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10 Dilemmas of a First Time Buyer
By Old Houses Malta | The Deal
Buying a property for the first time is an overwhelming experience. Even though you know that you are not the first one going through this experience, it is very normal that several thoughts cross your mind. Below are the top 10 first time buyer dilemmas. In this post, we are proposing some arguments to help you make the best decision.
This depends on how stable your lifestyle currently is. If you are planning to move out of Malta in the next few years I would say that you would be better off renting. As an investment, properties, unlike the stock market, for example, can’t be liquidated that easily. You can sell, but it might take some time for the deal to actually occur. If you are still trying to figure out what’s happening in the next few years of your life, then it’s probably a safer option to rent out initially.
On the other hand, if you have a stable job and are planning to stay in Malta for at least the next 5 years then buying a house is a good option.
Once again, this question depends on stability. This time stability in your relationship. If you are planning to get married it would make sense if you buy the house with your partner. The main reason for this is because you will probably be getting a loan. Now when you get married 50% of your income will be your partners’. This means that your partner will be contributing to your loan repayments in any case. Buying your first house with your partner will also help you get a larger loan.
The biggest disadvantage of buying a house with your partner is of course in the case of a breakup. In that case, you can either buy it from each other or else sell it to a 3rd party. This means that you might be dealing with each other for around a year or so, till the property is sold.
If you afford to, I would say that you should buy the better house now. First of all, you have no guarantee that you will be better off at a later stage. Most likely you’re going to be worse off since your expenses will increase, especially if you currently still live with your parents. This doesn’t mean that it is impossible to move to a bigger house later, however, it’s much harder. The next main advantage is that first-time buyers get a lot of deals and schemes which you should take full advantage of.
Few choices here… change your partner.. don’t buy an old house.. change your partner’s mind. In most cases, the best option is the latter one. First of all, invite your partner to like our page 😉 The next best thing is to show your partner that old houses, nowadays, have the practicality that our ancestors incorporated, together with the contemporary finishes to give your home a fresh look. Thus giving them the ideal balance between practicality and elegance. Generally, from a commercial point of view, old houses are a better investment than modern ones. Have a look at the top 10 reasons why you should buy an old house.
This probably requires a post on its own, however, I would like to take this opportunity to briefly suggest a few ideas.
The bank has an interest in you paying your loan. If the bank told you that you can pay €500 a month, you afford it. In reality, the only thing you need to do is cross check the monthly repayment with your lifestyle.
Here is a simple formula:
Total Expenses After Loan = Current Expenses + Monthly Loan Repayment + Home Bills and Future Expenses
Assume you currently spend x euros a month. Make sure that this x euro takes into consideration everything: money for clothes, car insurance, travelling etc… Apart from that, you will need to spend money on bills and food. It really depends on your lifestyle, however, you should assume that you will pay at least €400 a month on this. In theory, the rest of the money you can use for loan repayments.
Of course, this depends on the state the house is currently in. If you buy a house that has been lived in recently and is in a “livable” state, you probably just need to change the bathrooms and the kitchen. On the other hand, if the house is not yet converted, you will need to get some quotes to get a better idea of how much you will be spending. As a general rule, double whatever amount you are thinking of. Yep… I am not exaggerating. If you think you’ll be spending 20K you will probably end up spending 40K. Things will go wrong, and you will probably end up changing more things than you originally anticipated. Have a look at the project management post to get some ideas on how you can decrease your costs by varying scope and time.
If you think this is a risk, you can mitigate it by saving up a few months’ worth of expenses, then you will have a couple of months to find another job. Having said this, in my opinion, I would first make sure I’m in a stable position before committing myself to a monthly repayment. To be fair, up to a certain extent, unless you intend living with your parents your whole life, this will always be a risk. You have the same situation if you rent out. So, if you lose your job you might have a problem, however, to a less extent, you currently already have this problem.
The worst possible scenario is that your bank takes the house. However, if you did your research well and followed the suggestions on our site, you have several options on how to get out of that situation. One of these options is to rent out the house. Renting is currently in high demand, so rest assured that your property can be rented quite easily. The rental income should give you enough money to pay off your loan. On the other hand, you can opt to sell the house.
There are several houses, several agents and you can only pick one home. After viewing a handful of houses, you are going to become an expert in the real estate market. You are going to be able to distinguish between good and bad deals. Don’t worry by the end of this journey you can trust yourself that you will find the house which is right for you. Be sure to check out our post on speeding up the house hunt.
The bank requires that you, and your partner, get life insurance. In case someone dies the full loan will be paid by the insurance company. So, if you die, your partner will be single and owns a house. You can die happy. 😊
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