Buying a Holiday Home
With interest rates low, many holidaymakers and investors are starting to think about buying a holiday home in Comporta. Holiday rental costs versus mortgage cost comparisons can be very attractive.
Purchasing a holiday home in Comporta can be a serious commitment, with multiple factors to consider:
How long will you live in the house?
Buying a holiday home in Comporta costs money. If you only keep the property for a short while, the value of your home may not have appreciated enough to cover the cost of selling on. The length of time it will take to cover the costs of buying a holiday home in Comporta depends on various factors.
Average appreciation tends to sit at around 10% per year. In this case, you should plan to stay in your home at least 2 – 3 years to cover buying and selling costs. However, the real estate market can be particularly volatile, and dramatic swings up and down are not uncommon.
How long will the house meet your needs?
What features do you require in a house to satisfy your lifestyle now and five years from now? People tend to keep their houses in Comporta longer than they initially intend. This is primarily due to the sunny weather, lifestyle and expense associated with selling.
Therefore it is worth considering buying a vacation home in Comporta that will also suit your needs in the future. Could the basement be turned into a den or extra bedrooms or the attic into a master suite? Having an idea of what you’ll need will help you find a home that will satisfy your needs for years to come.
House affordability
Is now the right time financially for you to consider buying a holiday home in Comporta?
Would you rate your financial picture as healthy?
Is your credit good?
While you can always find a lender to lend you money, people with poor credit tend to pay far more to borrow. Some say that you should refrain from borrowing as much as you qualify for because it is wiser not to stretch your financial boundaries.
The other school of thought says you should stretch to buy as much house as you can afford, because with regular pay rises and increased earning potential, the big payment today will be less of a payment tomorrow. It is, however, important to stay within your budget.
“28/36” Rule
Purchasing a holiday home in Comporta involves many up-front and ongoing costs, and the stress of worrying about those costs often outweighs the satisfaction that may come from owning a holiday home abroad. To determine how much of a house you can afford, talk to a lender or go online and use a house affordability calculator. Good calculators will give you a range of what you may qualify for. Then call a lender.
While the “28/36” rule applies, lenders are making customised loans fit a particular person’s situation. The rule means that your monthly housing costs shouldn’t exceed 28 percent of your income and your total debt load shouldn’t exceed 36 percent of your total monthly income.
Depending on your assets, credit history, job potential, and other factors, lenders can push the ratios up to 40-60% or higher. While we’re not advocating you purchase a house in Portugal utilising the higher ratios, it’s important for you to know your options.
Where will the money come from?
Typically, house buyers in Comporta will need money for a deposit and closing costs. Having a lot of money saved for a deposit is not always necessary if you can prove that you are a good financial risk for a lender. If your credit isn’t stellar but you have managed to save 10-20% for a down payment, you will still appear to be a very good financial risk to a lender.
High-ratio mortgages can be a good option for those who haven’t managed to save a large chunk of money, but naturally, these have additional costs associated with them.
Cost of buying a holiday home in Comporta
Maintenance, improvements, taxes, and insurance are all costs that are added to a monthly house payment. If you buy a condominium or townhouse, a monthly homeowner’s association fee may be required. If these additional costs are a concern, you can make choices to lower or avoid fees.
Be sure to make your real estate agent and lender aware of your desire to limit these costs. If you are unsure about buying a holiday home in Comporta after making these considerations, you may want to consult your financial planner. They will help you assess how buying a holiday home in Comporta fits into your overall financial goals.
Now that you have decided that buying a holiday home in Comporta is a great idea, contact Living Portugal Property. We will assist you throughout the process, professionally and stress-free.
Buy a Holiday Home in Comporta
