Your first property purchase can be scary. Terrifying, even. You’ve probably heard horror stories from friends and family about how long the process takes, and how difficult it is to find the right place. We’ve put together a list of the most common myths surrounding first time buyers.
You’re going to be paying back the loan for the rest of your life.
Reality: The average home loan usually lasts 30-40 years… which is a long time, yes. However, situations can change allowing you to refinance or even pay off your loan early. Keep an eye on the terms of the loan.
You’re going to live there forever… so you have to pick the perfect property.
Reality: You’ll hopefully be enjoying your new home for a long time, but plenty of people find themselves upgrading or downsizing later in life.
It doesn’t have to be large because you’re going to keep it super neat.
Reality: Let’s face it, keeping your home tidy is really, really hard. One thing first time buyers often forget to consider is storage space. A garage with some overhead storage is perfect to put away the Christmas trees and other bits you’ll collect over the years.
You need a balcony, front garden and huge terrace for all your plants and fruit trees.
Reality: Although outdoor space is great, looking for too much is going to greatly limit what you find. Besides, house plants really brighten up your indoor space and emit lots of delicious oxygen for your to breathe. Win-win!
You need a spare room for when you have guests.
Reality: A spare room is great, but wonders can be done with a pull-out sofa bed or inflatable mattress. If you are flexible on the number of bedrooms you require, you’ll find your budget will get much more.
Once you’ve picked the property, you can just sit back and let the experts handle to details.
Reality: Unlike abroad, here in Malta the property-buying process is very hands-on. From the very beginning, your property agent will keep you updated with interesting properties and follow up on your thoughts after a viewing. This is more intense when you are buying on plan, as the developer will be asking you to choose different finishes. Keep organised by sorting documents in a folder, this will help you keep track of all the details.
The neighbourhood will remain the same.
Reality: Just because your new apartment is surrounded by pristine fields today, that doesn’t meet it will remain that way in 20 years. Development and urban sprawl are spreading, so keep that in mind.
I don’t need a garage, there’s plenty of street parking.
Reality: Chances are, other people think the same way you do. Until the Maltese Islands embrace bicycle commuting, or build an underground metro system, you might need to think again about that garage.
The process won’t take too long.
Reality: Finding the right property usually takes a while, at least a few months, and after the negotiation process you’ll have to wait a few more months between the Promise of Sale and the Final Deed. Sometimes it will be years before buyers set foot in their new home, as is the case with buying on plan. Use this to your advantage and plan the process strategically.
When I find the perfect place I’ll know it because it will feel right.
Reality: Be prepared to make compromises. You might fall in love with something that looks great aesthetically, but your logic may point you to a more convenient option. Discuss your options with your partner and be objective when looking at pros and cons of different properties.
I don’t need to start saving until I find the property.
Reality: The sooner you start saving the better. Keep in mind that you’ll need to pay a deposit (usually 10%) upfront, and after that you’ll have monthly repayments for the bank loan. By saving early, you get into the habit of managing your finances and budgeting.
You have to pay the asking price.
Reality: The asking price is not the same thing as the selling price. Keep in mind that sellers factor in the agency commission into the asking price. Your property consultant will be able to negotiate the price for you.
You can save money by avoiding estate agents.
Reality: An agent can give you a pretty accurate estimate of what a property is worth through their knowledge of the value of similar property in the same area. This is useful when it comes to negotiation of the price. Agents can also save you a lot of time by shortlisting properties according to your tastes. An agent can bring to your attention properties you wouldn't have considered.
What you see is what you get.
Reality: Very rarely is this the case. You can usually negotiate on price and repairs - just be sure to get the repairs listed in the Promise of Sale document as this binds the seller to perform them before the sale.
All agents are the same.
Reality: It’s true that some agents act selfishly, but many agents built their careers on excellent client satisfaction. Did you know that agents specialise in a particular area or type of property? Dhalia property consultants will always do their best to understand your needs and provide you with a professional service.
The deposit is the only upfront cost.
Reality: During the promise of sale, the buyer must pay the following:
- Deposit - usually 10% of the property price
- Notary’s fees - usually 1% total, a portion of which is due on the promise of sale
- Stamp Duty - 20% of which is due at the promise of sale, unless you are a first time buyer
You should accept the seller’s suggested notary.
Reality: The buyer has a right to choose their own notary. Look for a notary with a good reputation and experience working with first time buyers. You’re trusting your notary with the biggest purchase of your life.
Choose the bank that offers you the best rate
Reality: Consider other factors such as customer care and loan restructuring options.
Choose a location in the areas your know or grew up with.
Reality: Your choice of location should depend on many factors, especially distance from work and/or school, and your budget.
A property that’s been on the market for a while clearly has something wrong with it.
Reality: There isn’t necessarily something wrong with a property that’s been available for a while. Often this can be used in your favour as a buyer, to reduce the asking price. Still, always have your architect check the structure and permits.
The property has to be perfect.
Reality: All property requires maintenance. Even a brand new apartment can develop mould from our humid climate, more so with houses of character and older buildings. Don’t panic - ask your architect for a report on the structure. This will give you an idea of maintenance, and whether you can handle it.
Once you’ve signed the promise of sale, you’re all set.
Reality: During the time between the promise of sale and the final deed, your notary will look into the history of the property to make sure its title can be legally transferred. Sometimes problems do arise which result in a cancellation of the sale.
Any conditions set out in the promise of sale must be carried out by the seller before the sale is complete - this is legally binding, so if the seller doesn’t comply the buyer is not obliged to follow through with the sale.
Need more help? Dhalia property consultants are always available to lend a hand. We've helped countless first time buyers find their first homes, and we can explain any mystifying details. Give us a call on freephone 8007 4949, email us on email@example.com, or send us a private message on Facebook.