Buying property is a rather big deal, and for most of us it’s an incredibly scary process that involves spending a lot more money than we are normally used to parting with in one go. For this reason then, we will usually try to collect as much information as we possibly can prior to going ahead. Knowledge is power, and the more we know about how to deal with mortgages and choose the right properties, the better chance we’ll have of making the best decision, getting a good investment and being happy in our new home.
Only some of the information out there is wrong, and there are many commonly held misconceptions when it comes to buying property. Read on to discover some of the common real estate myths so that you can avoid letting them influence you in the wrong way.
You Need at Least 20%
There’s a lot of doom and gloom being spread when it comes to the property market. Generally the economic troubles we’ve seen in the last few years have made it more difficult for many of us to get the properties we want, and some young people have pretty much written off any chance of ever getting on the property ladder as a result.
Actually though things aren’t all that bad. Governments and banks around the world recognise this difficulty and they want to do what they can to help you buy property despite the obstacles. That’s why there are so many different ‘schemes’ available to help first time buyers such as ‘rent to buy’ and ‘1% mortgages’. Don’t assume you can’t afford a property – because you probably can.
Paying Off Your Mortgage is Much Cheaper Than Renting
On the other hand though, don’t get too carried away. Many people will tell you that everyone should buy as it’s so much ‘cheaper’ than renting. In some ways that’s true, but what you have to remember is that there are many hidden costs when you buy real estate. For instance you’ll need to pay for any repairs to your home yourself, and you’ll also be shelling out for interest and for stamp duty etc on top of the mortgage repayments themselves.
It’s Best to Put Down a Massive Deposit
If you have lots of cash, then it makes sense to put down a huge deposit right? That way you can ask for a smaller loan, pay it off more quickly, and pay less interest over the years.
It sounds logical, but in fact it doesn’t always work out that way. The problem you see, is that when you put down a lot of money on your real estate, you actually cost the banks because they won’t be making as much money off of you. As a result they can end up charging you greater interest on your smaller loan in order to ensure they’re still making as much money as possible and that means the difference ends up being quite negligible. You may have been better off just keeping the money in your account to help with future cash flow!
Featured images:
- License: Creative Commons image source
- License: Creative Commons image source
- License: Creative Commons image source
- License: Creative Commons image source
Today’s feature writer, Jim Carter, is a part of the team at Mark Richards Real Estate, a team of property consultants based in Toronto. He is an earnest employee and he enjoys swimming and surfing when he is not busy with work.