Buying a house: prelude

I met with the bank about getting a mortgage to buy a house. They seem to think there’s no major roadblocks getting one with me and the woman both working:

  • Current amount of savings is good.
  • Rate of saving is good.
  • No debt.
  • Possible cash injection when my dad retires next year.

We could borrow up to 3 times our salaries, about €105k each. With that mortgage and existing money, we would have €280k to buy on a 35 year mortgage. The repayments would be about €1k a month on current interest rates at 3%APR, which is less than we’d be paying on rent in Dublin if we moved out. Also payable on one salary!

The woman is still waiting to hear if she’ll be made permanent: she is pretty unhappy in the job, but would take a permo contract if it helped getting a mortgage. There is property available in DUblin, but the market is going up 10% in some places. I know it could be 5-8 years before another property crash, and I’m not sure how willing I am to rent or live at home for all that time.

Medium term, I would like to buy a house and rent a room out while living it it. If we wished to travel the world and all that jazz, we could rent the house out for a year, then start a family. While renting a place would help pay mortgage, this isn’t an investment, it’s a place to live.

I suppose there’s a lot of emotions tied up in a decision like this: maybe for my generation buying a house is the new marriage. I’m kind of the first of my peers to start looking and planning to buy, so any stories from people who’ve been there before would be good.

 

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3 thoughts on “Buying a house: prelude

  1. I got nothing in the way of advice. I think i told Michigan method this. I mean just read and don’t make any of the classic and epic mistakes like ARM or buying it from someone online and they are in Nigeria and selling someone’s house who’s on vacation.
    You’re basically exchanging one set of problems for a new set but overall the new set has been preferable at least to me. E.g. i spend average of six hours a week on lawn care. Before: i didn’t have a lawn and my kids played in a parking lot

    Good luck to you man

  2. I was going to reply a couple days ago, but only kept remembering when I could only respond on my phone and I hate typing on that.

    Despite drainage issues, AC not working, the house being wired weird, and a crippling feeling that I’m screwing this place up, I’m still happy to have bought my house. I had this awesome feeling when I came to the house after signing the final papers. Kind of a “this is mine” moment.

    While I never condone using the full available amount of credit that you can have, money will never be cheaper to borrow. We paid a little extra to get the things that we really wanted (2 car garage, basement, 3 bedrooms, quiet town), and in reality that extra $20k really only added about $100/month to the payment. Totally worth it.

    We were thinking about purchasing last summer and decided to wait a year and save up some extra cash for the downpayment. This backfired because the home values went up more than the money we had saved over that year. In retrospect though, we really weren’t ready to make that decision last year.

    Prepare for unforseen costs that add up really quickly. A few grand at least. Set this aside so it doesn’t blindside you. All the blacksmithing classes and stuff makes me think that you’re pretty handy with tools, this will help you out tremendously. I couldn’t imagine paying money to someone for some of the stuff I’ve already done.

  3. Good advice guys. MM, I think the longer we wait, prices will outpace what we can save yearly.

    We’ll try keep 3 months expenses in reserve in current account/cash as a float. There are unlikely to be any enormous healthcare costs here in Ireland, but cars/potential kids will be a big one.

    I am not really that handy compared to a previous generation, but I can do a reasonable amount. I think major repairs or renovation work would be beyond me, especially as I’m working full time. But it’s likely any place we get will need fixing.

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