I am from Pakistan and was relocated to Dublin last year by my employer. My family joined me in December and my wife is registering to allow her work as a nurse.
Over the past year or so, I have been able to save about €60,000 and I now manage to save €2,000 monthly after all bills, rent, food, etc. We live in a very old small apartment in an area we love, close to shops and parks.
We were thinking of buying a property. We have approval in principle (from a bank which recently announced a probable exit from the Irish market) and are looking at a two- or three-bed house up to €400,000, or possibly a two-bed apartment.
But many people I know are telling us not to buy, saying that prices will go down and that a market correction is coming, not that I see that happening. Some also say I should wait until my wife gets a job and then think about buying.
Others say we should wait until we are here for at least two years, and most people suggest that, for the money we are looking to spend, we should go for a new-build outside Dublin.
We like Ireland but we might (less than a 5 per cent chance) move to Canada or Australia seven to 10 years from now.
What do you suggest? As first-time buyers, we are confused.
Should we buy or stay renting based on what I’ve told you? Should we wait? If we buy and after 10 years we move to Canada, can we rent out this property? Should we look for another lender?
Mr SS, email
That's a lot of questions, which is good. Buying a home is a big commitment and doing so in a new country can be a confusing and, at times, intimidating process. The important thing is to ask those questions now before you find yourself locked into a mortgage, or locked out and regretting your failure to move.
As you have discovered, people are very open to giving you advice. All of them mean well and it is certainly always worth listening to what people have to say. However, you and your wife know your circumstances best and also how you would like to live.
Only you can decide what you are comfortable with. Many people who come to Ireland to work do rent, but that is largely because they are a young, mobile population who do not really see themselves setting down roots in this country – at least not yet.
Renting
Renting gives the freedom to live where they want, close to work and all amenities with no long-term ties. If their circumstances change – as it did for many when Covid struck – or they get a better job offer in another country or another part of Ireland, they can up and move with few complications.
On the other side, renting in Ireland is expensive – now more expensive than a monthly mortgage payment on the same property and the cost has been growing at a faster rate than property prices in the recent past.
And tenants rights aren't as strong here as they might be in other countries. Renting can leave you vulnerable to arbitrary rental increases (depending where you live) and a sudden requirement from the landlord to move which can mean new schools, doctors and all sorts of other disruption.
So there is some logic to having the control over your home that a mortgage gives, assuming you can afford it, as you can. You have prodigious savings over the past year and strong monthly savings even now on top of your full family living expenses, including rent.
Buying a home
From what you say, you are looking to live here for at least the next seven years and, quite likely, far longer. And while you like your current location, you are not overly enamoured with the actual apartment which is small and not very well heated.
I had a cursory look online and there are several properties for sale in the area you are now living that are within your budget. They tend to be two rather than three-bed and you’d need to be sure they otherwise fit your needs, but there are options.
And you’re in one of the most expensive areas of the State for housing. Moving out just a few kilometres might provide a wider choice.
Addressing some of the advice you’ve been given, should you go for a new-build outside Dublin? Well, looking outside Dublin certainly gives you more choice and more bang for your buck in terms of what €400,000 will buy, but you might lose some of the convenience of your current location which is one of the things you like about it. And then there is the commute to think about – both the cost and, more importantly in my view, the sheer hassle of sitting in lines of traffic.
Buying a new-build in Dublin or outside of it can be more affordable as you will have access to the Government’s Help-to-Buy scheme. This allows you a rebate of tax already paid over the past four years in Ireland up to a maximum of €30,000 or 10 per cent of the value of the home.
You also need to have bought by the end of this year (unless the Government extends the deadline), have a mortgage for not less than 70 per cent of its value and you are obliged to live in the property for a minimum of five years.
Of course, as you are only here just over a year so far, there is less tax for you to claim back but still, it is an option. You do need to be a first-time buyer so if you owned a home in Pakistan that will exclude you.
On the question of waiting for your wife to start work, I’m not sure what the point is unless the thinking is that where she secures employment might not be convenient to where you buy. But that would involve you moving job and I gather from your letter that you will almost certainly be the main earner and any move might jeopardise your existing mortgage approval.
From what you tell me about your job – information I have redacted so as not to unnecessarily identify you – it seems as secure as it could be in the current environment.
If you buy and your wife then secures a job, it can only be a plus as it will make meeting any mortgage costs, boosting savings or standard of living easier.
Market correction
Some friends suggest the market is heading for a correction? Like you, I have no special insight into this but there are a couple of factors to consider. Ireland is still recovering from a disastrous financial crash in 2008 which saw property prices plunge. They were recovering but Covid has slowed that slightly.
Also, there is a fundamental lack of supply in the Irish housing market and figures from planners and developers say there is little chance of this being overcome in the medium-term.
Finally, data from the Central Bank and the independent think tank, the ESRI, say prices would now be between 8 and 25 per cent higher but for rules the bank has in place to limit how much people can borrow for home loans.
All that suggests strong demand which will only push prices higher, especially if mortgage rules are loosened. So I don’t see a market correction any time soon. If anything, I think prices will continue to rise modestly, so holding off will mean you are likely to pay more for the same property.
If you were to move to another country, you ask whether you could rent your Irish home in the event that you did buy a house or apartment? Of course. There’s nothing to prevent you doing that although rental income would be liable for tax here and that could make life a little more complex if you were setting up elsewhere.
Lender
Finally, you wonder whether you should look for a new lender given that the one who has given you approval is not hanging around?
There’s no particular reason to do so. The mortgage drawdown will be honoured as long as you still meet the conditions and the lender is still here at that point – and both those pulling out will be here for a while yet. If there is any transfer after that, the new owner of your mortgage is required to honour the terms and conditions you have agreed with the bank, including interest rate.
The only issue is that if the mortgage loan book is bought from the bank by a group other than a bank, it might be impossible to switch mortgage to another provider later to avail of a cheaper interest rate.
But at this point, when you are looking at buying, I wouldn’t worry too much about that.
Where and whether you buy in the end are clearly personal decisions. There is no “right” answer. Listen to advice certainly, but more importantly, talk to each other and decide what works for you and your young family.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into
