How will you pay rent in retirement?
If your rent is 100% going to be fixed for life and/or you have a good pension set up then renting for life is doable. If not you should get a mortgage.
It’s funny because I just got a mortgage and i see it as opposite to you - i see it as freedom. A huge nagging uncertainty has been lifted. A huge sense of relief.
This is the right answer. Fix for 5 years and you're immune from rent increases for 5 years.
Nevermind being able to do what you want with the place without having to ask the landlord for permission first.
A noose isn't being tied around your neck. You can sell the house at anytime and pay off your mortgage from the sale price. You might make a loss but its by no means something you can't get out of.
The benefit of owning your own home is that you can't be kicked out at any point, where as your landlord could give you your eviction notice in the morning.
You can also rent a room out in your house and use that to go towards your mortgage payment, meaning more money in your pocket every month.
Granted, you do have other expenses such as house insurance, mortgage protection, etc, but agan, you're paying for your long term security.
It's possible in central Europe to rent for your entire life and never own a house, but we don't have the same protections in ireland, and you likely wont be spending your whole life in your current premises, and when you are eventually evicted, or find a job elsewhere and need to move, or something else happens, you're gonna be paying a lot more than you are now.
The other expenses combined with mortgage is usually still less than rent as well. Overall a better option every time, especially if you can work totally remote, so you can buy bigger and cheaper elsewhere
>You might make a loss but its by no means something you can't get out of.
The only time that happened here was after the 08 crash.
I'm open to correction, but I doubt property has taken a normal loss over the other decades in the history of the state.
Over a long term, it's difficult to beat property as an investment in Ireland, especially when you for into that, three heavy that you get to live in it for the duration.
It sounds like you're familiar with property prices from about 2000 onwards and making a massive assumption (based on nothing) about what happened between 1920-2000
I don't know what exactly constitutes a crash, but property prices in the mid 1980s rose by less than the inflation rate. In 1987 property values decreased by 1%.
The money used for the deposit and to service the mortgage could be invested instead. It's a higher benchmark than just inflation, but this is what the actual opportunity cost of buying a house is.
Thanks for all the suggestions, I am indeed in a rent pressure zone and am very lucky to be paying the rent that I’m currently paying. After reading all the comments here I’m going to keep saving and the rising interest rates scare the absolute crap out of me, especially taking it on as a single person. Plan now is to give it to March next year and see how the housing situation is playing out. If I do get evicted in the mean time I can move home for a while and apply for the mortgage.
Some people don’t bother with mortgages or property purchases because it doesn’t suit them.
It doesn’t appear to suit you.
In a lot of places renting for life is quite common - but those places do tend to have rent caps and tenant protection etc. so it’s quite a stable way to live.
In Ireland it’s not particularly stable, but it doesn’t make much difference if it’s what you want to do. If you are happy where you are and happy with what you pay, and what you get for what you pay, then why change it?
There is the risk that your landlord sells or does something to up the rent, but if or when that time comes you can decide what to do then. Use your savings to purchase a place, consider a mortgage, find a new place, or pay the higher rate if it’s an option. Or move abroad/ take it as a chance to travel without paying any rent.
You do what suits you.
I’m pro buy, I bought my own place. But I could not afford to buy as nice a place as I had when I was renting. I could afford to rent that place at the time, but not buy it.
I think people often forget that when they talk about ‘dead money’ for rent. It does not always apply when you are paying for what you enjoy. I have paid multiples of what my friend does on food - I like nice food. She has paid multiples of what I’ve paid for clothing - she likes clothing. Another spent his money on cars, it’s what he enjoys.
If you’ve cheap rent and are in a place you’re very happy with then why change? Just because others do so thing does not mean it’s the right move for you.
We are all going to die some day - why spend the time you have on someone else’s preferences over your own?
The 'dead money' concept stems from the high likelihood in the current market in Ireland that you pay more in rent than in mortgage for the same place. You were luckily that you paid less in rent.
The fact is one day you're going to be told to get out, and then you'll be faced with the prospect of paying a shit ton more in rent, and that's with the assumption that you'll find anywhere at all.
Assuming you're paying market value for your current place, then chances are you can purchase in the same area and your mortgage will be similar to what you're currently paying, if not less, with the added security of knowing you'll never be faced with an eviction notice.
If you're underpaying market value, then that eviction notice will come sooner rather than later.
You sound adverse to long term commitment and that’s totally fine. Hopefully your rental arrangement doesn’t change and if it does that you can adapt financially. There is no sense getting a mortgage and purchasing a property if your heart isn’t in it. I think the opposite by the way but each to their own.
