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  1. #1
    ruserious ruserious is offline
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    A Future Crisis: Retired and Paying a Mortgage

    It is now virtually impossible for people in their 20s to get a mortgage.

    The average salary for graduates in their mid 20s is 28K. Under current mortgage lending caps (3.5 times salary), this means that a bank can only give a maximum of 98,000 in a mortgage to an average single young earner starting out. Even when you add the deposit, there are not many places for young people to buy at that level.

    To make a mortgage even possible, young couples will now more than likely have to go in together in order to meet the salary cap. Before, the problem was making up a deposit. But the 3.5 times salary cap means that it is virtually impossible for single or young people to get a mortgage on their own.

    Most (sensible) people would not want to make such a big financial commitment with another person unless they were married. The average age for men now marrying in Ireland is 35.
    https://www.joe.ie/news/getting-married-ireland-585036

    If the average 35 year old (now finally married and mortgage ready) takes out the standard 35 year mortgage with a partner, he will be 70 by the time the mortgage will be paid off.

    Already this year, we heard how public servants can work until they are 70. I am beginning to understand why. If people are forced out of the labour market at 65/66, they will face severe financial trouble paying off the remaining few years of their mortgage.

    We, as a society, are kicking mortgage repayments into our later years. I believe that the banks and government should do more to make it attractive again for young people to take out mortgages and be able to enjoy life more in their later years.
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  2. #2
    Morgellons Morgellons is offline
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    I think they pass mortgages down from parents to children in places like Germany and Holland. That will probably start here too.
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  3. #3
    paulp paulp is offline
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    Quote Originally Posted by ruserious View Post
    It is now virtually impossible for people in their 20s to get a mortgage.

    The average salary for graduates in their mid 20s is €28K. Under current mortgage lending caps (3.5 times salary), this means that a bank can only give a maximum of €98,000 in a mortgage to an average single young earner starting out. Even when you add the deposit, there are not many places for young people to buy at that level.

    To make a mortgage even possible, young couples will now more than likely have to go in together in order to meet the salary cap. Before, the problem was making up a deposit. But the 3.5 times salary cap means that it is virtually impossible for single or young people to get a mortgage on their own.

    Most (sensible) people would not want to make such a big financial commitment with another person unless they were married. The average age for men now marrying in Ireland is 35.
    https://www.joe.ie/news/getting-married-ireland-585036

    If the average 35 year old (now finally married and mortgage ready) takes out the standard 35 year mortgage with a partner, he will be 70 by the time the mortgage will be paid off.

    Already this year, we heard how public servants can work until they are 70. I am beginning to understand why. If people are forced out of the labour market at 65/66, they will face severe financial trouble paying off the remaining few years of their mortgage.

    We, as a society, are kicking mortgage repayments into our later years. I believe that the banks and government should do more to make it attractive again for young people to take out mortgages and be able to enjoy life more in their later years.
    It's not pretty I know, however,
    With a 35 year mortgage, the real terms amount to be paid in the last 5 years should be small given inflation. Paying a 1,000 a month today maybe big. In 2048, 1,000 would not be a big amount one would imagine.
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  4. #4
    ruserious ruserious is offline
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    Quote Originally Posted by Morgellons View Post
    I think they pass mortgages down from parents to children in places like Germany and Holland. That will probably start here too.
    Something very immoral about that.
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  5. #5
    Jack Walsh Jack Walsh is offline

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    Quote Originally Posted by ruserious View Post
    Something very immoral about that.
    Why?

    3 children get a 500k house with a 200k mortgage?
    What is wrong with that?
    They can sell it and trouser 100k each.

    This almost uniquely Irish practise that a big FO house or property mortgage free is an automatic entitlement for your children after you die is far more immoral.

    Let people live their lives in old age and stop skrimping, just to be able provide huge lump sums for children who you have worked your ass off for 30 years plus to provide for, care, educate and protect.
    Last edited by Jack Walsh; 11th January 2018 at 07:30 PM.
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  6. #6
    Morgellons Morgellons is offline
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    Quote Originally Posted by ruserious View Post
    Something very immoral about that.
    Isn't that the same with government borrowing, passing debt down to future generations?

    Usury-it's not a sin for nothing, you know!
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  7. #7
    ruserious ruserious is offline
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    Quote Originally Posted by Jack Walsh View Post
    Why?
    Because children will become anchored by the decisions of their parents. It limits freedom of the individual.
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  8. #8
    NYCKY NYCKY is offline
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    Quote Originally Posted by ruserious View Post
    It is now virtually impossible for people in their 20s to get a mortgage.

    The average salary for graduates in their mid 20s is €28K. Under current mortgage lending caps (3.5 times salary), this means that a bank can only give a maximum of €98,000 in a mortgage to an average single young earner starting out. Even when you add the deposit, there are not many places for young people to buy at that level.

    To make a mortgage even possible, young couples will now more than likely have to go in together in order to meet the salary cap. Before, the problem was making up a deposit. But the 3.5 times salary cap means that it is virtually impossible for single or young people to get a mortgage on their own.

    Most (sensible) people would not want to make such a big financial commitment with another person unless they were married. The average age for men now marrying in Ireland is 35.
    https://www.joe.ie/news/getting-married-ireland-585036

    If the average 35 year old (now finally married and mortgage ready) takes out the standard 35 year mortgage with a partner, he will be 70 by the time the mortgage will be paid off.

    Already this year, we heard how public servants can work until they are 70. I am beginning to understand why. If people are forced out of the labour market at 65/66, they will face severe financial trouble paying off the remaining few years of their mortgage.

    We, as a society, are kicking mortgage repayments into our later years. I believe that the banks and government should do more to make it attractive again for young people to take out mortgages and be able to enjoy life more in their later years.
    Do you think that the average graduate starting out should buy a house? They haven't established any kind of consistent employment history and probably little of a credit history.

    The banks are right to cap the mortgage on a times salary basis. We all saw what happened when they didn't.
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  9. #9
    Casablanca Casablanca is offline
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    A number of factors play into this in addition to those cited by the OP.

    1. A feature of greater access to 3rd level education and post-Leaving Cert Courses is that young people enter the jobs market later. Whereas I started working at 18 and had achieved a good salary by 25, many people still haven’t started work at 25 now

    2. That later starting age and the need to pay a mortgage and pension means future generations will work up to 70, although that may be influenced by technology and the ability of the State to provide a ‘living wage’ as well.

    3. We will live longer meaning that even if we work til 70, we will have 15-20 years retirement, whereas working to 65 in the past meant 7-10 years retirement.

    All these things play into a rather depressing vista. I’d hate to be starting out again, and those that are have my sympathy.
    Last edited by Casablanca; 11th January 2018 at 05:57 PM.
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  10. #10
    NYCKY NYCKY is offline
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    Quote Originally Posted by paulp View Post
    It's not pretty I know, however,
    With a 35 year mortgage, the real terms amount to be paid in the last 5 years should be small given inflation. Paying a 1,000 a month today maybe big. In 2048, 1,000 would not be a big amount one would imagine.
    Inflation over 30 years helps a lot of people pay their mortgages.
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