Want to Buy a New Home but Don't Know Where to Start or What to Pay Attention To?
Some say wait, others recommend buying immediately. Some say real estate prices won't fall, others say they will soon. Some talk about how loans are expensive now, others argue they won't get cheaper anyway, even if Euribor falls. And if you still want to buy, should you start from real estate portals, bank consultations, or perhaps by researching the developers' background? There's no single right answer here, but Bonava Estonia's Head of Sales and Marketing Lauri Laanoja offers three tips on how to reach a successful home purchase today.
Research banks' lending terms
Your home bank may offer quite good deals for long-term customers, but definitely explore other banks' solutions as well. Today there are very different options on the market and banks' interest rates depend, among other things, on the characteristics of the home being purchased. Loans with fixed interest rates are offered, which don't depend on Euribor, as well as additional benefits for A-energy class buildings.
If you're not quite sure what kind of home you're going to buy and whether it's in a newer or older building, then also ask banks whether they have different lending terms depending on the age of the building. In particular, the size of the down payment required can play a role here. For example, with new homes, the down payment generally stays around 20 percent, with older buildings it can be 30-35 percent. If a young family or specialist can use Kredex's guarantee to finance up to 10 percent of the down payment if desired, and they need to find another ten percent themselves, then with an older building they would need to cover 20%. Depending on the price of the home being purchased, this could mean a need for additional funds of up to several tens of thousands of euros.
The easiest way to determine your borrowing capacity is to submit a home loan application through the bank's website. In some cases, banks may already ask, for example, to add the desired real estate listing or approximate purchase price. However, the absence of this information is certainly not an obstacle to finding out what size of home loan you or your household are generally prepared to be offered. Note that if it's not your home bank, then you need to submit all your income statements and bank account statements from the last 6-12 months. If there's a co-applicant, theirs as well. And if you also have the possibility of additional collateral, then definitely mention that to the bank too. This way you'll get the most adequate feedback about your borrowing capacity.
Real estate portals and developers' websites
Of course, you'll find the most information about real estate for sale from various real estate portals. Once you've found a region or new development that appeals to you, it's definitely worth checking out the developer's website as well, since the largest selection of different types of apartments is generally found among the developer's own offerings.
To start with, figure out how many rooms your dream home has. Also, whether you want to move in immediately or need some time, for example, to deal with selling your existing property or saving for a down payment first. Also, in new developments being built, there are more apartment options with different layouts to find just the home that appeals to you most.
Regardless of where you find your new home, definitely research information about costs associated with the home and what the building's energy label is. Recent winters have shown that energy costs are important to Estonian people and can fluctuate greatly over the course of a year. Gather as much information as possible about your future home so that you can adequately assess whether the monthly home expenses added to your loan payment are reasonable.
Definitely visit various homes beforehand. Look over apartments in similar buildings, especially if it's older real estate, to see what the construction quality has been like or how the building has been maintained over time. With newer real estate, almost every developer has some show apartment where you can get an initial sense of what the building quality and home feeling is like.
Once you've chosen your future home, ask the bank again for a loan offer for this specific home and think through whether there are any other important questions that matter to you in your home purchase.
Developer and builder background
In Estonia, in recent decades the business environment has become increasingly better and it's certainly the case that anyone would operate in the market using dishonest methods. However, in new residential real estate development, it's increasingly seen that clients care whether the company's values align with the buyer's values. In the renovation of older apartment buildings as well, increasing attention is paid to what values the company chosen to do construction work adheres to.
For example, what are the organization's principles regarding renewable energy solutions and whether the building has been constructed energy-efficiently. Where do the materials come from and are they of high quality? Are green energy sources used during construction or is waste sorted? Is workplace safety a priority? Does the building have solar panels and smart home solutions? There are more questions like these.
If you want to make an environmentally conscious decision, it's definitely worth exploring company websites a bit and what views are represented in the media. The construction sector is one of the most environmentally damaging sectors, so construction companies, developers, building materials manufacturers and other related parties need to pay very strong attention to ensuring that the client gets a home with quality and energy-efficient solutions that places as little burden on the environment as possible.
Once you've thought through everything important for you, made your purchase decision and received a positive response from the bank, then by working through a realtor or sales consultant, they will help you plan and arrange further notary procedures. However, if you buy directly from the owner, agree on who will arrange an appointment with the notary and keep track of when you need to pay your share, contract or notary fees. Note that the bank's representative must also be present at the transaction.
