Whilst renting a property has some advantages, such as being able to live in a location you’d otherwise not be able to afford, the distinct downside of renting is that you ultimately have little to show for the thousands of Euros you pay out in rent each year.
By choosing to buy your own home, those thousands of Euros go towards buying an asset which you’ll eventually own outright. An asset which could also increase in value over time, and you can ultimately sell. The decision to buy your own home naturally depend on several factors, especially your financial situation. However, if it is something you are considering, here are a few tips to help you along the way:
1. Do a budget and plan well ahead
Wherever you live, you are likely to need to build up a substantial deposit of perhaps 10% or 15% of a property’s value to buy your first home. According to research which used statistics from the Numbeo global index, this takes an average of four years and nine months for people across a range of European cities, so if you hope to buy your own home one day, start saving now! The easiest way to do this is by creating a budget and sticking to it. Fortunately, the end goal of buying your own property can be a huge motivator in helping cut non-essential spending, clear existing debt and putting money into savings.
2. Do your homework
The process and pitfalls for buying property vary from country to country, so take some time to research the process where you live and understand what it entails. Buying a home is likely to be the biggest financial transaction you will make and can also be one of life’s most stressful experiences, so learning how home buying works and what to expect can help you avoid making costly mistakes and enable you to work out what other costs, fees, and taxes you might need to factor into your savings plan.
3. Redo your budget
As your savings near their target, redo your budget. You’ll need this information when you apply for a mortgage, and it’ll also enable you to see how much you can afford to borrow and repay each month. Taking out a mortgage is a considerable commitment, and you could lose your home if you do not keep up repayments. Whilst it may be tempting to borrow as much as your lender is willing to lend, avoid the temptation to overstretch yourself, and ensure your budget can easily cover your mortgage payments, and the expected (redecoration, insurances, etc) and unexpected (repairs) costs that owning a property brings.
4. Get your mortgage ‘agreed in principle’ or ‘pre-approved’
After having spent perhaps five years saving your deposit, there will be a huge urge to go out and start viewing properties you would like to buy. However, what you think you will be able to borrow, and what a lender is willing to lend you could be vastly different, so it is wise to get a mortgage agreed ‘in principle’ or ‘pre-approved’ which will confirm how much your mortgage lender is willing to lend you (subject to certain conditions), and therefore dictate the sort of property you can afford to buy.
5. Use experts
Whilst in some countries it is perfectly possible to buy a property without using experts such as a lawyer, a property inspector or building surveyor, do so at your own risk. You’ll have spent a long time saving your deposit and may think you cannot afford such things. However, if you aren’t supremely confident about the purchasing process, that the property doesn’t have some sort of structural fault, and a whole host of potential property nightmares, then having experts on your team can be money well spent. Sure, it may mean you have to save for a couple more months to have the money to pay them, but you’re likely to be living in your home for many years, so it pays to do things properly. Remember, any mistake you make when buying a property could be expensive and you could regret it for years to come.
6. Stick to your budget!
It is a sad reality when you start looking at properties that those above your budget are generally the ones you want! They may have more bedrooms, be in better locations, have bigger gardens or nicer views. However, the reason you have set a budget is that is what you can afford to spend! Avoid the temptation of viewing properties that are above your budget as there is a danger that any property you can afford will seem inadequate by comparison, or you’ll end up over stretching yourself financially.
7. Shop around and compromise
You may have an image in your mind of the perfect property for you, or you may not have a clue. Either way, it pays to view different properties in various locations, with different characteristics, to work out what is important to you in your future home. The reality is that your ideal home may not be available at the time you are looking, or even exist in the area, or at a price you can afford. Decide what are “must haves” and “nice to haves” in the property you seek and take your time to weigh up the pros and cons of the properties you view. Don’t reject a property purely based on photos on a website or because it doesn’t fit your exacting criteria as, quite often, people buying a home for the first time have a preconceived idea of what they want, only to find out that there are things they have overlooked or not been aware of.
8. But don’t compromise!
If you know you want a three bedroom home because you plan to have children, then make this “non-negotiable.” Similarly, if you have mobility issues and want a home without stairs, need to be within walking distance of a certain school, or a whole number of other things that are vitally important to you, don’t compromise. Instead, take your time in finding the home that fits your criteria and be open to continuing your search if the right property is not available. Compromise can open your eyes to opportunities you hadn’t considered, but if there is something you’ll regret regardless of how lovely a property is, continue your property search.
9. Look beyond the property
When you eventually find a property that is right for you, be sure to look beyond the property itself and consider what life would be like living there all the time. Try to visit the neighbourhood at various times of day and on different days of the week to see if there are issues you haven’t noticed on your previous visit. For example, overlooking a park may seem idyllic on your first visit, but if it is hugely popular at weekends and parking or traffic becomes an issue, you’re unlikely to realise this if you have only been at the property midweek. When you are wrapped up in the process of finding your dream home you can become so focussed on the property itself that other factors can be easily missed, so do your research. After all, you could be living there for many years to come!
10. Don’t be rushed but be ready!
Real estate agents usually get paid when a property is sold, so they are naturally keen to sell properties and can create a sense of urgency to get you to decide quickly and “avoid missing out.” However, you are buying a home you will be living in and paying the mortgage on for many years to come, so try to take things are your own pace. Sure, you could miss a property if someone else gets in first, but that could also mean you find a property that is even better for you. It is far better to miss a bargain than to rush in and buy a property that could be an expensive blunder! However, if you are sure that a property is right for you, be prepared to move swiftly as the sooner you complete the purchase, the sooner you can move into your own home and begin this next exciting episode of your life.
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