09 Mar 2017
While you might be tempted to fall head over heels for a gorgeous house by the sea, you may need to hold your horses and check back in with reality. Otherwise you may well end up feeling the sting of rejection and heartache when you realise you can’t quite afford that house.
Day dreaming about gorgeous, massive gaffs in ideal locations is a bit of fun, but before you go too crazy with your wish-list, you need to do the maths and figure out the target house price you can afford.
So let’s gear up, and get those sums done!
How to find out your target house price?
1. Be realistic about the location you want
Sure, most of us would very happily live in a central loft apartment or in a sprawling mansion by the sea – but it’s not exactly affordable for the majority. If you live in Dublin, particularly, you’ll need to be willing to make sacrifices.
Generally, the closer you get to the city centre, the more expensive the houses get. You may need to cast your net further afield to find a real bargain.
First up, draw up a list of locations you like or would like to live in. Which leads on to:
2. Check out the Property Price Register for your chosen areas
The Residential Property Price Register is produced by the Property Services Regulatory Authority and includes Date of Sale, Price and Address of residential properties purchased in Ireland since January 1st 2010.
Quite the mouthful that, but behind all those long words is your secret weapon in choosing a house. Pop online, visit an Estate Agent website and enter the address of the areas you’d like to buy in. Up will pop a list of houses that meet the criteria of the site and have sold in the area since 2010.
Super handy, but also super useful as you can use it to zero in on locations that you like and could potentially afford to buy in.
3. Decide on your absolute must-haves
Again, step away from the dream house wish-lift. Sure a swimming pool and a panoramic coastal view would be unreal, but it’s probably not too realistic.
Instead, what are your musts? What do you need to be close to or have in your house? If you have kids, for example, you’ll need relatively easy access to good schools. Do you need a garage or will on-street parking suffice for the family car?
And what about the nitty gritty stuff like how many bedrooms you’ll need, if you need space for any pets, or if you want extras like an attic or garage.
Be still my beating heart!
4. Figure out your maximum mortgage loan
Now it’s time get down to the serious side of things. Beyond the list of ideals, figuring out your target price list comes down to two things. Finances and compromise.
The first consideration is your gross income. If you’re looking to get a mortgage with your other half, add together both your gross incomes. If it’s just you, then there’s no addition required. Take your gross income and multiply that by 3.5.
This number is a rough guide as to how much you’ll be allowed to borrow, though other factors do still apply. Let’s take a couple, Anna and Robert, whose gross income is €75,000. Together, their upper limit is €262,500.
So, the sum of money you just landed on is a pretty good guide to your price range – but it’s not everything. Your outgoing expenses come into play too, as well as any loans you may have.
Ideally, your mortgage repayments shouldn’t take up more than 30% of your gross monthly payments, though there is some wiggle room! To work out your affordability, check out this calculator for help! That’ll give you an idea as to your mortgage repayments as a percentage, so you’ll know if you actually can afford the house.
5. Have a chat with your friendly neighbourhood mortgage advisor
Once you’ve totted up your sums, pop into your local EBS for a chat with a mortgage advisor. They can make sure your sums add up and sense check any of the houses you’ve got your eye on. Of course, if you feel ready, they can help you get on track so you can make that house your own!
Thinking of getting a mortgage?
If you want to know more about applying for a mortgage, a 30 Minute Mortgage Meeting with your EBS mortgage advisor will set you straight.
If you have any queries about opening an EBS savings account, call 1850 654 321 or email email@example.com.
EBS d.a.c. is regulated by the Central Bank of Ireland.