If you are thinking of buying a property in Northern Ireland then you will no doubt know that getting a mortgage is the most integral step. Of course, arranging finance to buy a house for sale in Londonderry, Belfast or wherever is an incredibly important decision so it is vital that you take the time to consider a number of things beforehand.
By far the most important thing to consider in this respect is whether you can actually afford to buy. It is imperative that you don’t interpret this as ‘will I have enough money to buy’ as you need to ensure that the property you purchase will not cost so much that it will leave you living in total poverty, unable to do anything or go anywhere because you’ve over extended yourself.
With this in mind, it is vital that you put together an accurate budget that will clearly illustrate all of your costs – this will show you how much you can realistically afford and hopefully stop you from being tempted to bite off more than you can chew.
So how do you go about this?
Well, start off by drawing a line down the middle of a blank sheet of paper. This will create two columns; at the top of the first column write ‘Income’ and at the top of the second column write ‘Outgoings’.
Next, enter your everyday ins and outs – wages, food shopping, petrol, credit card payments, etc – into the relevant columns. Once you have finished with your everyday amounts, add on estimated mortgage payments, insurance payments, rates payments and electricity payments.
Now look hard at the information in front of you and ask yourself a simple question: ‘Can I truly afford to buy properties for sale in Northern Ireland?’
Be honest with your answer!
If you do decide to make a mortgage application then you need to be prepared for the fact that your proposed lender will insist on carrying out an affordability assessment. In the past, these assessments were derived mostly from income multiples and typically allowed successful applicants to borrow three times their annual income.
This is no longer the case.
Indeed, most lenders these days now assess what level of mortgage payments you can afford to pay after taking into account your personal expenses as well as your income. In addition, most lenders also look at the impact of future interest rate rises as they will restrict how much you can borrow if they think you won’t be able to afford your mortgage payments if rates go up.
Although this may seem a little more draconic than the casual finance days of the past, it is actually a very sensible approach – after all, it is good to know what your exact outgoings are compared to your earnings.
So don’t start looking round every Belfast estate agents you can find just yet; make sure you do your sums and work out what you can truly afford first.
or you can call our office any time and ask us any questions you want… we are here to help!!