Seven common misconceptions about buying a house – why you can afford your own home after all
Many people give up on the dream of owning their own house or apartment because they are too worried about making the wrong decision. Read our seven misconceptions about buying property and find out why you can actually afford to buy your own home after all.
1. "I don't have enough money to buy a house."
Lots of renters believe that they will never have the financial means needed to buy their own apartment or house. However, many of them aren't aware that they only need enough money to cover 20 percent of the property's purchase price – the rest can be financed with a mortgage. Funds from employee benefits insurance can also be used to cover 10 percent of the purchase price. To be able to take out a mortgage, you may only be required to provide liquid assets for just 10 percent of the price in certain circumstances.
Find out more about financing real estate with a mortgage in this explanatory video
2. "The bank will not give me a mortgage."
The requirements set out by banks for loans are sometimes seen as obstacles. However, it is important not to jump to conclusions. When it comes to issuing loans, the main factor is the affordability of the mortgage for the person buying the property. Affordability refers to the interest payments and the annual recurring costs for the property. It shows whether the purchaser is able to finance the mortgage over the long term. Provided the mortgage is affordable, the chances of getting a loan are good. Speaking to a Financing Expert is always a good idea. They will check the affordability and provide an overview of the purchaser's current status and which properties may be affordable in future.
Find out more about mortgage affordability in this explanatory video
3. "I am worried about going into debt as a result of buying property."
Having concerns when you're about to make a major decision is just human nature. However, the fear of signing yourself up to a life of debt by taking out a mortgage is unfounded. Financing Experts will work through all the calculations with you to make sure you can finance the property over the long term, allowing you to rest easy. An imputed interest rate of 5 percent is used to calculate affordability. This is applied to make sure that borrowers are still able to afford their repayments without getting into financial difficulties, even if interest rates were to rise.
4. "I would have to pay more tax if I owned my own home."
Purchasing property is often associated with much higher tax rates. But how does it really work? While your taxable income will rise as a result of the imputed rental value, you can also deduct maintenance and renovation costs from your taxes, along with any debit interest on your home. So, buying your own apartment or house does not necessarily mean higher taxes.
5. "The idea of buying property is overwhelming."
Feeling overwhelmed can stop people from taking the step towards home ownership. Starting with the initial planning and financing stage and ending with the final purchase – the process of buying your own apartment or house does not happen overnight. Banks offer consultation appointments without any obligation for any questions related to buying property. Financing Experts can help with more than just financing; they also provide a range of valuable tips. Potential buyers who do their research at an early stage will quickly gain an overview of how to purchase their dream home and make a sound decision.
6. "It would be too stressful to finance a house over the long-term."
Buying a house may seem like a burden. Problems that could normally be solved by calling your landlord have to be tackled on your own when you are the owner. However, this is not necessarily a bad thing. Without the middle man, the owner can select their own tradesman, for example, and make sure the final result meets their needs. What's more, there is no risk of your contract being terminated because you own the property. There are a wide array of options when it comes to residential property, some of which allow you to share responsibility for your home.
Find out more about the various types of residential property
7. "I am worried that owning my own property will make me less mobile."
Property and a mortgage are big, long-term commitments. Meanwhile, your personal circumstances and needs may change over time. And yet, there is still no reason to shy away from home ownership. A house can always be sold. In certain circumstances, you can even transfer your mortgage, for example to the new buyer or to a new property. A mortgage can also be terminated early in return for an early repayment penalty. And don't forget about the option of renting out your apartment or even your entire house. This option not only allows you to keep your property but also means you can use it again later.