Before you start poring over construction drawings and floor plans, you need to be clear about your financial situation. What stage are you at and how much money do you have? To buy your own home, you’ll first need to put up enough money of your own. This will generally be around 20 percent of the purchase price, with the remainder being financed by a mortgage from your bank.
Of this 20 percent, at least 10 percent must be your own “hard” savings, i.e., it cannot include money withdrawn early from your pension fund. Capital for the down payment can include credit balances held at your bank, funds from pillar 3a, the surrender value of insurance policies and proceeds from the sale of securities. An advance against inheritance or a gift can also be used for the down payment, but not interest-bearing or repayable loans.
To save up sufficient capital of your own, it’s important to have a savings or investment strategy and to stick to it. Which method of saving is suitable will depend on your individual circumstances and should be clarified with your client advisor. Possibilities include savings from investment solutions or deposits into pillar 3a. Not only can you use the latter to purchase residential property, you also get tax relief on these amounts, reducing your tax bill.
Before you start looking for your dream home, ask yourself what type of property and location would suit you best. Ultimately, you’ll have to reconcile your preferences and requirements with your actual budget, so think about the following points:
- Do you want to build your own home or buy an existing property?
- Are you willing to consider an older, cheaper property or some other existing building?
- Are you looking for a condominium, a row house or something detached?
- What sort of architecture, size and floor plan are important to you?