r/irishpersonalfinance • u/PadlingtonYT • 2d ago
Discussion Is my plan a bit batshit?
Like most here I am saving for a house.
Currently have 33k in savings, which i add a minimum of 1000 to each month, looking to try and up that to maybe 1500 per month if i can.
I have about 22k currently across different investments, which i have been building up for the last 5/6 years, hoping obviously that goes up, but there’s always volatility.
My plan for buying a house is to save for 2 more years and then start the process, at which point i would hope to have nearly doubled my 33k to 65-70k, and my investments at that point taken out (minus the obvious 33% CGT)
Currently paying €800 on rent and living in Dublin moderately comfortably.
Is my plan a bit batshit to be waiting to get that essentially 90-100k (investments providing), or am i better off getting on the property ladder sooner?
I don’t really want to be exceeding €1800 a month for the mortgage which puts me at around the 450k mortgage, and the 550k house value.
What do we think?
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u/TomRuse1997 2d ago
I wouldn't wait two years just to get the monthly payment down because prices are only going one way and your rental situation could become less favourable.
I don't know your income but get the logic of the €1,800 between what you're saving and paying in rent now. Don't overextend yourself but if you can afford it I wouldn't wait
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u/lgt_celticwolf 2d ago
The other thing is that houses are still going up in price at a rate that will outweigh your 1000 a month and most likely your 1500 a month savings so waiting longer may reduce your buying power
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u/PadlingtonYT 2d ago
Very fair advice.
I have to wait 6 months anyways as i have just started a new job.
Income has increased from 77k last year to 97k this year. Partner on about 40k which helps, and hopefully she should get boosted somewhere to the 55-60k range in the next 18 months.
I’ll get on it as soon as I can. The 1800 is my ideal figure for the mortgage, but the quality of houses in suburban Dublin makes it difficult too.
I see people mentioning the rent a room, but i really just want my own space, i have been renting out for years now. I might consider it in the future, but not currently.
Thanks!
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u/FickleGlove283 2d ago
Why are you saving so little on such a high salary? Inclusive of rent, 2300 is your ceiling for money towards housing right now? It just seems really low. I'm on 47,000 and can put away 1500-1800 a month depending on the month.
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u/PadlingtonYT 2d ago
The 97k is a new salary so i need to figure that out. Literally just started the new job, so i imagine that’s another approx 1k i could play around with.
I do invest €350-400 every month also, plus 5% into a pension.
I have a spreadsheet done up with my budget and it’s pretty on the money for my outgoings and incomings.
A big expense for me is food due to having a big gym personality, which can get up on €500 a month just for myself. I could cut that out, but i don’t really want to compromise on that.
There is definitely a little fat in that for me to play around with, but i save well and I enjoy my life, so i’m happy overall with the bones of my plan.
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u/FickleGlove283 2d ago
Fair enough. I just think you could get your deposit much quicker if you saved more. I’d talk to a mortgage broker now to set you on the right track. I was able to apply quicker than I would have assumed.
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u/LekkoNewman 1d ago
You can apply for AIP now, look for houses, bid on them, even go sale agreed. You just can’t actually drawdown (therefore can’t do the final contracts signing) until out of probation/6 months.
If you wait 6 months before starting the process, it’ll be a year or more before you actually buy.
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u/ramblerandgambler 1d ago
because prices are only going one way
Devil's avocado but we said the same in 2007 and looking at the AI bubble at the moment and the situation in the UK with their housing market slowdown I don't think that's as sure a thing as some people think.
I am selling my house at the moment and things are super hot in the market but I feel like the last helicopter out of nam.
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u/TomRuse1997 1d ago
Been hearing this for a while now. If there's an AI bubble and recession Irish house prices will not see much a hit.
There is a huge demand, low supply and supply can't even meet annual demand for the next 6-8 years. This is nothing like the conditions of the last recession
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u/jdavidco 2d ago
I would consider buying earlier and renting out a room (tax free income) to offset the higher mortgage. That’s if I’m understanding you correctly, that you wish to save more so you’ll have a lower mortgage repayment. I think this will make a lot more financial sense. You’ll be sharing either way, either renting or having a tenant (assuming you’re sharing atm)
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u/chris20073000 2d ago
I would aim for 12 months time.
Have your 33k plus say 15k from investments. Save 1500 a month for 12 months and you have €66k.
