Taking out a mortgage is a major financial commitment. Getting it right is essential as it can really make the difference between security and comfort or years of worry and penny pinching. The cost of repaying €200,000 over 25 years will probably amount to between €400,000 and €450,000, a great deal of money.
It is necessary to get the correct balance between the term and the repayment – the longer the term the lower the monthly payments but the loan will cost you more in the long run. A young man I met recently is currently going through the process of buying his first home. His proudest boast was that he had succeeded in persuading (or tricking?) his mortgage lender to give him a much larger loan than his income could justify.
So full of confidence was he that, when my friend murmured about putting himself under too much strain, he looked amused. Youth and optimism are, indeed wonderful things, but I shudder to think what will happen to him if interest rates rise, even by a modest amount. Reputable lending institutions have well-established rules regarding how much they will lend. These guidelines are used to assess an applicant’s ability to repay and are there for a good reason. If you work within them, with the help of a good mortgage broker, you will get the best deal possible, the one that suits your individual circumstances.
Remember that a good lender, one you feel you can talk to, should be seen as a partner in your quest to achieve ownership of your own home. Experienced finance providers can’t be tricked easily. It is far better to be upfront in all of your dealings, earning the respect and trust or your associates. This trust factor, incidentally, is impossible to measure, but invaluable. Earn it and it will act as a lubricant the next time you wish to do business with the same people. Lose it at your peril.