Home ownership is one of the most common aspirations or people worldwide, but its not an easy process. There are also many horror stories out there of what can go wrong. Maybe there’s some truth to these scary home buying myths. Or, maybe they’re voices in your head discouraging you from what’s possible.
Below we highlight some of the key myths and help you on your home buying journey. Move past these home buying myths and start seeing just how affordable homeownership is!
- Its reasonably fast
- I need a strong savings record.
- That small credit card I didn’t pay in college won’t matter.
- All Banks are the same.
Its reasonably fast
Wrong I’m afraid, our data shows that it takes an average of 7 months from initially identifying your property to moving in. There is a lot that needs to happen and the co-ordination and technology between the key stakeholders (Banks, Solicitors, Estate Agents) is almost zero. It’s a long drawn out process and you need to be prepared for delays and problems along the way. The legal and mortgage processes are paper based and so you will spend an insane amount of timing waiting for post – yes post in 2021! Thankfully Pangea Mortgages can help – we have a digital mortgage and legal process. Also, use our mortgage calculator to see what your monthly repayments will be.
I need a strong savings record
This is not true. What the Banks will want you to show is strong repayment capacity. With rents at all time highs, this means that lots of applicants simply have no money left each month to start saving with. But fear not – this doesn’t mean you wont get a mortgage. If you are paying say €2,200 a month in rent and your mortgage would be €1,500 – be consistently paying that rent and not being overdrawn on your accounts you are proving that you could easily pay the lower mortgage amount. As a first time buyer you are required to have a 10% deposit – but this can come from several different sources that are not your savings, namely Help to Buy.
And from a gift from your parents. They can gift you this cash amount that will help you buy the property. You can easily work out your mortgage repayments by using a mortgage calculator. It is however a good idea to save if you can and there are a number of money saving tips available here.
That small credit card I didn’t pay in college won’t matter.
Unfortunately it might. When you are getting a mortgage, the Banks will carry out a credit check on you. This is a central credit register that will have a history of all loans taken and applied for. So the Bank can see what you have outstanding and what you didn’t pay. Some people think that the Banks “wont know” about that small credit card – but they will!!
To make matters even worse, some Banks will excuse some small discretions as long as they are more than 2 years cleared, but some people simply ignore letters chasing payments which means that debt stays on their record for ever. Its crucial that you pay all loans and clear off anything outstanding as soon as you can. There are no easy ways out!
All Banks are the same.
Not true. There are certain key guidelines that all Banks have to adhere to such as Loan to Value Limits and Loan to Income Limits. However, Banks can and will look at your income in different ways, especially around non base pay. So what’s non base pay – that’s overtime, bonuses, commission, rental income, share options and self employed income. Certain Banks will take 50% of these amounts if consistent over a number of years while some Banks will take 100%.
This can make a very substantial impact to the amount you can borrow. Whilst a mortgage calculator gives you the amount you can borrow – it does not differentiate between base pay and other – it usually just asks for income. But when you go for a full application the Banks will split this out. It can lead to some people getting much less than the mortgage calculator told them. Its impossible for a first time buyer to know what the different Banks policies are so we recommend coming to a broker like Pangea Mortgages and using our knowledge for your benefit – we are here to help you.