Step by Step Guide to Buying a New Home and Staying Sane
For those of us already on the property ladder, remember how hard it was to get everything right when buying your first home? The gazillion forms you have to fill out, the nail-biting wait for the bank to give the green light, only to request more and more of the same forms to get the deal across the line, and that’s just to get the mortgage!
With the right advice and right contacts, buying your first home shouldn’t leave you on your last nerve.
We have prepared a guide for you to follow to make sure you are aware of what’s needed and when, so you don’t end up pulling your hair out before you get your keys.
Time to say no to the holidays and parties and start saving for your deposit
Even though you might have loads of moolah in your current account, the bank will still want to see that you can save enough each month to afford to pay the mortgage and live comfortably. Don’t just leave the money in your current account, make sure you are moving it to a savings account or similar for at least 6 months so the bank can see you can afford to pay the mortgage comfortably. If you are already renting this should be considered with most lenders, but you will need to be saving as well.
So how much can you afford... like really afford, without leaving yourself in the depths of depression because you can’t afford that fancy new couch or the long-awaited night out with friends?
There’s no point in teasing yourself about going for a big fancy house in the country when all you can realistically afford is a bedsit. Life is too short to put unnecessary financial pressure on yourself. Make sure you have considered every possible cost to buying and kitting out your new home.
When we think of buying a house, the first thing we think of is, we need the money for the deposit. There are many other costs we need to take into consideration before and after applying for the mortgage.
Payment | Approximate Cost |
House Deposit | 10% cost of house* |
Stamp Duty | 1% cost of house or 2% if over €1 million* |
Solicitor Fees | Either a flat fee or 1% cost of the house plus VAT* |
Valuation Fee (usually arranged by the lender) | Varies – Approximately budget €200* |
Land Registry Fees | Depends on cost of house* Up to €50,000 €400 €50,000 - €200,000 €600 €200,001 - €400,000 €700 Greater than €400,000 €800 |
Engineers Report | Varies - Approximately budget €450* |
Moving Costs if any | Varies |
Home Insurance | Varies |
Life Assurance/Mortgage Protection | Varies |
Initial Repairs, decorating, furniture | Varies |
(*prices from ccpc.ie as at 11th March 2020)
After the House is purchased, there are ongoing costs to consider such as Broadband and TV Package, phone, TV licence, bin collections, electricity and gas supply where applicable, property tax, ongoing repairs and Management fees if it’s an apartment in a managed complex. If you are planning on buying a second-hand property, then how much are you setting aside for renovations? Are you setting any savings aside for holidays? Do you need a ‘rainy day’ fund for unplanned events? It’s best to err on the side of caution here. Check out this very useful Budget Planner.
If it is possible, it’s a great idea to clear any loans you have before applying for your mortgage.
Most banks have a handy mortgage calculator where you can calculate how much you can afford to borrow.
Form filling time
Here’s where the fun begins. Make sure you research all the mortgage providers and their terms and conditions or hire a mortgage broker you can trust to do all that work for you. As regards choosing a mortgage lender such as a bank or a mortgage broker, there are pros and cons associated with each choice. A mortgage broker is an intermediary, and he/she works on your behalf using their expertise to get you the best deal from a wide range of products. Generally, it’s cheaper to deal directly with your lender but you may not get the best deal. You’ll need to do some research here to see what’s best for you.
Below is a general list of paperwork that you should start preparing (check what each lender requires before arranging a meeting with them)
- Salary Certificate completed by your current employer
- Last 3 months payslips
- Most recent P60
- Colour Copy of ID (passport or driving Licence) – bring the originals to your meeting just in case
- Recent proof of address – bank statement, utility bill, letter from the Revenue
- 6 months bank statements for all accounts
- 6 months credit card statements
- 12 months loan statements
If Self Employed:
- 2 to 3 years certified accounts
- 6 months personal bank statements
Once you have all these documents ready it’s time to start making appointments to meet with various lenders or mortgage brokers. People sometimes think they have to stay with their current bank. The old mentality of thinking “I’ve been with this bank since day dot, they’ll look after me” but that might not be the case so there’s no harm in shopping around to make sure you are getting the right deal for you. It’s important to get your mortgage approval in principle before making any offers on houses. ‘Formal’ mortgage approval is required before you sign the contract for sale. If you go ahead and sign the contract for sale and subsequently don’t get formal approval, you will forfeit your deposit.
