Affordability VS A Bidding War: Why It Matters
Cut your cloth according to your coat. The old saying has kept many from making rash decisions they may come to regret. When you’re setting out on a property-buying adventure, a cool head can be as important as the loan you need to make the purchase.
Finding a dream home has similarities to falling in love. It’s easy to get carried away at the moment and stop at nothing to bag your prize. Read on to find out why you should base your purchase on what you can afford to avoid complex, long-term problems.
Valuation, Valuation, Valuation!
A consistent valuation is often the key to unlocking the front door of your new home. When you engage in a bidding race, you might find that an initial estimated price quickly spirals into a stratospheric figure.
That means that even if you win the bidding battle, you could end up losing the war. Your mortgage lender might well raise an eyebrow at the final agreed price and only lend you what it believes the property is worth.
That could be substantially less than what you have committed to pay, leaving you with a massive hole you have trouble filling. For lenders, it’s all about the risk. They will only lend you what they believe they can easily recoup.
If your lender’s loan does not cover the figure you need, a shattered dream and a great big arrow pointing back to the drawing board might be all you’re left with.
Keep Enough Aside for Home Improvements
Endless case studies offer proof that buying a new home is often one of the most stressful life events. One of the joys of completing a sale and moving into a new home is the chance to put your stamp on your prized possession.
That means keeping cash aside to make your home your own. Freshening up a kitchen or a little external landscaping might be all it takes, but even small jobs need a budget. If you blow a hole in yours, your dream home might never become what you want it to be.
Home is where the heart is. It’s your safe place to make great memories and it’s definitely somewhere to enjoy. Over-stretch yourself in a bidding war and you could find yourself with a millstone around your neck that’s a never-ending killjoy.
Getting the Most from Life
Life is for living and many Canadians are among the world’s most fortunate few who have the opportunity to make the best of a safe and secure future. Here are some of the usual, optional extras that top the aspiration list:
· Travel to new and exciting places
· Major home improvements like a new bathroom or extra bedroom
· Paying into a pension pot for comfortable later years
· Being able to put aside cash for our children’s future
When you’re buying a new home, it’s wise to save enough each month to meet your future needs. A life struggling from one salary cheque to the next can quickly feel like no life at all.
That’s another reason to keep your feet firmly on the ground and not to let yourself get swept up in a bidding war.
Take Stock of Your Options
Always consider all your choices before getting involved in a bidding war. Extricating yourself can be costly, both financially and emotionally. Weigh up your commitment to the property early on.
Speak to your mortgage lender and legal advisor first before you embark on a home-buying journey. If there’s a bidding war involved, be upfront with your legal and lending team.
In some cases, you might be better off looking for another property straightaway. Bidding wars are most common in a rising market, so you could also end up paying more for a comparable replacement property.
Keep Calm and Carry On!
Buying a new home is both exciting and challenging. It’s serious stuff and so a clear head is important to keep your property dreams in check. Bidding wars provide ideal opportunities to throw caution to the wind and ride the wave.
The best advice is to stick to what you can afford. A dream home can soon become a nightmare if you don’t exercise a sensible level of self-control.
If you’re looking for a great value mortgage to suit your needs, let us do the hard work for you. Get in touch with us now to find out more about the mortgage services we offer and how we can help you.