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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 the right contacts, buying your first home shouldn’t leave you on your last nerve.
An Post Insurance 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
You might have loads of cash in your current account, but 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’re 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 looking 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 getting the money for the deposit. But there are many other costs we need to take into consideration before and after applying for the mortgage.
|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|
|Life Assurance/Mortgage Protection||Varies|
|Initial Repairs, decorating, furniture||Varies|
After the house is purchased, there are ongoing costs to consider. These include 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 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 better still, hire a mortgage broker you can trust to do all that work for you.
Below is a general list of paperwork that you should start preparing. Check what each lender requires before arranging a meeting.
- 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 etc.
- 6 months bank statements for all accounts
- 6 months credit card statements
- 12 months loan statements
Plus, 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 lenders or mortgage brokers. People sometimes think they have to stay with their current bank, but there’s no harm in shopping around to make sure you’re getting the right deal for you.
It’s important to get your mortgage approval in principle before making any offers on houses.
Finding your perfect home
Stick within the limits of what you can afford to borrow. A great place to start your search would be on the likes of www.Daft.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.
Make a list of the features that are most important to you, plus must-haves for things like security, location and noise levels. Of course, we’d all love to have the very best of everything that’s on our wish list, but you must also be sensible in your approach and willing to compromise. Keep an open mind when searching.
There’s 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, and visit at different times of day to get a feel for traffic and noise levels.
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. 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 to complete and when.
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, or even the house you are thinking of purchasing. Check it out at propertypriceregister.
When making your offer, make sure you don’t get carried away and 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 buyer is ready to draw down the mortgage for a quick sale.
It can be tough to know whether offering a low price first time around will scupper your chances and insult the seller. Sometimes the estate agent can give an indication as to what they believe the seller might accept.
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 price.
To ensure there are no major issues with the house, it’s vital to arrange for an engineer to survey it and give you a report. This will avoid you spending your hard-earned cash on a house that will end up costing a fortune to repair. 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 a final closing date.
When 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. This is the date when you finally get your long-awaited keys from the estate agent.
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 worth it.
Whether you’re already a home owner, or you’re a first-time buyer, get a home insurance quote from An Post Insurance now. An Post Insurance Home Insurance is arranged and administered by An Post Insurance and is underwritten by Aviva Insurance Ireland DAC.
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