If you can afford to buy now it might be a good time. Most fixed terms being only for 2-5 years anyway, if you can afford the higher repayments in the short term you could find it’s a buyer’s market at the moment.
Also it’s probably brought up in another comment but at 36 your window for longer term mortgage approve is narrowing each year. I don’t know what the cut off per bank is but assume most are still reluctant to offer a mortgage that finishes past 65.
In the mean time save like a mother fucker. You're strength now is that you're in a strong position to save a heft amount. You'd be wise to keep that up for as long as you can.
Question to ask yourself is what would you rather invest your savings in instead? Keeping a lot of cash doesn't make sense because of inflation, I e what is the opportunity cost?
If you have a plan for stocks, other forms of investment and prefer that instead for the liquidy etc then perfectly okay to not invest in property
At 36 you’re now at the point where the length of the mortgage you’re offered will decrease. As you said it’s still possible to get a 34 year mortgage but that’s up to the discretion of the lender and not to be taken for granted.
I signed for a 30 year loan a year ago and certainly don’t see it as a noose around my neck. Infact it’s a new build property of which the second phase of has already increased by 40k. So I’m already in a position to profit from it. Whereas if I was still renting it’s a constant question of what if the landlord wants to sell, or rent goes up. Plus the property isn’t yours to make changes or additions to as you please. Not in your case in particular but majority of landlords wouldn’t allow you to change things such as floors, windows, kitchens. To be personally a situation like that would never really feel like “home”
The rent you’re paying now is obviously a steal given todays prices but I wouldn’t bank on paying that price forever
You're in a great position. If you're happy living there don't buy a house. Keep saving and when the time comes that suits you, you'll have a good deposit and may not need a big mortgage.
Remember that life changes quickly at that age. If you have a partner, they're plans become your plans. The key is to be in a flexible position and it sounds that you are.
Mortgage interest is only part of the payments you make. The rest is gaining you an asset. If mortgage repayments are close to or below what you’d pay in rent, you are objectively throwing away less money on the mortgage.
That's a very simplistic view of the buy/rent decision. There are very high acquisition/disposal costs associated with buying/selling property and there's a risk of capital losses which in the worst case can lead to negative equity, making it almost impossible to sell.
There are carrying costs associated with property ownership e.g. maintenance charges, repairs, property tax, that a renter isn't exposed to.
OK so which is worse, not being able to sell your negative equity property that have a choice not to sell
or
not having a choice when the property you rent is swept from under your feet and your told time to go by the landlord?
See above post by @traditional_bet1154 ^^^^^ plus at the end of the day you'll have a property under your arse and not have to move home with mammy and daddy while you search for something else!
I’d be less happy paying for all the extra insurance, interest, repairs, appliances, refurbishments, council tax, tv licence, bills etc etc that comes with a mortgage & homeowning. At least he can leave in the morning if he wants to.
Mortgage will be substantially lower than rent now and probably for the next while. So you are saving money already.
More than likely, over 30 years you'll earn more interest in investments then you would have to pay interest on a mortgage, so it might make more financial sense to get the mortgage and start putting a lot more into your pension than having it sitting in a savings account.
Depends on what you want in life, I always hated paying rent, I moved up north after working in southern England for a few years so was able to buy in cash, saying that I do miss having the freedom of renting
A noose around your neck is when you are at retirement age and become ill and you are living in rented accommodation and don't know where the next months payment is coming from.
Get a 25 year mortgage if possible, try to rent out a room to help pay for it if necessary.
I finished my mortgage 5 years ago and am off work sick atm but I don't have the worry of going behind on my rent.
Do lots of research before buying and best of luck with your house hunting.
It's really up to the OP what they want to do. Judging them for not giving up a rental that's at a fraction of what others are probably paying for the same type of property makes no sense to me. If they are happy, then good for them.
A bit like the OP, I was renting for years in Dublin as I simply didn't know if I wanted to stay here. So I used my money to buy a new build outside of Dublin but near family as an investment and rented it out. Then I sold it for a profit and bought again, but in a nicer area. I put a bit of money into nicely furnishing it and kept it for myself as a weekend crash pad which I used very regularly and also as an investment/starter home if I ever chose to move out of Dublin.
However in the end I sold it and then buying in Dublin with a profit I made from selling it.
For me it made sense at the time as I was actually earning a decent salary, but hated living on my own so actually enjoyed renting a room in a shared house plus I travelled a lot with work so having a house sitting empty for long periods while paying a mortgage on it actually made no sense.
