What's your timeframe? Cash on deposit will likely lose to inflation but other investments have plenty of downside risk too.What should I do with the money I get from the forthcoming sale of the share in a house (valued at €45,000) in the medium term? Eventually I will put this towards my own house, but I’m worried about inflation in the meantime.
Hi Brendan, thanks for your reply. I'm currently living in the first property mentioned above with siblings, so no rent to pay but I don't want to go about selling this until I have gotten approval in principle for the other 140k.Where are you living at the moment? Are your paying rent or living with your parents?
What is your salary outlook? I presume that as a public servant, your salary will steadily increase, but is unlikely to dramatically increase in the way a newly qualified accountant or IT person might expect.
How much would a house in your target range cost?
What is your timescale for buying a house?
Brendan
It's right on the line of affordability for three bed semis in my area, it's just that supply is so tight at the moment, there's very little comes up. I think with an extra 10-20k saved over the next year or two, it should be enough.You have a deposit equal to €120k at present.
You can borrow about another €120k.
Can you buy what you want for €240k?
Brendan
Hi Coyote, thanks for your reply. While I have a decent deposit to put towards a mortgage, I think the bank will still need another year or more of evidence of ability to pay e.g. saving 600/700 p/m into savings untouched. On that basis, I'm aiming to apply in a years time but wouldn't be surprised if it was two years away. I'll look at the state savings options so, definitely want to be buying within three years anyway.What's your timeframe? Cash on deposit will likely lose to inflation but other investments have plenty of downside risk too.
For anything less than five years I would keep it on deposit. With state savings you get some interest and can cash in at any stage (losing most of the interest of course).
In that case you need your funds liquid and you will have a low risk tolerance.On that basis, I'm aiming to apply in a years time but wouldn't be surprised if it was two years away.
This is the nub of the issue, I'm quite happy with the accommodation situation but feel the sooner I get buying the better from a financial standpoint, particularly the idea of renting out two rooms effectively paying the mortgage. I should probably relax a bit seeing as I have a foot in the door as is.OK, so you are living in a property which you own jointly with your siblings.
1) You have a stake in the property market as you own 1/3rd of a house
2) It seems that your current accommodation requirements are well catered for.
I am not sure that you need to rush to buy. By all means, position yourself to buy, but there is no hurry.
If house prices rise, your stake in the property market rises as well.
If house prices fall, you can buy a bigger house.
Could you buy your current home from your siblings over time?
Are you sure that when you want to sell your 1/3rd, they would willing and able to buy and that the price would be agreed?
Brendan
Thanks Coyote!In that case you need your funds liquid and you will have a low risk tolerance.
Deposit account or state savings only is my recommendation!
Any advice re: AVC's also welcome - the potential of 35 years compounding growth of small amounts now is hard to get away from.
We have an explicit agreement that I can buy out if I'd like to, and both have money to buy me out at current rates from the proceeds of sale of the other property. We have agreed to get an independent valuation of the property and go off that. The risk is that property prices rise significantly and they can no longer afford to buy me out, or eat away at their money over the next few years and then I can't access my share when I am ready to buy.
It's a verbal agreement but we've talked it to death over the past two years reiterating the same points of view/understanding, if anything they are keener to buy me out and are planning for that eventuality more so than anything else. Changing priorities and circumstances on their part is certainly a risk to bear in mind though of course.Is this in writing?
People fall out or change their minds or misremember what was initially agreed.
And as you say, they might not be able to pay you the money when you need it.
So based on that, I think you should buy sooner rather than later.
Brendan
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