sábado, 12 de junio de 2021
How to buy a home without savings?¿
Although it is difficult, there are several ways to buy a home without savings. Normally, when you buy a home you need to have an amount of money, whether you pay it in cash or if you ask for a mortgage. When banks grant a mortgage, they usually give a maximum of 80% of the appraised value of the home, so you need to have the remaining 20%. In addition, you must add another 10 or 15% to cover the costs of buying that home and processing the mortgage (although these expenses have been reduced with the new mortgage law).
However, despite the difficulty that some buyers have to get the money they need to buy a home (especially young people due to job instability and low wages) there are several alternatives that allow buying a home without savings.
How to buy a house without savings? Here you have the different possibilities that the real estate market offers you.
Buying a home from the bank
In order to get rid of the stock of flats they have due to seizures, etc., financial institutions offer loans with better conditions to those buyers who acquire one of these properties of their property. In fact, they even offer 100% mortgages that cover the full price of the house. Without a doubt, this is one of the easiest ways to buy a home without savings, keeping one that belongs to a bank.
The only drawback is that you may not find the house you are looking for exactly or in the place where you want to live. Generally, these properties are located on the outskirts, in small towns and coastal areas, since the stock in large cities has been reduced in recent years. Therefore, you may have to be a bit flexible when choosing where you want to buy your home.
Rent with option to buy
Renting with the option to buy allows you to pay for part of that home while you live in it (a part of the monthly rent is used to pay the final price of the property). After an agreed time, the tenant can keep the house, discounting from the final price what he has already paid in advance as a purchase.
The advantage of this second formula to buy a house without savings is that you do not need to pay the value of the house at once (although a premium is usually paid for the purchase option -generally, 10% of the price of the property-), but the home at the end is your property. During the rental period, the future buyer can save the money that he will have to pay at the end of the lease. In this way, he can get money to close the purchase or to apply for a mortgage for a lesser amount.
Another advantage for the buyer is that the price of the house is frozen. That is, if the market rises it does not matter, because he has previously agreed on the acquisition price.
However, this system also has some disadvantages. It may happen that the price of the house falls during the rental period (although it is unlikely) and you will not be able to benefit from this market downturn. In addition, the price of the lease is usually higher than that of a conventional one. Finally, if in the end you do not exercise the purchase option, you will lose the money invested until that moment (rental fees and purchase option premium).
This option is a good alternative to how to buy a house without savings or collateral, so it is very suitable for those who have difficulties obtaining a mortgage and who cannot - or want - to have family support to make the purchase.
Buy the apartment with family help
The family can be another solution to buy a house without savings through a loan. In fact, parental support is very common to help children acquire a home and become emancipated.
However, some precautions must be taken to avoid problems with the Treasury. It is convenient to sign a written contract in which it is established that the loan is free. If the interest of the loan is not specified, the Treasury may consider that the legal interest of the money is applied and tax the lender for the profit obtained with the loan. In this other article we tell you how to ask your family for help to buy a flat with the least possible risk.
Have a non-debtor guarantor or mortgagee
At other times, parents act as guarantors for their children. To get the bank to approve the mortgage, the parents put their home as collateral in the contract. Careful! Being a guarantor is dangerous, because if the buyer cannot pay the mortgage, the guarantor must be liable for the debt with all his equity (moreover, the bank can go before the guarantor than against the debtor himself).
To limit the responsibility of the family members, it is recommended that, instead of guarantor, they choose the figure of the non-debtor mortgagee, since their responsibility will only be limited to the percentage of the mortgaged property as collateral.
Have a high income
Although it is not usually frequent, you can buy a flat without previous savings if you have a high income and financial solvency. In this case, the bank considers that you are a client who can assume the mortgage payment without difficulties and will even be more open to granting loans for a higher percentage than usual: we are talking about 90 or even 100% mortgages. In addition, if the client has other financial products contracted in the entity, it will be easier to obtain better conditions on the loan requested.
Being a civil servant or employee in certain sectors (such as banking) also makes it easier to buy a house without savings. The reason is that some entities offer especially advantageous conditions for these groups and even mortgages for the full amount of the home.
Mortgage credit insurance
Banks and insurers are jointly launching mortgage credit insurance to make it easier for buyers to buy a home without savings. These insurances allow to raise the amount of the mortgage up to 95% of the value of the appraisal. In this way, the buyer needs less money for the entry of the house.
These insurances are designed for mortgages with a maximum value of 250,000 euros and for solvent clients, but who do not have savings to buy a house. Mortgage credit insurance is a common product in neighboring countries such as Germany, Great Britain or Italy, and now they are beginning to enter the Spanish market.
As you can see, it is not impossible to buy a house without savings and there are several alternatives. However, as it is one of the most important financial decisions you will make in your life, it is advisable to carefully analyze the advantages and disadvantages of each of these options. Remember that the more money you have saved, the less you will need to finance with a mortgage and the final cost of the home will be lower.