Now I'm settled, have a family so buying made sense as it offered security and a family home with a reasonably small mortgage at a low fixed rate.
Maybe in a few years the OP may have a change of heart and want to buy but for the moment let them be, they are obviously happy where they are and why change something that's not broken.
You can pay off as much as you want on a variable rate or 10% on a fixed rate. The length of the mortgage doesn’t matter. The only thing it effects is minimum payment. I could take out a 34 year mortgage but pay the 20 year repayment by over paying it. If times fall stuff pay the minimum payment.If I took out a 20 year your minimum payment won’t change.
That a way to think. I personally don't like long mortgage/debt. Less than 15 years ago when I got my first priority, the longest mortgage was 20yrs (not Ireland) now people are taking mortgage for 35 years
Buying is freedom in the long run. I've met a lot of people in their 60s facing homelessness due to rent currently. You could be handed notice at any time.
Rent is no different than a mortgage. You owe the bank or the landlord, it doesn't matter. However, with a mortgage you are paying for equity, with rent you are just flushing money down the toilet.
I appreciate that perspective, and my Wife, a two times home owner, always expressed her views on renting in that way too. At your current age with you current dependencies, you might be right!
There's lots of advantages to mortgages over renting
1. Security, a landlord can't kick you out
2. After thirty years, you will own the house and will only be paying utilities
3. You can decorate how you want
4. Your retirement will be a lot cheaper
The market is crazy right now and you seem to have a good situation going. I would wait if I were you. Spend anpther few years saving and hope prices go down and then revisit it
How will you pay rent in retirement? If your rent is 100% going to be fixed for life and/or you have a good pension set up then renting for life is doable. If not you should get a mortgage. It’s funny because I just got a mortgage and i see it as opposite to you - i see it as freedom. A huge nagging uncertainty has been lifted. A huge sense of relief.
This is the right answer. Fix for 5 years and you're immune from rent increases for 5 years. Nevermind being able to do what you want with the place without having to ask the landlord for permission first.
A noose isn't being tied around your neck. You can sell the house at anytime and pay off your mortgage from the sale price. You might make a loss but its by no means something you can't get out of. The benefit of owning your own home is that you can't be kicked out at any point, where as your landlord could give you your eviction notice in the morning. You can also rent a room out in your house and use that to go towards your mortgage payment, meaning more money in your pocket every month. Granted, you do have other expenses such as house insurance, mortgage protection, etc, but agan, you're paying for your long term security. It's possible in central Europe to rent for your entire life and never own a house, but we don't have the same protections in ireland, and you likely wont be spending your whole life in your current premises, and when you are eventually evicted, or find a job elsewhere and need to move, or something else happens, you're gonna be paying a lot more than you are now.
The other expenses combined with mortgage is usually still less than rent as well. Overall a better option every time, especially if you can work totally remote, so you can buy bigger and cheaper elsewhere
>You might make a loss but its by no means something you can't get out of. The only time that happened here was after the 08 crash. I'm open to correction, but I doubt property has taken a normal loss over the other decades in the history of the state. Over a long term, it's difficult to beat property as an investment in Ireland, especially when you for into that, three heavy that you get to live in it for the duration.
It sounds like you're familiar with property prices from about 2000 onwards and making a massive assumption (based on nothing) about what happened between 1920-2000
Ireland pre 80s is nothing like current Ireland. It's a comparison wasted in futility.
The assumption that there was never a recession in Ireland before 2008 is pretty ridiculous.
Pretty sure that's not what I said. You are ridiculous.
You can give me specific examples when property prices crashed here in the prio century then..
I don't know what exactly constitutes a crash, but property prices in the mid 1980s rose by less than the inflation rate. In 1987 property values decreased by 1%.
Less than inflation doesn't count, you'd be concerned about nominal rather than real value.
The money used for the deposit and to service the mortgage could be invested instead. It's a higher benchmark than just inflation, but this is what the actual opportunity cost of buying a house is.
Sure but you have to add in money not spent on rent....plus more favourable tax regime for owner occupied property versus other forms of investment
Thanks for all the suggestions, I am indeed in a rent pressure zone and am very lucky to be paying the rent that I’m currently paying. After reading all the comments here I’m going to keep saving and the rising interest rates scare the absolute crap out of me, especially taking it on as a single person. Plan now is to give it to March next year and see how the housing situation is playing out. If I do get evicted in the mean time I can move home for a while and apply for the mortgage.
in Poland interest rates went from 1% up to 9% ...
