Before looking for a new home

When you have set it on yourself to invest in a new home you must first stop to think. Bear in mind, purchasing property is a very emotional experience apart from a very significant investment. Therefore, I strongly advise that you should always follow 5 criteria before taking the issue further:

1. Qualify yourself - Create a detailed list of your requirements.
2. Contact your preferred Bank and check on the loan value you will qualify for.
3. Calculate the total investment involved - including Stamp Duty and Notary's fees.
4. Browse property search engines to see what is available within your budget and requirements.
5. Contact a reputable Estate Agent and start your property search

Qualify Yourself

This is the first and most important step in the cycle; since you will be able to obtain a very clear idea as to what you and your partner are looking for, however, always keep at the back of your mind the amount you would like to invest. Remember a property that fits in 100% to your requirements is impossible to find and you will have do what we normally do in life: 'Compromise'.

Below I have included a list to help you achieve this:

Use of Property -

1. First Time buy
2. Holiday
3. Buy To Let
4. Retirement
5. Relocation

Property Type -

1. New Build
2. On Plan
3. Re-Sale

Preferred Property Types -

1. Maisonette
2. Flat

Property State -

1. Finished - Modern - Traditional.
2. Shell or partly finished.

Location Type -

1. Town
2. Village
3. Rural

Street Type -

This will vary according to your needs

Number of bedrooms required

Size of living area required -

1. Open Plan layout
2. Independent Kitchen
3. Sitting/Dining
4. Living Room

Size of outside area required -

1. Back yard
2. BBQ area
3. Garden
4. Swimming pool

Size and type of Garage -

1. Lock up
2. Car Space
3. Underlying basement garage
4. Garage with workshop area.

Type of Views -

1. Seafront
2. Sea views
3. Country views
4. Open views

Amenities required within the area -

1. Close to shops
2. On a bus route
3. Close to restaurants
4. Close to sea
5. Close to beach

Accessibility of location - Short drive to:

1. Work
2. Family
3. Friends

Special Considerations -

1. Wheelchair accessible Qualify Yourself
2. Health considerations - No hills etc.,

Towns considered

Other Considerations

Amount of Investment being considered Lm

Financial Considerations -

1. Cash Purchase
2. Bank Financing
3. Purchase dependent on sale of present property
4. Re-mortgage

Purchase Within -

1. 3 months
2. 6 months
3. 12 months

Once this is complete one should have a clear idea of what the requirements are. Then off to the next question - Can we afford it?

Getting a House Loan

Before you actively start your property search, it is necessary to study how much you can afford. It is important to determine what your down payment, closing cost and what your monthly payments will be. Common practice in the industry is that a 10% deposit payable on preliminary agreement. Look at various home loan options and check what interest rates apply. All local banks provide a detailed assessment before suggesting a specific package. In the case of standard home loans your repayment should be in the region of 25% to 30% of your gross income, with a maximum lending term of 40 years. You can borrow up to 90% of the purchase price or completion costs with the property being purchased offered as security. Once you have established the above, you are in a position to know exactly the price range you should be looking at.

The next step would be to determine how long you expect to live in the new home. This decision will not only affect the home you look at, but also the type and term of loan you choose. When a quotation is being done ask your bank what fees typically are included in the finance charge computation, and what fees may be charged separately at closing.

How much should you budget to own your own home?

Apart from the down payment, the five largest expenditures involved with the purchase of a home are usually your monthly loan repayment, home and life insurances (annually), Bank processing fees (one time), Notary's fees (one time) and stamp duty (one time). Obviously, the amount of your repayment depends upon your down payment, rate of interest and the price of the property.

For example, a Lm 45,000 loan at a 5% interest rate for a 35 years period will run approximately at a repayment of Lm 227.70 per month: the interest rate charged varies according to the Central Bank base rate.

What about taxes? If you are purchasing your sole primary residence then stamp duty payable is 3.5% on the first Lm 30,000 and 5% thereafter, otherwise the rate is 5% in all other cases. A local real estate agent can help prospective homeowners refine these figures.

At this stage we should keep in mind, that home ownership is not just a one-way street, -that is, aside from spending money, homeowners also profit from their property. Of course, the primary benefit is capital appreciation that builds from year to year. A home, apart from being a place that provides shelter, is a profitable investment, and the rising value of the property provides another "savings" account. So, when it comes to investing in a new home, remember one thing ... the purchase of a property requires a lot of - Budgeting and Planning

What kind of Property is Right?

Before going a step further you should determine the specifics you want or need in a home. What are your day-to-day and future needs? Do you enjoy maintenance? Older houses have great charm, but may need updating whilst new homes offer the latest energy efficiency and design features and need less maintenance. Larger plots can give room for additions and swimming pools. Sit down with your real estate agent and discuss your wants and needs list. By knowing your price range, your agent can help you determine in which towns and neighborhoods you can start looking at. You may find that you are limited to where you look based on your situation, whilst you may notice that you have to prioritize on certain needs such as location and give up on others such as size depending on your price range.

Go to the different listing web sites offered by estate agencies and search for properties to find out what prices homes are listed for in areas you are considering. The prices of property in the area should not necessarily mean or determine the price of the property you wish to purchase, however it is always important to check what is available in the area and which price are these properties selling for. It is also important to compare the same property in different locations to see how your properties in your location compare to similar properties in other locations.

With a list of houses that you can afford to invest in, make an appointment with your real estate agent to view the interior of the ones you are interested in. After you have narrowed down your selection to a few, it is important to visit them at different times of the day. Visit them during the morning commute time. If you visit only during the middle of the day, you might not notice if the street in front of the home is noisy or not or which kind of neighbours live in the area. This is also a good time to find out how you emerge from your residential area into traffic on a thoroughfare or how long it takes to get to a certain point during rush hour. Go back after dark and walk around the block. You might notice that headlights from approaching traffic shine into the home or hear sounds from a nearby night club, street or neighbours that you were not aware of.

After viewing a number of homes, you will want to view a few of your choice for a second time. This is the time to take measurements, ask questions and carry out a closer inspection. Should you decide to make an offer, ask your agent for sales compromises to arrive at an offering price. A "seller's market" or "buyer's market" can have big effect on how much to offer. There is not much sense in making a low offer on a well priced home in a seller's market so one needs to be realistic.

Remember, investing in property is long term and although it is a very emotional experience one must always bear in mind that it is above all an Investment with a capital 'I' and my advice to readers is: 'Better buy a room in a good location than a castle in a bad one'.

Trafford Busuttil

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