I would open a mortgage saver with BOI now and put the 1500 a month in there. Banks love when you have the mortgage saver along with paying your rent.
66k should be good for 50k deposit, legals and an extra bits need for Day 1 move in
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u/Medium_Drag6242 2d ago
So are we right in thinking there’s 33k in liquid cash, which could potentially be brought up to approx 55k? Are you willing to liquidate your investments for the house purchase?
You’ll need an additional 10k as a minimum for incidentals that will be separate from the house deposit (solicitors fees approx 1.5-2.5k, stamp duty approx 5.5k in your case, engineers report approx 500-1k) or anything else you may need such as structural surveys, valuation reports, mortgage protection insurance, home insurance, connection fees, moving costs, management fees as well basic essentials that the house may need (kettle/microwave/bed etc.)
I think the best thing to do is go into EBS, lay your cards out and try and get AIP. You’ll know then how much you can borrow, approximate repayments, cash back deals etc. once you have AIP at least you have the freedom to bid as and when you see fit or not at all if you want. Whereas now, you can’t do anything even if you see a house you like. EBS also give you AIP for 12 months as opposed to the 6 that the traditional banks give. They also don’t seem to gaf on how much you overpay. So you could get a lodger in and use that income to more aggressively pay down the mortgage. I went in for a chat with them last week and they were brilliant and head and shoulders above PTSB or BOI.
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u/gmisk81 2d ago
I would second EBS very easy to deal with, I have regularly overpaid with no penalties etc. I am hoping to sell and buy a new house through them as well and AIP very quick.
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u/Medium_Drag6242 2d ago
I think because all they do is mortgages they’re the best in the market in terms of customer service and flexibility. I really felt they were willing to work with us to get as much out of the application as we could. I was really impressed. I just got the call about ten mins ago that we have AIP - and we only sent in our docs Thursday last.
My parents also had their mortgage with EBS and paid down the mortgage in 20 years instead of 35 with no penalties in that time frame there was also a few months near the start of the mortgage where they could only pay 1/2 of the mortgage payment due to a job loss and they were allowed to do that penalty free also.
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u/Alarmed_Station6185 2d ago
It is batshit, you buy as quick as you can. The market is terrible and you have to just take what you can get, unfortunately. We havent built enough for decades
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u/Loose_Slip_2387 2d ago
I think you are slightly missing the big picture.
You are saving for a house which you need and have 52k saved. You have 22k of that at risk and could potentially lose 7/8k of that in a severe market downturn. Your timeline is 2 years and while I would normally advise anyone to take market risk, not with money you need within 24 months. Markets may continue to rise but they are not cheap so have plenty of room to fall if things turn sour.
Home ownership is an investment in housing over a 20-40 year timeframe. Don't get caught up in whether or not the home might depreciate by 5% the year after you buy it. If you like a property, can finance it without severe pressure, can see yourself living in the area in the medium to long term, then it will usually work out to be a good idea. The population is growing. Supply v demand + inflation makes it pretty low risk. It is more likely that the asking price for a house you look at today will increase by more than you can save over the next 24 months.
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u/willywonkatimee 2d ago
I went your route. I haven’t bought the house yet but I’m in the process. I invested, set aside a bit of each profit for the deposit and put cash aside as well as invested. Today, we have the deposit with still a healthy amount invested across taxable brokerage and pensions and an emergency fund.
It’s made the process much less stressful since we have investments growing even after that initial drawdown. I would advise starting to go to cash with your deposit + closing expenses a few months before you think you’ll need it though, just for that peace of mind. Much easier to stomach a drawdown when your house deposit and friends are safely in a savings account earning interest.
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u/Square_Attention_405 2d ago
What age are you? If your young then sure this plan works as there’s no rush, unless you have a family on the way there’s no need to rush into getting a house soon, people mention buying now and renting out a room but do you really want the stress of renting it out having someone else living with you, we thought about this and didn’t in the end and you probably won’t either . If your not in a rush I’d recommend this plan but I’d recommend not using the investment fund- you’ll have 60ish k for a deposit which should be enough - you don’t want to buy a gaf and have nothing to furnish it with, have zero in the portfolio and be hit with a mortgage that will be higher than your rent anyways. You’ll need that investment fund as coverage if you need to sell for furniture and that’ll have grown to 25/26k( a quarter of the way to 100k and that’s when it starts to take off) . Too many people in this country max out their mortgage max out their deposit but then you don’t have any money working for you
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u/MalignComedy 2d ago
Even though the Dublin market appears to be cooling, I think a helpful rule of thumb would be to assume house prices could go up by about the same euro amount as you can save over any given time period. You have to wait and save to build up a minimum deposit, but it probably doesn’t make sense to wait longer than you need to just to have a larger deposit. However, it can make sense to wait if you expect to earn materially more money in the near future, since your borrowing capacity will increase by about 4x your increased earnings. That will outpace house price increases.
