings

Do you have a pension scheme?
Yes, (both of us)
Do you own any investment or other property?
No.

Ages of children:
9 month old

Life insurance:
No


What specific question do you have or what issues are of concern to you?
We are renting from a family member currently but with a new baby we would like to have the security of our own home. Also, the house we rent is a small 2 bed and we have seen a very nice 3 bed bugalow which we like.
I have a few questions re. buying now or waiting...
*The house was on market for 490,000 and has recently dropped to 430,000...we were thinking of an offer around 350,000? This would be a ~30% drop of original price..not sure if this would be accepted as it is a big drop from what they are currently looking for so we were thinking of waiting 6 months before offering (while saving). My heart is set on this house but I know that we have to use our heads now..am trying to say to myself why not offer 350,000 but to be prepared to walk away if not accepted
*Would we be mad to consider taking on a mortgage of 350,000, I am nervous about borrowing so much and being tied into such a big commitment. Are our earnings sufficient? (I am on a 3 day week so could go back to 5 which would see my income rise to 60k but as baby is still so young would prefer not to).
*As this would be our home, do the usual issues with negative equity apply? This is a bungalow on a nice estate, houses vary wildly in asking price (2 on market curently, one 650,00 the other nearer 1,000,000!!!?!). By nice estate I mean a quiet mature estate, near our commute roads, town a walk away etc...

Would love to hear some advice/ thoughts from anyone

Thank you
 
I say you will struggle to get a mortgage of €350K on your wages. Lenders will only lend max around 90%.

So you will need around €35K deposit.
 
Thanks Gmac,
Yeah I think you are right, we would have probably been allowed such an amount '07 but it is a huge amount. My dad keeps trying to tell me that we should not be thinking about any more than 3 times bigger plus 1.5 smaller (~200,000)...I think he's right but is nice to hear advice from someone else too.
I think our generation just got used to thinking that a quarter of a million plus was a normal amount to borrow!! Is time to change the mindset I think..
Thanks again,
TOB76
 
Hi TOB76,
I'm in a similar situation, renting with a small child and can't wait to buy. It's hard to know what to do when very recently €400k was bog standard house price. €350k starts to look like a bargain but in a year or two that could look expensive.
On the other hand if you see a house that is unique at a great price and you can comfortably afford it then it's hard not to consider going for it.
You're in a great position to save with such cheap rent, I envy you. Everyone is saying this year will be worse than last year so you've nothing to lose by waiting - unless that house is really unique.
 
Thanks for reply moneygrower,
It is very hard to wait alright and although we are very lucky to be renting at sucha good price I do think that we got very complacent about saving until we had our son. I think you're right, maybe put the head down and get as much saved as possible and have a review in the next 6-12 months, I'm kind of thinking that if its meant to be it will be and if not a better one is out there.
Good luck to you too for the next year.
 
thanks TOB, I'm hanging a few pictures today to stop myself frantically searching myhome and daft and try to accept my temporary home. God I hate the housing boom/bust thing.
 
The maximum LTV mortgage you can get is 95%. That means that because you only have €3,000 of savings, the most they will let you borrow is ~€100,000.

I think you get the idea. Before you even consider buying a place, you'll need a €20,000 deposit.
 
1. Wait, the market is falling
2. Don't set your heart on one house (not a great strategy when buying for first time).
3. Get advice, mortgage approval, keep saving, go through approval process again with new savings in place, keep saving
4. Wait
5. Read on AAM strategies for buying property, creating market between sellers etc
 
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