Just because you can afford to repay a mortgage doesn’t necessarily mean you can afford to own and run a home. Now, stay with us here while we explain.
Each year AA Ireland Home Insurance very helpfully analyse expenses regarding the ownership and the maintenance of running a home. Their latest figures, released at the end of last year, found that it ‘costs about €16,000 per year to run a house’.
We tend to forget those little extras that come with having a roof over our heads; for example, as well as paying your mortgage, you’re gonna need a slush fund for maintaining and repairing your home.
For example, the likes of a broken boiler, a washing machine that refuses to spin, a burglar alarm that needs servicing; add to that the ESB bills, the cost of heating oil/fuel, building and content insurance, ‘phone and broadband services, satellite TV costs, refuge collections, garden/outdoor costs like repairing a patio, painting fences and gates and of course the property tax, etc., can all add up.
Buying your first home is possibly the biggest and most expensive decision you’re ever likely to make, however, while chatting to some first-time buyers, (my youngest daughter included), I’ve realised many people appear to be both overwhelmed and poorly prepared for this step, and sadly that can mean making some easily avoidable mistakes. With that in mind, we’ve put together a few pointers that we hope will prove helpful.
Preparation is key
There’s a lot of competition out there; use it to your advantage and approach an independent financial broker for advice. I’ve advised my daughter to shop around before she accepts a mortgage. She’s in a strong negotiating position, she’s got an excellent credit profile, she’s holding all of the cards at the moment, (and so are you); so it’d be unwise to accept the first offer you get. Remember, your bank may not be offering you the most suitable financial package specific to your needs, so take it handy and don’t be rushed into any deal you may regret at a later date.
Location, location, location
What are your main criteria when it comes to neighbourhood/community? Are you planning a family? If so, what are the schools like? Is there local public transport nearby, what about shops and other essential services? And, most importantly, how safe is it, as in what’s the crime rate like?
Don’t get lured in by the more expensive ‘ready to hang your coat’ house that looks prettier than the home that needs a slap of paint; but that you can comfortably afford. It’s easy to add on that bit extra to your long-term loan but keep in mind the long-term charges associated with that ‘few extra thousand’. Who knows, things may not always be as rosy as they are now; besides, you’ll need the extra few quid to book that holiday or pay your car tax and insurance.
Never, ever be tempted to forgo the cost of hiring a surveyor whose professionally trained eye will spot possible structural damage that could end up costing you a fortune. Use his/her report to strengthen your negotiating position on the asking price.
Get everything in writing
I cannot stress this strongly enough, especially if you’ve got your eye on that antique bureau or that fabulous dining room table that you think (but haven’t confirmed) are included in the overall price. Leave no room for ambiguity.