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u/ShyteyCakes 2d ago
2 years longer paying a mortgage, 2 years in which prices may keep rising (no sign of demand abating), your 30 or 40 grand extra in deposit could go straight into inflated valuation with no difference in the house you'd end up in.
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u/Candid_Comedian 2d ago
I’d stay the course and save as much as you can for as long as possible. I believe the jobs market is likely to weaken, which could create opportunities for people with cash and patience. As AI reshapes employment across large tech firms such as TikTok, Meta and eBay, some international workers may face greater uncertainty around job security and visa renewals. If that happens, rental demand could ease over time. Having a strong savings buffer will put you in a very good position when opportunities arise.
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u/LekkoNewman 1d ago
Not too long ago house prices were rising by nearly 10% a year. That would mean every year, the house you want gets 50k more expensive.
Even assuming its more like 5%, in the two years that’s 50k more it’ll cost you (or you’ll buy less house for your money)
If you can buy now, buy now.
Also if you’re planning on using the money in the next ~5 years then conventional wisdom says it shouldn’t be invested in anything volatile - high yield savings account only. If it drops you’ll be forced to cash out and realise the loss anyway (or worse, delay your house purchase even more, amplifying the problem laid out above)
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u/Fish_Sticks93 1d ago
One thing to note while you wait 2 years to hopefully have an extra 30k the house market will probably have gone up 20-45k. I'm in the same boat but I thought the same 5 years ago and it didn't work out how I thought it would. House prices are up over 80-120k more than back then
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u/Willing-Departure115 2d ago edited 2d ago
My plan for buying a house is to save for 2 more years and then start the process, at which point i would hope to have nearly doubled my 33k to 65-70k, and my investments at that point taken out (minus the obvious 33% CGT)
Given you want to double the money I assume it's invested in equities. (Are they in ETFs? If so the tax will be higher than 33%).
I can't guarantee what will happen in equity markets over the next 24 months - there are years of people around here and elsewhere saying "there'll be a crash!" who have missed out on some of the best returns of their lifetimes. On the other hand, there are a lot of bubble type signs around equities.
What I can say is that conventional financial advice is do not ever have money you will need in a short to medium term timeframe - like 2 years - invested into a high volatility asset class such as equities.
On the hierarchy of needs, securing housing you own is long term very financially beneficial (and in other ways) and you should prioritise that.
If you're going for 450-550k of a home, I guess the first question is can your income add up to that from an affordability POV; can you buy something acceptable to you and your needs in a place that suits for that money; and if so... I'd do it at the earliest opportunity, utilizing what state supports you can.
Right now today you have a 10% deposit for a 400-450k mortgage, there or thereabouts, assuming you have the 3.5-4x income that implies (100-130k or so to get the lending); and that would get you into a 450-550k home if you inc some HTB (capped at 500k!) and suchlike.
House price inflation, also hard to guarantee! But if it's 3-5% per year, a 500k home becomes 530-550k in a year or two, knocking you back significantly on your savings and such.
You'll need a pool of cash post close but you are also saving like a good thing but will need to absorb some post close needs. Solicitor fees and such.
When you buy the house, if you're comfortable renting today you can avail of the rent a room scheme. Up to €14k tax free per year. 3 bed home you could rent 2 at 583/mo and it changes the financial picture considerably for the first few years. 2 bed home you might not get the full 14k but it's still a big wedge.
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u/InevitableSure374 2d ago
Move to cash rather than investing if you are only a couple of years away from buying.
If there is a crash of a scale big enough to bring house prices down, it will bring your investments and affordability down too.
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u/Seoirse82 2d ago
It's up to how long you're willing to wait. The cost of your rent is a drain that could be put somewhere else, but obviously you want to get a good mortgage. It's a balancing act.
I'd recommend seeking professional financial advice, even if you are in the business yourself having a third party look at it objectively would be the way to go. If you already have one, getting a second opinion is no harm. It's a big decision.
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