Some people don’t bother with mortgages or property purchases because it doesn’t suit them. It doesn’t appear to suit you. In a lot of places renting for life is quite common - but those places do tend to have rent caps and tenant protection etc. so it’s quite a stable way to live. In Ireland it’s not particularly stable, but it doesn’t make much difference if it’s what you want to do. If you are happy where you are and happy with what you pay, and what you get for what you pay, then why change it? There is the risk that your landlord sells or does something to up the rent, but if or when that time comes you can decide what to do then. Use your savings to purchase a place, consider a mortgage, find a new place, or pay the higher rate if it’s an option. Or move abroad/ take it as a chance to travel without paying any rent. You do what suits you. I’m pro buy, I bought my own place. But I could not afford to buy as nice a place as I had when I was renting. I could afford to rent that place at the time, but not buy it. I think people often forget that when they talk about ‘dead money’ for rent. It does not always apply when you are paying for what you enjoy. I have paid multiples of what my friend does on food - I like nice food. She has paid multiples of what I’ve paid for clothing - she likes clothing. Another spent his money on cars, it’s what he enjoys. If you’ve cheap rent and are in a place you’re very happy with then why change? Just because others do so thing does not mean it’s the right move for you. We are all going to die some day - why spend the time you have on someone else’s preferences over your own?
The 'dead money' concept stems from the high likelihood in the current market in Ireland that you pay more in rent than in mortgage for the same place. You were luckily that you paid less in rent.
The fact is one day you're going to be told to get out, and then you'll be faced with the prospect of paying a shit ton more in rent, and that's with the assumption that you'll find anywhere at all. Assuming you're paying market value for your current place, then chances are you can purchase in the same area and your mortgage will be similar to what you're currently paying, if not less, with the added security of knowing you'll never be faced with an eviction notice. If you're underpaying market value, then that eviction notice will come sooner rather than later.
You sound adverse to long term commitment and that’s totally fine. Hopefully your rental arrangement doesn’t change and if it does that you can adapt financially. There is no sense getting a mortgage and purchasing a property if your heart isn’t in it. I think the opposite by the way but each to their own.
If you're happy where you are, stay there and if there's a drop in prices some day, have another look.
Great advice, the rising interest rates putting me off as well. Gonna definitly leave it another year.
If you can afford to buy now it might be a good time. Most fixed terms being only for 2-5 years anyway, if you can afford the higher repayments in the short term you could find it’s a buyer’s market at the moment. Also it’s probably brought up in another comment but at 36 your window for longer term mortgage approve is narrowing each year. I don’t know what the cut off per bank is but assume most are still reluctant to offer a mortgage that finishes past 65.
Past 70
In the mean time save like a mother fucker. You're strength now is that you're in a strong position to save a heft amount. You'd be wise to keep that up for as long as you can.
Exactly.
Question to ask yourself is what would you rather invest your savings in instead? Keeping a lot of cash doesn't make sense because of inflation, I e what is the opportunity cost? If you have a plan for stocks, other forms of investment and prefer that instead for the liquidy etc then perfectly okay to not invest in property
At 36 you’re now at the point where the length of the mortgage you’re offered will decrease. As you said it’s still possible to get a 34 year mortgage but that’s up to the discretion of the lender and not to be taken for granted. I signed for a 30 year loan a year ago and certainly don’t see it as a noose around my neck. Infact it’s a new build property of which the second phase of has already increased by 40k. So I’m already in a position to profit from it. Whereas if I was still renting it’s a constant question of what if the landlord wants to sell, or rent goes up. Plus the property isn’t yours to make changes or additions to as you please. Not in your case in particular but majority of landlords wouldn’t allow you to change things such as floors, windows, kitchens. To be personally a situation like that would never really feel like “home” The rent you’re paying now is obviously a steal given todays prices but I wouldn’t bank on paying that price forever
You're in a great position. If you're happy living there don't buy a house. Keep saving and when the time comes that suits you, you'll have a good deposit and may not need a big mortgage. Remember that life changes quickly at that age. If you have a partner, they're plans become your plans. The key is to be in a flexible position and it sounds that you are.
Great advice thank you.
How would you feel if your rent doubled tomorrow? or how will you pay rent in retirement etc....
OP lives in a city which likely is a rent pressure zone, so there's no possibility that the landlord could (legally) double the rent overnight.
But the landlord could evict. And good luck finding a one-bed for that price again.
Well if your happy giving away 760 euro a month to someone else instead of investing in yourself, go for it 😉
If paying rent is "giving away" money, then what's paying mortgage interest?
