1. John McCabe

    Good article Karl. There are some good points in there but the biggest problem facing first time buyers this year is that obtaining mortgage approval is getting harder. Are mortgage lenders going to change their lending rules for better or worse to help first time buyers this year?

    John – Raheny

  2. Mark Bailey

    Sounds a good idea to buy now so, but the big problem I see with mortgage approval is Job security, nobody feels safe. If you were to buy now, and your company was to let you go, then you’re in real trouble. I think a change of government might make people feel safer about, and provide a bit of confidence to the market.

  3. Oliver

    Karl, wont the interest rates for each example above converge in year 6? Both moving to a standard variable rate for example. Therefore the interest cost on the 200k mortgage will be more from that point on? So, lower monthly costs for the 1st 5 years but higher for the next 20?

  4. @Oliver great point (and thanks for reading the post, of course- you can tell the CFA from the question asked!)

    Anyway, in month 60 the balance on the first loan is 175k vs. 161 in month 60 on the second lower loan, but you also have to live somewhere in yr1 in the second case, if that is c.€1,000 p.m. then you have bridged most of the 14k capital gap (and the person who moved first will have a year rent free at the end before you) then you also have the €8,000 cash savings during the 5 years which if you had the diligence to put on deposit could grow into something significant, in particular if you made (for instance) pension contributions bearing in mind that there is a tax efficiency there that after tax money used to pay mortgages doesn’t have.

    Totally accept the point though – and on that note it seems I have more work to do because I should probably do a ‘whole of life’ example to be fair!

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