The housing market is booming but what does that mean for you? Is now the time to buy, sell, rent, or just stay put? It can be a hard decision but one that you can make when you’re ready. If you’re considering whether or not the time is now to apply for a mortgage, there are a few tips to keep in mind.
What is a mortgage?
At the outset I just wanted to give some context. I am not a financial advisor rather I have been through this process more than once therefore I feel equipped to give some tips and advice purely based on my own experiences in this area. When we started on this journey of getting our first mortgage as a naïve 20 something year old, if I am honest I probably didn’t even know what exactly a mortgage was! In its basic sense, taking the definition from Investopedia a mortgage is “A mortgage is a loan that the borrower uses to purchase or maintain a home or other form of real estate and agrees to pay back over time, typically in a series of regular payments. The property serves as collateral to secure the loan.”
Home ownership has always been a hot topic and perhaps we tend to be somewhat conditioned from an early age into wanting to own our own homes. I know in some European counties long term rental agreements tend to be favoured. I did some research around home ownership here in Ireland and note that the latest figures from the CSO which are for 2016 show “In 2016 in all 58.4% of homes that were ‘owned outright’ were a ‘detached house’, while ‘detached house’ was also the most prevalent dwelling type for those who ‘own with a mortgage or loan’ (47.8%).”
So the million dollar query……
Should you apply for a mortgage or wait?
Owning your own home is never a bad idea. As long as you’re not getting into payments that are over your head, you should be able to invest in property and feel confident that it’s a strong investment. If you’re looking at a house that you know is too expensive, that’s a big indicator that it’s not the right time to make that purchase.
With various parties involved in a typical property transaction, from Estate Agents, Online Conveyancing Solicitors to Mortgage Advisers, things can get pretty confusing and overwhelming quickly. To figure out if you’re ready and able to buy a house, the first step you need to do is get pre-approved from a lender or bank.
You’ll never know if you’re able to actually afford the house of your dreams if you first don’t find out how much you’re able to borrow as a home loan. A important step you can do is to utilise a trusted online mortgage calculator this will give you an good clear indication of firstly the monthly payment and also how much the mortgage will cost you over its term.
Once you have that figured out, you then get to decide if you’re going to spend at the top of your allotted loan amount or try to meet somewhere in the middle or the lower end. Ultimately it’s your choice on what type of home loan and mortgage that you want to have but you do what to be careful that you don’t end up being “house poor”. This term comes from people who have overspent on where they’re going to live and then have no money leftover to purchase items for the home or to do anything fun out and about as well.
If you’re ready to apply for a mortgage and begin the house buying process, make certain that you speak with a trusted lender that can walk you through the process. With a home purchase being the largest item you’ll ever buy, it’s a big decision that you shouldn’t take lightly at all!
It would be remiss of me not to include details on where to go in the event you run into difficulties in making your mortgage repayments, the covid situation has had a very real impact on incomes and it is very important to seek advice in the unfortunate event you find yourself in this situation. In Ireland, Citizens Information have a list of bodies who you can contact for assistance or if you are in the UK, the Financial Conduct Authority (FCA) have details on where to go for assistance.