HOUSING MARKET MARCH 09

Here in Inishowen, there are some great deals and bargains to be had particularly on turnkey homes.

Potential buyers see that prices are more affordable and the lower mortgage interest rates are making the idea of buying your own home more attractive.


Ready To Buy: Young Still Keen to have a Home
Falling prices are attracting potential first time buyers to the property market, research has shown. Bank of Ireland carried out the survey with 500 non-mortgage holders aged between 20 and 35 and it revealed that 38% were considering buying a home in the next eighteen months.

Even with the feelings of uncertainty out there 70% of those surveyed still believe that buying a home is one of the basic goals of life. Other European countries, such as Germany, may have a culture of renting but it looks like we won’t be turning into a nation of renters any time soon.

Better Value
Here in Inishowen, there are some great deals and bargains to be had particularly on turnkey homes. Potential buyers see that prices are more affordable and the lower mortgage interest rates are making the idea of buying your own home more attractive.

Aside from falling interest rates, first-time buyers also benefited from an increase in mortgage interest relief announced in the budget. From January 1, the relief for first time buyers was increased from 20 to 25 per cent in the first two years of their mortgage, and up to 22.5 per cent in years three to five.The increased tax relief, which is deducted automatically by lenders, is available for new first-time buyers and first time buyers who bought a house in the past four years. Tax relief at 20 per cent still applies to first-time buyers in the sixth and seventh year of their mortgages.

Cheaper Than Renting
As property prices become cheaper and interest rates stay low, it may be cheaper to pay a mortgage than to pay rent. Financial institutions seem to be happy to lend to owner-occupiers, particularly if their credit rating is good. The AIB and Bank of Ireland have been at pains recently to convince the public they are open for mortgage business with each of them offering a €1bn fund for first time mortgages. The banks are also offering competitive rates to first time buyers.

Greater Choice
First time buyers also have a greater choice of properties on the market at the moment. Given that buying a home is for most of us, a mid to long term purchase/investment and that you are likely to live there for between 5 and 30 plus years, then if you can get credit and can afford it, it makes sense to buy now while prices and interest rates are competitive.

Top Ten Tips when Buying a Home
1. Start Saving for Your Deposit - Banks and building socieites do not give 100% mortgages any more so get a lump sum saved for a downpayment. E.g. If the maximum you can borrow is 92% then you will need a deposit of €16,000 for a €200,000 property.

2. Find out how much you can borrow - Lending criteria are based on a number of different things and take into account the earnings of those who are applying for the mortgage, the ability to repay the loan both now and in the event of increased interest rates applying to your loan in the future. As a general guide, a multiple of two and a half times the basic income of the applicants may be borrowed. There are variations, however. For example: a single person may have lower financial commitments in addition to his/her mortgage repayments and this may increase the amount of money that they can borrow.

3. Understand Your Loan - There are various types of mortgages, 30 year fixed, 15 years fixed, repayment mortgages, endowment mortgages. It’s a jungle of jargon so see make sure you get your provider to explain to you so that you can understand exactly what your mortgage means and what your repayments will be and how they might change. Remember, if you are credit worthy the instituions will want to sell to you so make sure you ask around, try and get independent advice so you don’t need to worry about fluctuating costs from month to month and changing interest rates. Go with a reputable provider.

4. Preparing Your Credit - While everyone knows that their credit score will be an important element in determining their mortgage payments, most do not follow a few simple tips for improving their score in the months leading up to the closing. First, make sure you keep the balance on your credit cards under a quarter of the total line of credit. Also, avoid large purchases or transfers that might appear out of the ordinary. And finally, pay off debts such as student loans that may be keeping your score down.

5. Gather your paperwork - Your lender will generally require 2 years of tax returns or wage slips, a year of bank statements, P- 60’s from the past 2 years, and a list of your current debts such as car and student loans. With strictor lending criterial, the blenders may ask for other information too. Find out what they need and have these prepared before they ask for them. This can save you a lot of time and avoid unnecessary stress.

6. Study The Local Property Market – Check websites such as daft.ie and estate agents on line to see what prices houses are going for. Estate Agents might give you details of recently sold homes and if you have information of the asking price of properties, what they sold for, and the price per square foot, this information will help you put in a more competitive first offer and come across as a serious buyer. Make sure you can afford all the extras. There will be insurance and solicitors fees, so find out what these cost and factor them in to your budget.

