Home ownership is a dream for more than one in two renters in 2019. 54% of young people hope to become homeowners between 30 and 35 years. This stage of life, which generally translates a search for stability, can however be realized before the thirties. Having taken the step myself, I suggest you to discover my advice for a first successful real estate purchase.
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Many tenants think, often wrongly, that they can not access the property for financial reasons. But among them, how many have already calculated their annual expenses in rent? Rents “lost” since this money will generate no return on investment…
With my husband, we dared to do it, this calculation. And we can say that it caused us an electroshock! For 8 years, we rented an apartment for 694 € per month. That is 66,624 € spent in the wind. Even if this fact made us sick, it was decisive in our choice to become owners. By increasing our housing budget a bit and getting into debt over 20 years, we have been able to acquire an apartment of our own!
To you, who dream of independence and first successful real estate purchase but have not yet jumped, here are some tips.
Tip # 1: Determine the Needs and Search Criteria for Your First Real Estate Purchase
A (first) real estate purchase is reflected in the medium term. It must meet your current needs while being able to adapt to your future life, which may evolve. Whether you are alone, in a relationship, with or without children, imagine what your life might be like in 3, 5 or 7 years and ask yourself the right questions. What surface are you looking for? How many pieces are needed? Rather apartment or house? With or without a garden? What is the best location for your professional life and the infrastructures located nearby (shops, schools, associations, transport, road access…)? So many questions that must be asked before starting research. Because it is by establishing a framework and priorities that you will be able to evaluate the potential of the properties you will visit. A potential that is important to take full measure, since it is he who will define the current and future value of housing.
I recently read in a study that the French keep on average their property for 7 years. It is therefore likely that your first real estate purchase eventually leads to a new project (purchase of a house or apartment with a different configuration or location, for example). Having fully estimated the potential of your home as soon as you buy it, you will certainly be able to rent it or sell it more easily, at a price close to its purchase price.
Tip # 2: Define Your Contribution and Borrowing Capacity
Once the list of essentials is established, return to reality: the budget! Key point of any real estate purchase, it is from him that everything will flow.
Appointment at first with your bank advisor to make a precise inventory of your situation. The main points that will affect your loan will be:
- Professional situation (profession, type of contract …)
- Savings capacity (banks are sometimes more confident towards a client with average salary but who save than towards a client with high incomes but who does not save money)
- Possible debt ratio (up to 33% of net income, except for high wages or some professions considered “carrier” for which the rate may be higher)
- Analysis of bank accounts (late payments, overdrafts …)
- Personal contribution (the more important it is, the less the client is considered “at risk” for the establishment)
A tip that has served us well during our first real estate purchase: insist that you do not want to indebt you in a rash manner by showing that you have always honored the settlement of your rents.
Once the financing proposal has been obtained by your bank, do not hesitate to play the competition. Ask other banks or consult a broker who will find the best offer for you.
Tip # 3: Learn about Assisted Loans and Alternative Financing Solutions
Some loans exist to facilitate access to housing for first-time buyers. The most famous of them is the zero interest loans, which allows you to benefit from a rate without interest or fees. The following guide details its advantages and the conditions for accessing them: download the guide.
Other forms of assistance exist, such as the loan for social benefits (which provides for notary fees and reduced filing fees) or the housing equity loan (better known as the “1% housing loan”), which offers some employees to take advantage of a complementary loan at a favorable rate.
The interest-free loans or grants are also common during a first property purchase. Speaking of our project with our entourage, we ourselves had some nice surprises since relatives wanted to give us a financial boost.
This is why some market players propose to help you orchestrate the generosity of your friends, families and colleague’s .The brand goes even further since it contributes financially to each project put online.
Solutions to build or strengthen his personal contribution exist!
Tip # 4: Be Aware of Ancillary Costs
When buying a first property, it is necessary to be well aware of the existence of certain ancillary costs.
Beyond the purchase price of your home, consider notary fees. In the new, they are reduced, which can weigh in the balance nine vs old. Especially since we then benefit from several guarantees, which ensure the quality and the final rendering of housing, as well as the latest technical standards in force.
Loan insurance, the mortgage loan guarantee and some banking fees are also added to the bill. A tip: with good negotiation, it is possible to make significant savings in their overall cost.
Being a property owner is also paying a housing tax (you already pay one by being a tenant) but especially a property tax (the amount varies depending on the location of the property). All that being said, you will always be a winner compared to the rent you paid previously, without having anything in return.
Tip # 5: Inform Yourself about the Environment and the Condominium (in Case of Purchase of an Apartment)
As I said before, location is one of the key points of any real estate purchase. Do not hesitate to go around the city and the neighborhood at several hours of the day and night. This will allow you to soak up the atmosphere that will reign in your future home. Because an apartment or a quiet house between noon and two can be a little less during peak hours …We will avoid unpleasant surprises once the cartons unpacked!
Last little advice if you plan to buy a first apartment already built; ask to see the minutes of the last general meetings of the condominium. You will be aware of any work that has been voted.
So… Are you getting started?