Finding your perfect home
Where do you start? Stick within the limits of what you can afford to borrow. A great place to start your search would be online with the likes of www.daft.ie, www.myhome.ie and www.sherryfitz.ie, where you can search by location, price range, size and property type. You will also find the contact details of the Estate Agents dealing with the sale of each house so you can arrange a viewing. Another option is to pay a visit to local estate agents if you intend to buy in your locality. The staff can be very helpful in advising and guiding you.
Make a list of what’s most important to you, must haves you can’t deviate from for e.g. security, location, noise levels etc. Of course, we would all love to have the very best of everything that’s on our wish list, but we also must be sensible in our approach and willing to compromise.
No harm in doing your homework on the area itself too…chat to the neighbours, make sure it’s not a party scene at night or prone to flooding during the winter. Also, it would be wise to consider health implications and check whether the area you are looking at is in a Radon Risk Area.
With energy prices showing no real sign of abating, a building’s Energy Rating (BER) has become even more important, not just to give an indication of the energy efficiency of the house but also how it might impact its resale value.
Keep an open mind when searching.
Hire a legal brain
If you don’t already have one, you should find a good reputable solicitor with a lot of experience in purchasing houses. Get a quote from a few different solicitors as prices can vary quite substantially. Ask around for recommendations from people who you know have used a solicitor. You should appoint a solicitor before you find your dream home to avoid any delays and possibly losing out to another buyer. Your solicitor will let you know what paperwork you will need and when.
Get a reputable surveyor
A qualified surveyor can help identify any defects with the property which mightn’t be apparent. Sellers are under no obligation to highlight defects. If defects are found it can help you negotiate a more favourable price. See Chartered Surveyors of Ireland for a list of qualified surveyors.
Make an offer
Before you make any offers, you should first do your homework and check on sale prices for similar houses in the area. The Property Services Regulatory Authority has an excellent service where you can check the Residential Register for the sale price of houses sold in the same area since 2010 or even the house you are thinking of purchasing. Check it out on the propertypriceregister.
When making your offer always make sure you don’t offer more than you can afford. It’s not always the highest bid that gets the sale. First time buyers are at a slight advantage because once they have their mortgage approved, they don’t have the added time pressure of having to sell another property before they can go ahead with the purchase of their new home. If the seller is in a hurry, they may accept less than the asking price if the purchaser is ready to draw down the mortgage for a quick sale.
It can be tough to know whether offering too low of a price first time around would scupper your chances and insult the seller. Sometimes the Estate Agent can give an indication as to what they believe the seller might accept.
Woohoo offer accepted
Congratulations, but don’t get too carried away, it isn’t over until the keys are in your hand.
At this point you need to transfer the holding deposit to the Estate Agent, approximately €5,000* or a percentage of the offer.
It’s vital to arrange an Engineer to survey the house and give you a report to ensure there are no major issues with the house. No point spending your hard-earned cash on a house that will fall around your feet with structural issues. If you don’t know any yourself, your solicitor may have a list of reputable Engineers you could contact.
Mortgage protection and home insurance now need to be put in place before the bank will release the mortgage.
Your lender will also require a professional valuation to be completed at this stage.
Making it final
You should have already received the contract from your solicitor. It’s important to talk this through with them and ensure you are happy with it before signing 2 copies which are then sent to the seller’s solicitor.
Now it’s time to pay the remainder of the deposit, again this is through your solicitor.
Once the seller has sent back their signed copy of the contract, both solicitors agree to a final closing date.
Once you have all the above in place, your lender will release the mortgage either to you or directly to your solicitor who will then pass it on in time for the final closing date and you finally get your long-awaited keys from the Estate Agent. Your solicitor will also register the deeds (the official documentation stating that you are the owner) with the relevant government body. This can take many months (or even years) but don’t worry, you are still the registered property owner during this time. Usually, the deeds are held by your solicitor or your mortgage lender so it would be useful to ask your solicitor about this.
It’s time to celebrate, kick back in your new home, pop open the bubbly and plan all the ways you will remain broke for the foreseeable. One thing is for sure, it will be all be worth it.
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