© The Irish Independent
Maybe you’re renting and thinking about getting on the property ladder or maybe you’re living at home and need a place of your own? So here’s the top 10 tips for first-time buyers.
It’s a big step, buying your first home and not to be taken lightly. The mortgage market has changed, with more requirements needed to meet the lending criteria, so if you want to get on the property ladder, here’s how.
- Be sure that you want to buy and not just rent
Buying is a huge commitment and should not be taken lightly. Before you commit to a mortgage, take a look at your current situation. Maybe your career is uncertain; maybe your family circumstances are in flux, its best wait until the right time is for you. However if you decide to proceed, rest assured there is plenty of support available throughout the Mortgage process.
- Show savings
You will have to show your ability to save and pay rent. A deposit of at least 10% to 20% of the value of the property, while is a great achievement, is not enough. You’ll have to prove that you have a cushion of savings that will mean you can make your mortgage payments despite any eventualities. The only thing banks can be sure of is that nothing stays the same, your circumstances will change, but your mortgage payments will always have to be made.
Gerry Hiney from Park Financial Planning, Terenure says, “Banks will want to see that you have saved the deposit yourself over a period of at least six months. Some people make the mistake of perhaps dipping into their savings to go on holiday or whatever but the Banks will immediately not consider you if they see that. If you’re saving for a mortgage, put the savings into a separate account and don’t touch it.”
“Banks will also be averse to an application if they see a pattern of online betting. If there are maybe 4 or 5 transactions with an online betting firm from your account, they’ll take a dim view on that.”
- Fix it up
“There are some very attractive fixed rate mortgages around at the moment and we would always advise first time buyers to get a fixed rate.[if they are looking for certainty for the first years of their mortgage] Interest rates will inevitably go up and having the rate locked in is very much worth the cost for the peace of mind it can provide,” says Hiney.
- Shop around
Shop around for the best deal. You don’t owe anybody anything. You don’t have to be loyal to any financial institution, so you can use one mortgage offer as leverage against another. See who wants your business most.
“People think that if they have a relationship with a bank that it will help them, but to be honest, their bank won’t treat them any different than if they just walked in off the street, so shop around for the best rates you can get,” says Hiney.
- Don’t over borrow
Be realistic about what you can afford. Don’t, whatever you do over borrow. Set yourself limits and leave room for manoeuvre to be sure that you can comfortably make your mortgage payments. Apart from the disastrous consequences of not being able to service your mortgage, life is short and stressful enough without having to fret and worry about how you’re going to keep the roof over your head every month.
“All the banks are concerned about is whether the mortgage can be repaid on a stand-alone basis. Banks no longer accept ‘leans’ or guarantors. They want to see that you have saved the deposit, they don’t care if you’ve inherited money or won it, they want to see dependable, consistent saving over a period of at least six months,” says Hiney.
- Have a plan of house you want, don’t compromise
Choose the area, size, style location and orientation you want and don’t compromise. You want a south facing garden? A garage? Rom for extension? Hunt for the house you want, for the price you want, you’ll find it. It may take time, but you’ll find it.
- Don’t get into a bidding war
Whatever you do, don’t get into a bidding war. You may really want a certain property, but paying more than you are prepared for is about the worst thing you can do. Found the perfect home? Let it go, there will be other perfect homes, if the other buyer wants it that much, let them have it.
- Recognise potential
Don’t be afraid of the ‘doer-upper’. Maybe a house seems small, but could be improved with an extension. You don’t have to walk into a dream house. A house is four walls, what happens between them make it a home and a happy home can be any size. With passion and energy any place can be transformed gradually into the perfect living space for you and your family.
- You can change any time you want
“30 years may seem like a long time to a first time buyer, but don’t forget you can change the terms of your mortgage any time you wish. First time buyers often want to keep expenses down, so consider starting with a full 30 years, then as you get older, as your earning power increases, you can go into your lender with a letter and change the terms to what suits you,” says Gerry Hiney.
- Think of the extras
“Bear in mind the extra costs, says Gerry Hiney, “There is a stamp duty of 1% and legal fees usually come to €1,400 plus VAT on average, and you’ll also have to pay for a structural survey, so you’ll have to be aware of these costs too,” Gerry reminds us.