Are you thinking of buying your first home? You may have considered whether to buy or rent and then decidedproceed with the purchase.
The reality is that the process can be more complicated than it seems and there are many things to consider: loan, expenses, taxes, sales contract, among others.
Before you take the step forward, check out this home buying guide. We have suggestions and advice that can make the difference, summarized in five points:
- What to consider when buying a house
- What are the costs of real estate credit?
- What taxes do you pay when buying a house?
- How much money do I need to buy a 200 thousand euro house?
- Guide to buying your first home: 9 essential tips
What to consider when buying a house
Before moving on to choosing the house, the first thing you need to do is find out if it meets the requirements minimum requirements for that. Especially if you need to take out a mortgage to buy your first home, which may involve taking out a mortgage on the property.
1. Real estate loan only up to 80-90% of the value of the property
In most banks the maximum loan amount is between 80% and 90% the value of the housefor real estate credit. The bank can lend 100% of the value of the property only if it belongs to the financial institution itself.
✅ Remember! The loan is granted on the basis of the lower value between the appraisal of the property and the purchase price. In other words, if you want to buy a house for 200 thousand euros (having calculated that to do so you need a mortgage of 160 thousand euros), but the valuation shows that the value of the property is 180 thousand euros, the bank will lend an amount lower than that 160 thousand euros.
2. Consider the expenses involved in purchasing a property
Remember that part of the costs (such as valuation, registrations and bank commissions) of the purchase and sale I am paid by the buyerwithout counting taxes. Our advice is to have, from the beginning, 20% of the purchase price of the property.
3. The loan amount must take into account your income
Make sure that the monthly installment to be paid to the bank, «both for the house only and in conjunction with other credits already contracted», does not exceed the 35% of the family’s monthly net income. Many financial institutions do not authorize mortgage transactions if the buyer’s debt is excessive.
✅ Important! If you take out a variable rate loan, be aware that the value of your loan may increase if interest rates rise. The same goes for mixed rate loans. Then carry out several simulations with a possible increase in Euribor, to check whether it is below this threshold.
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What are the costs of real estate credit?
When you buy a house, you need to add the costs of buying a house to the price of the property to find out the total costs you will have to pay. In fact, these costs are foreseen in the art WELL (European standardized information sheet).
Here are the main ones:
Interest rates
Another cost to take into consideration is the interest rates on home loans. The bank charges an interest rate in exchange for lending money and this interest is paid in monthly installments.
The interest rate can be fixed, variable OR Mr:
- Already fixedA the interest rate is always the same and, therefore, the payment forecast does not change;
- A variable This subject to the sum of the index (Euribor, the reference rate) and the diffusion basis and contract, an interest rate defined by the lender (see basic and contract spread concepts here).
The credit installment may increase or decrease during the contract, taking into account the duration of the Euribor rate (3, 6 or 12 months);
- I and Mr implies that there is a contract with two distinct periods – initially the interest rate is fixed and then becomes variable.
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What taxes do you pay when buying a house?
Taxes relating to the purchase of a house are always paid by the buyer:
- Municipal tax on expensive real estate transfers (IMT). AND calculated on the value of the deed or on the tax value of the property (whichever is greater) and depends on the location of the property, its intended use (own or secondary residence) and its destination (home, business, etc.);
- Stamp duty (IS). Two-step payment:
- in the deed – corresponds to a rate of 0.8% on the value of the acquisition or on the tax value (whichever is greater);
- for the granting of the loan at the time of stipulation – it can be 0.5% (for loans with a duration between 1 and 5 years) or 0.6% (for loans with a duration exceeding 5 years);
- IRS. In the case of purchasing the house with the money deriving from the sale of another house and this operation generated a capital gain.
Usage: In the case of the sale of a property that has been the permanent home of the taxpayer or his family, it is possible to benefit from the exemption from paying capital gains tax, if the value of the sale is reinvested in another permanent home.
How much money do I need to buy a 2 bedroom house?00 thousand euros?
Assuming that the bank lends 80% of the value of the property, to purchase a house worth 200 thousand euros you need to have around 40 thousand euros in advance and between 9 and 10 thousand euros in advance. expenses (banking process, deed and taxes). In other words, in total, around 50 thousand euros are needed.
📣 Find out more: Follow this list if you are thinking of buying a house
Guide to buying your first home: 9 essential tips
We know that buying your first home can be dizzying. Most people entering the real estate market are not experts, so it’s a good idea to clarify some concepts!
Check out these tips for buying a home:
Analyze your needs
This is the first thing you should do. If you are clear about your needs, it will be easier for you to choose the property you should purchase. Determine the number of bedrooms you need, the number of bathrooms and the area.
Some aspects to take into consideration when purchasing are the existence of a lift or the proximity of services such as schools, supermarkets and transport in the area.
Do a market study of the area where you want to live
After deciding on these initial criteria, locate properties for sale in the desired area. Most real estate portals allow you to apply filters such as the number of rooms, square meters or the type of property.
✅Don’t forget! Keeping in mind that the value may be overestimated, don’t be afraid to try to negotiate a lower price.
How to find out the real price of a house
It’s one of the great unknowns. How to know the price of a property? Will you pay more than its value? A trick to arrive at a more or less objective price is to calculate the price per square meter of the area.
To do this, consult one or more real estate portals, view the properties in the area you are looking for and look for the average price expressed in euros/m2. Use the filters to narrow your search to the type of property you are looking for and compare the average with the cost of the house you are interested in.
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