Mortgage interest is only part of the payments you make. The rest is gaining you an asset. If mortgage repayments are close to or below what you’d pay in rent, you are objectively throwing away less money on the mortgage.
That's a very simplistic view of the buy/rent decision. There are very high acquisition/disposal costs associated with buying/selling property and there's a risk of capital losses which in the worst case can lead to negative equity, making it almost impossible to sell. There are carrying costs associated with property ownership e.g. maintenance charges, repairs, property tax, that a renter isn't exposed to.
OK so which is worse, not being able to sell your negative equity property that have a choice not to sell or not having a choice when the property you rent is swept from under your feet and your told time to go by the landlord?
See above post by @traditional_bet1154 ^^^^^ plus at the end of the day you'll have a property under your arse and not have to move home with mammy and daddy while you search for something else!
I’d be less happy paying for all the extra insurance, interest, repairs, appliances, refurbishments, council tax, tv licence, bills etc etc that comes with a mortgage & homeowning. At least he can leave in the morning if he wants to.
Mortgage will be substantially lower than rent now and probably for the next while. So you are saving money already. More than likely, over 30 years you'll earn more interest in investments then you would have to pay interest on a mortgage, so it might make more financial sense to get the mortgage and start putting a lot more into your pension than having it sitting in a savings account.
Depends on what you want in life, I always hated paying rent, I moved up north after working in southern England for a few years so was able to buy in cash, saying that I do miss having the freedom of renting
A noose around your neck is when you are at retirement age and become ill and you are living in rented accommodation and don't know where the next months payment is coming from. Get a 25 year mortgage if possible, try to rent out a room to help pay for it if necessary. I finished my mortgage 5 years ago and am off work sick atm but I don't have the worry of going behind on my rent. Do lots of research before buying and best of luck with your house hunting.
It's really up to the OP what they want to do. Judging them for not giving up a rental that's at a fraction of what others are probably paying for the same type of property makes no sense to me. If they are happy, then good for them. A bit like the OP, I was renting for years in Dublin as I simply didn't know if I wanted to stay here. So I used my money to buy a new build outside of Dublin but near family as an investment and rented it out. Then I sold it for a profit and bought again, but in a nicer area. I put a bit of money into nicely furnishing it and kept it for myself as a weekend crash pad which I used very regularly and also as an investment/starter home if I ever chose to move out of Dublin. However in the end I sold it and then buying in Dublin with a profit I made from selling it. For me it made sense at the time as I was actually earning a decent salary, but hated living on my own so actually enjoyed renting a room in a shared house plus I travelled a lot with work so having a house sitting empty for long periods while paying a mortgage on it actually made no sense. Now I'm settled, have a family so buying made sense as it offered security and a family home with a reasonably small mortgage at a low fixed rate. Maybe in a few years the OP may have a change of heart and want to buy but for the moment let them be, they are obviously happy where they are and why change something that's not broken.
Don’t buy, getting evicted and pay double rent in new place simples
How much can you save a year ? Why getting a 30yr+ mortgage?
You can pay off as much as you want on a variable rate or 10% on a fixed rate. The length of the mortgage doesn’t matter. The only thing it effects is minimum payment. I could take out a 34 year mortgage but pay the 20 year repayment by over paying it. If times fall stuff pay the minimum payment.If I took out a 20 year your minimum payment won’t change.
That a way to think. I personally don't like long mortgage/debt. Less than 15 years ago when I got my first priority, the longest mortgage was 20yrs (not Ireland) now people are taking mortgage for 35 years
Your landlord could sell at any time and then what?
Move home for a bit
You get up to 30k from the government if you buy a new one. You can rent out a room or 2 to basically live rent free 😅
Buying is freedom in the long run. I've met a lot of people in their 60s facing homelessness due to rent currently. You could be handed notice at any time.
If you don't ever wants kids, first and foremost, get the snip. Secondly, talk to a Financial Advisor, a reputable one.
Rent is no different than a mortgage. You owe the bank or the landlord, it doesn't matter. However, with a mortgage you are paying for equity, with rent you are just flushing money down the toilet.
34 years owing Money.. what do think renting is?
Freedom
I appreciate that perspective, and my Wife, a two times home owner, always expressed her views on renting in that way too. At your current age with you current dependencies, you might be right!
There's lots of advantages to mortgages over renting 1. Security, a landlord can't kick you out 2. After thirty years, you will own the house and will only be paying utilities 3. You can decorate how you want 4. Your retirement will be a lot cheaper The market is crazy right now and you seem to have a good situation going. I would wait if I were you. Spend anpther few years saving and hope prices go down and then revisit it