This week on RTE Drivetime’s ‘Talking Money’ segment we looked at the issue some parents have with ‘Kidults’ who are grown up children living at home. There are many reasons behind the increased occurrence of people remaining at home, and there are both advantages and disadvantages, we tried our best to give some tips that might help!
We have designed a simple calculator that lets you put in your property price, what rents you are currently paying, how you think prices will change and how many years it would take you to save a 20% deposit if you only have 10% now.
Just download the excel file, fill in the bright yellow boxes on the first sheet, and then scroll down to the green area to find out if you win or got shafted. (download here)
You can play around with different scenarios, but suffice to say that a regular couple who have €25,000 saved up and are looking to buy a property for €250,000 today will be worse off if rents and property prices went up by 2% a year (and it took them 4 years to save the additional deposit required) to the tune of €15,500.
We don’t believe it is in the remit of the Central Bank to damage the balance sheets of financially healthy individuals, but you can test your own hypothesis and see how it …
We spoke about the up and down sides of coming out of negative equity 0n Today with Sean O’Rourke on RTE1 where Keelin Shanley was sitting in.
There are winners and losers in every economy, and many things in economic terms come with a series of trade offs. So to think that rising house prices are a good thing is only taking the view from one pre-determined set of assumptions, there are many losers when we create winners and that needs to be remembered. We are hopeful that those points were well made.
That banks are lending enough is evidenced in gross lending contraction, that they simply ‘aren’t lending’ is factually incorrect.
We encounter all kinds of strange paths to homeownership with our clients and thought it might be worth showing a recent example which probably never would have made it through without a broker, branch banking typically run a mile from this type of case or don’t spot the angle.
In this instance we had a permanent worker with a child and no savings. This instantly has a few negatives, having children reduces your borrowing capacity and not having savings diminishes any hope left.
With this case in particular though, there were other aspects that swayed it. The client lived with a relative who was selling a property and moving in with a sibling, some of the profits were going to go towards helping our client make a purchase.
A gift alone normally won’t help you get a loan, you have to prove repayment capacity, some lenders will let the whole deposit come from a gift but you still …
There are four main types of loans, these differ in the way the capital is repaid to the lenders.
Capital & Interest, the most popular type of housing loan, where the borrower makes regular repayments – part interest / part capital. These are usually for an agreed term, typically 25 years however in recent times the term can be as long 30 -35 years.
C&I loans are also know as Repayment mortgage, Standard mortgage and Annuity mortgage. In the early years of a C&I loan the majority of the repayment is used repaying the interest, so the capital reduces slowly.
So as the capital reduces with each repayment, so does the amount of interest payable on that capital.
The other types of loans are interest only repayments with the capital sum been paid at the end of the term from, a:An Endowment Mortgage b:A Pension Mortgage c:The sale of the property / asset.
This means that the borrower pays interest only for the term of the agreement and only repays the capital sum at the end by means of a …
Here is a round up of the leading rates at present for 90% mortgages. There are different rates depending on your LTV so if you are not looking for 90% you’ll need to call so we can go through them with you.
Variable rate: AIB 3.54% 1yr fixed rate: KBC 3.99% 2yr fixed rate: BOI 4.49% 5yr fixed rate: BOI 5.29%
Something that is interesting is how people are amazed that banks are jacking up interest rates at a time like this… In fact, it is precisely because of the time we are in that they are doing it, and due to the market environment they face.
Banks have a choice at any time as to where they will put the money they hold, their job is to turn liabilities (deposits, debt, equity finance) into assets and at present there is a golden window of opportunity where any decent (almost any) assets can be lodged with the ECB and the ensuing liquidity recycled.
For the most part this has helped to support the bond market, part of the LTRO was based on this premise, but in Ireland while bond yields are attractive (still above 5%) mortgage rates are not as attractive. Currently the standard variable is less than 5% meaning a person can borrow for cheaper than the nation they live in is able to!
That won’t last, the likelihood is that sovereign rates …
I thought it would be interesting to show a small table that outlines the issue with losing money, the figures below show what you have to ‘make back’ to get to break even depending on a certain amount lost.
Loss Return needed to regain original sum -5.00% 5.26% -10.00% 11.11% -20.00% 25.00% -30.00% 42.86% -35.00% 53.85% -40.00% 66.67% -50.00% 100.00%
It’s easy to see that it gets harder to get back to zero the further you fall, the most obvious example being that you need 100% growth to break-even if you lose 50%! Just something to keep in mind as you are investing or weighing up risk in the things you invest in.
Noleen Blackwell of Free Legal Advice Centre and Karl spoke to Mark Cagney and Sinead Desmond about mortgage arrears, default and what the issues were in the current market.
Angela Keegan of MyHome.ie wrote an opinion piece in the Sunday Business Post yesterday which included some of our firms commentary:
Figures compiled by Karl Deeter at Irish Mortgage Brokers showed that the size of the average first-time buyer mortgage peaked in the first quarter of 2008, at €251,000.
At the moment, the average drawdown is €188,000. According to Deeter, the ‘average mortgage’ from 2008 on a 2.1 per cent tracker costs €1,076 per month. Current TRS is €80 per month, so the net cost is €996.With the new, bigger TRS in the Programme for Government, the TRS will now be €119, resulting in a monthly payment of €957, an extra saving of €39 per month.
Compare that to the new first-time buyers, who will miss out on TRS. If they take out a loan for €188,000 at 4.3 per cent variable, their cost per month is €1,023.With rates likely to push up over 5 per cent, irrespective of the ECB, Deeter believes that, by this time next year, the divergence between the two mortgages could be as much as …