Considering your mortgage options

With the recent budget changes geared towards getting young people into the housing market and with an additional push to get banks lending again, 2012 will see an excellent opportunity for the first-time homeowner, writes Brian Melia.

First things first, you should ask yourself three questions:

- Do we need to have a place to call ‘home’?

- Would it be better to own a home rather than renting?

- Can I afford to buy?

If you answered ‘yes’ to these questions, then there is no better time to look into becoming a first-time homeowner in 2012. If you wanted your own place in the boom times, this was usually followed by the words ‘at any price!’

Thankfully, this has changed and buyers are more sensible, financial institutions less reckless and interest rates far lower than at the height of the boom.

The term ‘dead money’ became a byword for renting a property during the Celtic Tiger. For many, renting used to mean paying money to a landlord and having nothing to show for it in the long term. While more people are choosing to rent rather than buy these days, it is important to point out that it may be cheaper to buy rather than rent.

Let us look at a simple example;

The cost of a home loan of €180,000 over a term of 30 years is equivalent to the average rent on a three bed semi in Galway City at present (€800 p/m).

If it is your first time entering the property market, you will be able to factor in the government’s new mortgage stimulus designed to make it affordable for purchasing a home. Well you are probably asking what it is worth in actual money terms. For a home loan amount of €200,000 this would work out at around €150 per month refunded to you.

If you are interested in becoming a homeowner, you probably are wondering what to do next. You may visit your local financial institution, contact a number of banks but do you really need the hassle? You may find it more straightforward contacting an independent mortgage broker regulated by the Central Bank.

Independent mortgage brokers give you mortgage options which individual banks cannot. Think of it like this: if you were buying car insurance would you contact every car insurer yourself to get the best deal?

You may try three or four then settle on the cheapest to avoid any more hassle. But wouldn’t it be easier if an expert compared the market for you? Well that is what independent mortgage brokers specialise in.

They give honest advice on how to go about owning your first home. And, where individual banks may attempt to sell you unnecessary financial products, independent brokers do not; they will just get you the best home loan deal available by analysing mortgage offerings in the market and explaining your mortgage options.

Once you know the best deal available and all the pros and cons (which your broker will explain), you choose the right home loan that suits you.

Brian Melia is an independent mortgage broker and Managing Director of Mortgage Options. Brian is the founder of the online campaign for integrity in financial advice Ireland (CAIFA). To learn more about owning your first home, contact Brian or his team on 091-844588 or visit mortgageoptions.ie.