A Helpful Guide to buying your home
When you take out a mortgage, your lender agrees to lend you a sum of money to buy a home and you agree to pay it back. You also pledge (promise) your home as security for the loan. This means that if you fail to pay, the lender could take legal action and repossess the property.
Save the deposit
One of the biggest financial decisions you make, so you need to prepare for it as much as possible. Before you apply for a mortgage there are a number of things to arrange:
You will need to save a deposit – new rules implemented by the Central Bank means lenders can lend you up to 90% of the value of the property that you wish to buy if you are a first-time buyer and up to 80% if you are not a first-time buyer.
First-time buyers are be able to borrow up to 90% of the total value of a home, with a 10% minimum deposit.
Not a first time buyers
Opening a regular savings account is a good way to help you save a deposit, and will also show any mortgage lender that you have a solid savings record. This will be important when you apply for a mortgage. Our regular savings comparison will help you compare the different savings accounts available.
Use our budget planner to work out what you can comfortably afford to repay each month. Include a regular amount for ‘unforeseen expenses’ in your budget such as medical expenses, interest rate increases etc.
Our spending calculator can help you work out what you are spending your money on now and where you can cut back.
Use our mortgages comparison to help you compare the different rates and repayments from lenders based on the value of the home you have in mind and how much you may want to borrow.
Shop around when applying for a mortgage. Check out our mortgages shopping around checklist to help you compare and track different rates and lenders
Know your budget Get Approval in Principle
Getting ‘approval in principle’ means that your lender approves you for a mortgage of up to a certain amount, based on the details you provide in your application.
Having approval in principle does not mean that you need to buy the most expensive home you can. When you are looking at property, try not to be guided by the amount you can borrow. Any offer you make should be based on what you think the home is worth versus others in the same area, or similar homes.
Applying for a mortgage
Good money management and a steady savings record will work in your favour when applying for a mortgage. Get more information on applying for a mortgage.
Mortgage protection insurance
You should look for mortgage protection insurance which is insurance that will pay off your mortgage if you die within the term of the policy. You should not wait until you have made an offer on a house or apartment before shopping around and applying for mortgage protection insurance. It can take some time to get approval, particularly if you have had poor health in the past. This could delay the sale as, by law, your lender must make sure that you have this cover before taking out a mortgage. Your lender may agree to give you a mortgage without you having this cover if:
- you are over 50
- you are buying an investment property
- you have enough life insurance in place already or
- you cannot get cover.
When finding your new home
When you find a home you are interested in, remember to ask the estate agent any questions you have which might help you make your decision.
Look for a solicitor
Hire a solicitor to do the ‘conveyancing’ – to transfer ownership of the property from the seller to you. It is a good idea to choose a solicitor before you start looking at properties, because as soon as you have an offer accepted, the estate agent will ask for your solicitor’s details to pass onto the seller’s solicitor.
Solicitor’s fees may be either a percentage of the price of the home, or a flat fee. You will usually be charged additional fees for things like telephone, postage, search fees and registering deeds.s and details about their professional fees and other costs.
Making an offer on a home
Making an offer ‘subject to contract and survey’ – this means that you are offering to pay this amount in principle, providing there are no legal or structural issues with the property. Your solicitor will check there are no legal issues, and you will need a engineer to check that there are no structural issues prior to signing. If your survey reports points out something you were not aware of on your initial offer, you can withdraw you offer, or revise it.
Building Sale agreed
If your offer is accepted it is usually called ‘sale agreed’ and you will need to pay a booking deposit to the estate agent. Booking deposits vary – they can be a specific amount such as €5000, or a small percentage of the offer you have made. The booking deposit is refundable up until you sign the contracts and enter a legally binding agreement. Paying your booking deposit is a strong signal to the estate agent that you intend to buy the property and will usually mean that the home won’t be put on the market again for three to four weeks.
Once your offer is accepted, the estate agent will prepare a document of sale details and send this to the seller’s solicitor and to your solicitor. This document contains details of the price, conditions of the sale, the estimated ‘closing date’ – the day you will be given the keys of the property, and the names and addresses of all those involved in the sale.
Once the seller’s solicitor receives the sale details from the estate agent they will send the contracts for the sale of the property, along with a copy of the Title Deeds of the property to your solicitor. Title deeds are legal documents showing the ownership of a particular property. Each time the ownership changes a new deed is drawn up to show the change.
A solicitor will guide you through the legal process of transferring ownership of the property from the seller to you – this is known as ‘conveyancing’. Your solicitor will also check that the sale of the property is legal – that the person who is selling the property owns it and has the right to sell it, and that nobody else could claim to own it.
Once you have an offer accepted, the estate agent will ask for your solicitor’s details and pass these on to the seller’s solicitor.
Get a pre purchase survey
You should consider hiring your own surveyor or engineer to carry out a detailed structural survey, especially if you are buying an older property. This will help highlight any issues you may not have been aware of when you made your offer. For example, if your surveyor discovered that the roof needed to be completely replaced, you could change your offer to account for this, or decide not to buy.
If you are buying a property at an auction, you would usually have your survey completed before the auction. Ask the auctioneer for the terms and conditions of the auction, which will be available before the auction date.
Get a valuation
Once you have the property ‘sale agreed’, you can arrange for a valuation. Your lender will want a professional valuation completed on a home before they formally agree to lend you the money to buy it.
When buying a newly built home, you and your solicitor will receive a “completion notice” from the builder once all the work is finished. As soon as you receive this, it is important you arrange to have a ‘snag list’ drawn up. A list of incomplete jobs or things that you want put right. Item on snag lists include:
- cracks in ceilings or walls
- skirting boards not correctly placed
- doors that don’t open and close correctly
- uneven plaster work
- broken light switches
- loose wiring
- leaking pipes
You can make a snag list yourself, but it is recommended that you hire an engineer or surveyor who will have experience in this area and knows what to look for when snagging new homes. Once the snag list is complete, you give a copy to the builder. The builder will then work on fixing all the snags.
You should do a final inspection of the new property to make sure that all the snags have been fixed. You can do this on your own, or with the person you hired to do up the snag list. The cost of hiring them may be higher if you want them to inspect the property with you.
You should think about agreeing a “defects liability period” with your builder before you sign any contracts. This means that you agree that the builder will fix any further problems that arise free of charge within a certain period of time.
Closing the Deal getting Mortgage approval
After your offer has been accepted, contact your lender and inform them. Your lender will ask for details of the property such as the address, the type of property and the age of the property
- The value, length, cost and repayment schedule of the mortgage
- The address and description of the property to be bought
- Any terms and conditions which apply to the offer
- Expiry date of the mortgage offer
Your lender may want to see a surveyors report before issuing you a letter of offer, if the property is very old. Your bank will also send a copy of your letter of offer to your solicitor, along with other legal paperwork, so you should meet with your solicitor as soon as possible after getting your letter of offer.
When you meet your solicitor, they will explain and complete various documents with you. If you are happy with all the details, you formally accept the letter of offer from your lender through your solicitor. You solicitor will also check that the contracts are in order. If they are happy with the contracts, you will sign two copies. Your solicitor will return both of these copies to the seller’s solicitor. At this point you have legally agreed to buy the property.
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