When you consider buying a house, the first thing you should calculate is how much money you can spend on the purchase . It is necessary to establish a budget according to your economic and employment situation and your income before starting the search for a house and a mortgage, if you do not have savings to buy in cash.
Calculations to make the purchase budget
Everyone aspires to get the house of their dreams, but you have to be realistic, it is difficult to find it at a price you can afford, especially if you do not have savings. So the first step in the search for a house begins with establishing a budget because the price of the house must be added to expenses and taxes that increase the final figure.
These are the key points that the budget should include, but you can consult more details in this article on how to make a budget to buy a house :
- Prior Savings . Banks do not grant more than 80% of the appraised value of the home, therefore, you need to have the remaining 20% saved.
- Housing purchase expenses . The deed of purchase requires the intervention of the notary and the Land Registry. These fees are regulated and depend on the value of the home . In addition, taxes must be added , VAT if it is a new home or the ITP if it is second-hand and the Tax on Documented Legal Acts (IAJD). These expenses are estimated to add up to between 10% and 15% of the appraised value .
- Mortgage expenses . They include the appraisal of the house and the opening commission.
- Borrowing capacity . It refers to the money that you can allocate to the monthly payment of the mortgage fee. It is recommended not to exceed 30% of monthly income . With an income of 2,000 euros, no more than 600 euros should be allocated to the monthly mortgage.
This budget can help you know if you can afford the house or not, but what happens when you do not have previous savings? In that case you cannot get a mortgage, because the banks do not grant more than 80% of the value of the house, but there are other formulas to buy the house.
How to buy a house with no money saved
Although it is difficult, there are several ways to buy a house or a flat without having money saved . Despite the difficulty that some buyers have in obtaining the money necessary to purchase a home (especially young people due to job instability and low wages), there are several alternatives that allow buying a house without savings .
Buy the house from the bank
Financial entities, in order to get rid of their stock of flats, offer loans with better conditions to buyers who acquire one of these properties. 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, to keep one that belongs to a bank.
The only drawback is that you may not find the exact house you are looking for or 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 it comes to choosing where you want to buy your home.
Rent with option to buy
Rent with the option to buy allows you to pay for your home while renting (a part of the monthly rent is used to pay the final price of the property). After an agreed time, the tenant can purchase the house, deducting from the final price what he has already paid in advance for the purchase.
Another advantage for the buyer is that the price of the house is frozen, that is, even if market prices increase, they do not affect the home because the purchase price has already been previously agreed upon.
However, this system also has some disadvantages . If the price of the house falls during the rental period (although it is unlikely) you cannot benefit from this price drop. In addition, the rental income is usually higher than a conventional rental. Finally, if in the end you do not exercise the purchase option, you will lose the money invested up to 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 people who have difficulties obtaining a mortgage and who cannot count on family support to make the purchase.
Buy the flat 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 emancipate themselves.
However, some precautions must be taken to avoid problems with the Treasury . It is advisable to sign a written contract stating 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 applies and tax the lender for the profit obtained with the loan. In this other article, we tell you how to ask your relatives for help to buy a flat with the least possible risk.
Have a non-debtor guarantor or mortgagee
On other occasions, 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. Watch out! Being a guarantor is dangerous, because if the buyer cannot pay the mortgage, the guarantor must answer for the debt with all his assets (what’s more, the bank can go against the guarantor before against the debtor himself).
To limit the responsibility of the relatives, it is recommended that, instead of the 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
It is not usually frequent, but it is possible to buy a flat without prior savings if you have a high income and financial solvency . In this case, the bank considers that you are a client that can assume the payment of the mortgage without difficulties and will even be more open to granting loans for a percentage greater than 80%. In addition, if the client has other financial products contracted in the entity, it will be easier to obtain better conditions in the requested loan.
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
It is a formula used jointly by banks and insurers. With this mortgage credit insurance, buyers can buy a house without savings more easily, because they allow the amount of the mortgage to be raised up to 95% of the appraised value . In this way, the buyer needs less money for the down payment on the home.
These insurances are designed for mortgages with a maximum value of 250,000 euros and for solvent clients, but who do not have the savings to buy a house. Mortgage credit insurance is a common product in countries such as Germany, Great Britain or Italy, and is now beginning to enter the Spanish market.
As you see,It is not impossible to buy a house without savings and there are several alternatives. However, as this is one of the most important economic decisions you will make in your life, it is advisable to carefully analyze the advantages and disadvantages of each of these options and, above all, make a realistic calculation of the budget that you can allocate to buying the property . living place. 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.