10 Tips for First Time Buyers

This is a decision that, above all, must be well considered. Don't rush, take the time you need and take a financial strategy thinking about how you'll pay for your first home, because if you're not well prepared, this burden can stifle your finances in the years to come.

1 - Timing for home buying

House prices rise, fall and are influenced by various factors combined with the law of supply and demand and the economic context itself.

Choosing the best time to buy the first home is something that is intrinsically related to the costs of housing credit. Given that euribor is currently at historic lows, financing housing is now more affordable. At times when rates are appealing, joining bank spread reductions is always a good opportunity.

2 - Make long-term plans

Most likely, the first house you buy is for living (not for vacationing or rent, for example), but did you really think about the long run?

Put the chance of a day later wishing to sell the house. If this happens, note that the location will have a big impact not only on the value you will gain from the sale, but also on the ease of finding potential buyers.

Nevertheless, please note that the best located properties pay more than IMI. To keep track of this value in the area where you want to purchase the first house, see the imi location coefficient with the Finance, which is one of the portions of the calculation of the tax value of the buildings.

Factors such as good accessibility, proximity to schools, commerce, public services, transport and construction in areas of high real estate market value naturally influence this value. So it's about the opportunity cost between choosing a better location and taking advantage of it in the future or paying less.

3 - Size matters

A mansion may be the home of your dreams, right, but the bigger the house, the higher the costs of maintenance, heating in winter and even with regard to the taxes associated with it.

When faced with a choice between similarly priced homes, where one of them is blessed with a few more square meters, it is tempting to choose the largest and, in most cases, this is a smart move. However, a large property can weigh on your monthly budget and unbalance your expenses.

4 - Buying the first house to rent will be a good option?

If your plans eventually come to rent the house you are buying, it is best, at the time of the research, to draw up a small market study on the areas where homes are most sought after to rent.

You can always settle a second home loan with the amount you charge on the rental of the first home, but this type of loan (for second property) will always have different conditions from the first (usually the spread is higher and the financing term allowed shorter).

5 - Housing support programmes

Today there are more rental incentive programmes than the purchase of housing, starting, inter alia, with the Porta 65 programme, aimed at young people up to 35 years of age and on low incomes. In procedural terms, a percentage of the income is given to successful applicants for a period of 12 months, renewable until it reaches 60 months.

6 - In financing, do not facilitate: compare to the maximum

The bank chosen by most people who buy a house is usually the one they have been related to for some time (especially if it's been many years). But with so many banks in Portugal offering home credit, you can save a lot of money on paying interest, insurance and commissions just by comparing various solutions in the market and choosing the one that is actually best for you.

When it comes to equating the various simulations, attention needs to be paid to several elements: in addition to the TAEG and the total amount charged to the consumer, it is also necessary to rely on the spread and the monthly installment. The market offer can vary greatly.

7 - Interest rate fluctuations

It is impossible to predict the future and as such, even if euribor is at historic lows at historic lows, 20 or 30 years of a housing credit is a long time to be conjecture about possible upheaves or descents.

The only way to avoid this is to choose a fixed-rate loan, so you'll always know what counts. However, when EURIBOR is in a fall, so is its provision, so it will pay less for the home loan.

8 - Build an emergency fund

Why is this important? Simple. Imagine that you suddenly lose your main source of income (either because of involuntary unemployment or for any other reason). In order to be able to cope with this change of circumstances in the early days, it is crucial to have money aside for emergencies and that ideally can cover the monthly instalments of the home loan.

9 - Run into the first house: consider getting an agency

You can do all the work yourself and explore at your own risk, but enjoying the help of an agency can relieve a lot of the stress associated with the process.

An agent who works for you can guide you and advise you in several key aspects: location, price, state of the property, what types of services are nearby and predictions about the appreciation of the house in the future... Our advice is to find someone who is experienced and who you can trust; ask for references to friends and colleagues.

10 - Budget for additional costs

It is easy to enter into ecstasy and let yourself be carried away by the natural emotions of those who acquire the first house. Review everything carefully, learn what you can and consider all alternatives, especially when it comes to housing credit, as you will have to bear this burden for many years to come.

Having ideas clarified and a good dose of patience helps you make better purchasing decisions and benefit from them in the long run. Unbeknownst to you, you may be too focused on the price of the property and forget about other costs related to buying the house, such as taxes and commissions associated with housing credit. If you are already able to check all these tips, then you are literally able to buy your first home.

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