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First-Time Buyers Guide

Step by Step Guide to Buying a Home

courtesy of  www.myhome.ie 

Buying a home can be quite a stressful experience – dealing with estate agents, solicitors, surveyors and movers. Here is a simple step by step guide to give you an overview of the process and the stages involved in buying a home. 

Before you begin you need to make sure that you qualify as a First-time Buyer. A First-time Buyer is someone who hasn't previously bought or built a house in Ireland or abroad and where the property is lived in by the purchaser as his/her main residence. In addition, the purchaser must not derive rent from the property for five years following the date of purchase, in exception of the Rent-a-Room Scheme.

As a First-time Buyer you are exempt from stamp duty on a new home which is no greater in size than 125 square metres and as long as you plan to live in this residence for a minimum of 5 years. If the size of the property is greater than 125 square metres, then the appropiate level of stamp duty applies.

The basics that you need to know are as follows:

• How much can I borrow?
• How much do I need as a deposit?
• What will my repayments be based on the terms of my loan?
• What are the additional costs?
• Should I choose a fixed, variable or split mortgage?

1. Find out how much you can borrow.
The amount you can borrow from one financial institution to another. However, there are some general guidelines which will give you an idea of the amount you can potentially borrow. In general, your current salary including bonuses, overtime and commission will usually determine the amount a bank or building society will lend you. Some lending institutions determine the amount you can borrow by a multiple of your income, while others will look at your net or take-home pay.  As such the amount you will be offered may vary from one financial institution to another.
The maximum you can borrow is usually 90-92% of the value of the property, which means that you must come up with the rest of the cash irrespective of your income. In addition you will need to cover the costs of solicitors, surveyors and stamp duty.
(You will find a breakdown of the stamp duty rates in the Mortgage and Insurance section of the site)

2. Get Approval in Principle
It is recommended that you obtain Approval in Principle even before you start looking at properties as this will give you a clear indication of how much you can afford to spend. This avoids wasting time looking at properties you can’t afford. It could also be the case that you could be offered a loan for more than you had originally anticipated and could therefore consider properties in a higher price range. The best thing to do is to complete a mortgage in principle application form and submit this with supporting documents and therefore supplying the lender the all the necessary details to support your application.  Once this has been done, you can begin your search for a property knowing exactly what your price ceiling is.

3. Finding a property
Now that you have an idea of how much you can afford you can begin house hunting.

The best way to find a property that suits you is to make a list of your requirements in terms of location, property type, price range, number of bedrooms etc. It’s a good idea to keep this list with you when you go to view properties so that you don’t lose sight of your original search criteria. Once you have decided where you want to live and how much you want to spend, you need to start actively looking for a property. This is where MyHome.ie becomes an extremely useful resource.

MyHome.ie provides an automated self-service property finder facility.
You can find all the available houses on the site through the property search function in the Find A Home section of the site – just enter the area, price range and type of house you are looking for and a full listing of current available property will be downloaded.

4. Contacting an Estate Agent to enquire about a property
When you find a property that matches your search, you will need to contact the estate agent looking after the sale of that property in order to place an offer. If  your offer is accepted, you will need to place a booking deposit on the property to secure your offer. The booking deposit is usually a couple of thousand euro. You are then given a period of time to get mortgage approval. If you carry out a survey on the property at this stage and you decide not to go ahead with the sale, you can get your booking deposit refunded. It is advisable to instruct a Surveyor to survey the property to ensure that it is structurally sound and that there are no hidden problems.

5. Finding a Solicitor
As soon as you place a booking deposit on a property, you will need to employ a solicitor. You should inform your solicitor about any transactions that have taken place, along with the address of the property and the agents you are dealing with. If you are a first-time buyer it is probably the case that you have never employed the services of a solicitor before. In this case, buyers will normally find a solicitor based on friends recommendation. Alternatively, you could check out the MyHome.ie listing of Solicitors in our Experts and Services section, where you can search for a solicitor by locality.

6. Letter of Offer
This is the official document offering you a mortgage. 

If you are having problems getting enough loan approval  to buy a home, there are a number of additional options available including:. Rent-a-room scheme, Guarantors and Joint Applicants. The use of these methods in obtaining the required mortgage is becoming more and more common as a result of rising house prices.

At this stage your lender will arrange a valuation on the property and a “letter of offer” will be issued by the financial institution. The valuation contains information about the property in terms of condition and size. This is done so that you can be confident that what you are paying for the property is actually what it is worth and you are not being ripped off.
Once a loan has been offered by a financial institution it remains valid for 3 to 9 months from the date it was issued. If this period lapses, you will probably need to supply the financial institution with up-to-date records of your income before they will issue another loan.

7. Signing Contracts
Once you have signed contracts, you are committed to the purchase of the property. This is usually done when the letter of offer has been issued and the survey is complete. At the signing of contracts you will need to pay the balance of the deposit which is usually about 10% of the asking price (this 10% includes your initial booking deposit). It is important to note that there is no turning back at this stage. You need to be sure that this is the property for you. If you back out at this stage, you will lose your deposit.

8. Closing the deal
When the cheques have been received, the estate agent should be able to give you a completion date and the deal will be closed. At this stage you should arrange the house and mortgage protection insurance.

9. Closing the sale and getting the keys to your home.
Once the Estate Agent is ready to close the deal the financial institution should send the final cheque to the estate agent and the deal will be done. Finally, you will get the keys