7. Compare Lenders - After your offer is accepted, check out other providers to make sure you are getting the best rate possible. Be wary of offers that will only last a year or so, check out what they will mean further down the line. Once you have a lender, you will have bargaining power to determine who really wants your business, get the best possible interest rate, and save the most money in the long run. Make sure they are well-known with a solid reputation.

8. Go visit properties - Visit properties, take pictures both inside and out, make notes of pros and cons, Make sure it suits your living needs. Choosing a home where you may be living for a long time is an important mile stone in your life so don’t rush into it.

9. Get an Inspection - When your offer is accepted and it seems that the process is almost over, do not get too attached and believe that the home is already yours. Although it can be a major stumbling block in the negotiations, you absolutely need to have a qualified inspector look for foundation problems, damp and numerous other things that cannot be seen when you stroll through a home. Sometimes the inspector will only find minor problems, but other times there are extremely expensive issues that may make your purchase impossible. Under any circumstances, don’t skip this step.

10. RELAX - It can be expected that this buyiong a home is going to be somewhat stressful considering the major investment and lifestyle change you are making. But it is a positive step and hopefully an exciting experience and once you have bought a house, you can enjoy turning it into a home.

Good luck and happy house hunting!



The Jargon Busting Guide to Getting a Mortgage
Understanding terms that are thrown about when applying for a mortgage can be confusing. Here is the Independent’s guide to what it all means.
Advance: the mortgage loan.
Annuity Mortgage: (or Repayment Mortgage) a mortgage loan where interest and some of the debt is repaid, usually in monthly installments.
APR: stands for Annual Percentage Rate; more accurate measure of interest rate costs for comparison purposes.
Collateral: property that is given as security against the loan.
Contract: written legal agreement between the seller and the buyer.
Conveyancing: the legal work connected with the transfer of property.
Deeds: the documents that evidence the owner's legal entitlement to a property.
Deposit: part of the purchase price - usually 10% - that the buyer has to pay when contracts are exchanged.
Endowment Mortgage: interest on the mortgage is paid, usually each month, and the mortgage itself is repaid from the proceeds of an assigned Endowment policy.
Endowment Policy: this is a special life assurance/savings policy.
First-time Buyer's Grant: a government grant available to first-time buyers who purchase a house as their own residence.
Freehold: ownership of both the property and the land it sits on. In the case of a block of flats, for instance, you may at a later date sell off all the flats and retain the land, in which case you will charge ground rent to the new lease-holders.
Gazumping: when the seller of a property cancels the agreement on an offer from one buyer, in order to accept the offer of a higher price from another.
Ground Rent: annual rent (usually low) paid on a long lease.
Home Owner Payment Protection (HOPP): if you should find yourself unable to work through accident, illness or even redundancy, Payments Protection insurance will pay all or part of your mortgage repayment depending on the cover you choose.
Indemnity Bond: In certain circumstances, lending institutions may insist on an indemnity bond being taken out where the amount of the loan exceeds 75% of the value or purchase price of the property, whichever is lower. The indemnity bond is a "once-off" and not an annual payment.
Interest: interest is the price that you pay for a loan
Leasehold: property that is leased by the owner to a leaseholder or tenant for a fixed number of years. Unless the unexpired period of the lease is at least 50 years, it will be difficult to obtain a mortgage on the property.
Mortgage Protection Plan: life assurance policy assigned to the lender to clear your borrowings in the event of your death.
Mortgagee: a lender, such as a bank or building society, who grants someone a mortgage.
Mortgagor: the person who borrows money to buy a home against the security of the property.
Stamp Duty: a tax charged by the government.
Term: the period of years over which a mortgage is repaid.
Title: the ownership of the property.
Title Deeds: the documents that evidence the owner's legal entitlement to a property.
Valuation: inspection of a property, to check its market value. (This is not a full structural survey, which we advise you to have completed by a qualified architect/engineer).NOTE: The above are very general explanations of what is often quite complex legal terminology. We are giving them here in this format to help your understanding of this guide. If in doubt, contact your solicitor.