Are you ready to buy your first home?

Amidst all the Covid-19 uncertainty, it would be nice to have something to look forward to in 2021! And owning your own house can certainly lift the spirits. But how do you know if you’re ready? Here are the top signs that it’s time to buy your first home

NO MORE RENTING!

If you are tired of paying rent every month, but never actually getting to own the property, then you might be thinking of buying a house.

Ask yourself, if you would be better off converting monthly rent into a monthly mortgage repayment. Rents are now at an all-time high. In fact, according to research by Daft.ie in their quarterly Rental Report published in 2020, it is actually cheaper to pay a mortgage than pay rent in all counties for starter and family homes. The analysis was based on standard mortgage repayments off a 3.25% variable mortgage, for a term of 30 years, with 85% Loan-to-Value (LTV). For example, a three-bed house in Cork City would be €909 for a monthly mortgage repayment, but to rent the same house, it goes up to €1,392!

It might make more economic sense for you to buy instead of rent, but that doesn’t mean the rent you are paying isn’t helping your future. Your monthly rent outgoings is taken into consideration when the bank is assessing your affordability for a mortgage. But if you feel you want to spend your money to own a house, rather than rent, it might be time to think about a mortgage.

SAVING ENOUGH

Under the Help to Buy (HTB) incentive, if you are a first-time buyer, a 90% limit will generally apply to the mortgage you can get. This means you will need to save at least 10% of the purchase price of your new home. For example, if a house is worth €250,000, your bank may lend you up to €225,000, but you will need to have the remaining €25,000 yourself. There is also an enhanced HTB relief scheme until the end of 2021, which provides increased relief up to a maximum of €30,000.

But don’t forget all the other costs associated with purchasing a home, such as valuation fees, stamp duty (1%), legal fees plus Value-Added Tax (VAT) and of course, the moving in costs! Turn to page 5 for more on these hidden costs.

KBC have handy calculators on their website – kbc.ie/mortgages/first-time-buyers – which can tell you just how much you need to save.

When applying for a mortgage, the bank will want to see good saving habits and will review income and other debts (car loans, credit cards) to determine how much you can afford to pay. But don’t worry about all that online shopping you’ve been doing during lockdown (we are all guilty of that!). As long as you can show you’re able to make regular rent or bill payments, while also being able to save a certain amount every month, this will help you when you apply for a mortgage.

If you feel you have saved enough, or have the ability to do so by having a savings account, then you might be ready for that first step into being a homeowner. Turn to page 6 for more savings tips!

STEADY EMPLOYMENT

When being assessed for a mortgage, the bank will look for at least two months of payslips and will typically need to see 12 months of continuous employment with the same employer.

If you have been impacted due to the pandemic in the last year, talk to KBC about your situation and they will go through your options with you on getting ready for a mortgage application and applying for a mortgage.

For more on what you need when applying for a mortgage, turn to pages 8 and 9.

READY FOR A HOME

According to the findings of KBC’s Irish Consumer Sentiment Survey, the outbreak of Covid-19 has impacted every aspect of life and for some, the pandemic has increased the importance of living space and facilities.

The Irish dream of independence has usually been driven by the idea of owning one’s own home. Having to stay at home for 95% of the previous year has made many people

realise they are ready to move. Maybe you have been living with your parents and want a space of your own? Or you’re sick and tired of your cramped rented apartment. This desire is especially the case for people who were separated from their significant other for some time. If there’s someone else to consider in your life and the two of you are thinking of taking the next step, this is the perfect time to buy your first home and build on your partnership together.

Make a wish list of your ideal location, the facilities you need, how many rooms, type of garden and schools nearby, and compare this to your budget and what you believe you might be able to afford. Make a wish, but also be realistic!

While this article has been written to use as some guidance, it is not to be taken as the deciding factor. It is advised to meet with one of KBC’s dedicated Mortgage Team to discuss your personal circumstances. For more information, visit kbc.ie or call 1800 51 52 53

Information correct as at 19/02/2021. Lending criteria, underwriting, terms and conditions apply. Security and insurance required. The maximum mortgage is 90% of the property value. Max loan amount will typically not exceed 3.5 times an individual’s gross annual income.

KBC Bank Ireland plc is regulated by the Central Bank of Ireland.