Guide For First Time Buyers

Getting on the property ladder for the first time is naturally an exciting time in anyone’s life. However, amid all the excitement, it is easy to forget that, in the current economic climate, it can also be a stressful experience. There is a body of work involved before you ever get to the stage of signing contracts with your solicitor. The following is a helpful guide for First Time Buyers when looking at purchasing a residential property:

1. SHOP AROUND FOR YOUR MORTGAGE

While there will understandably be a temptation to be lured in by immediate Cashback offers, it is important to look at the long-term potential implications of your mortgage terms. And while, as First Time Buyers, 3k – 4k into your hand could go a long way towards furnishing your first house, a higher interest rate could cost you multiples of this over the life of your mortgage. Remember, a mortgage is not just for Christmas, it’s for life, or the better part of it, at least for most of us!

2. PREPARE YOUR BUDGET

It is important, at the outset, for prospective buyers to fully inform yourselves of the potential costs involved to ensure that you have adequately budgeted for the total cost of the purchase. Remember, booking deposits paid to auctioneers are refundable should the purchase not proceed. However, for the avoidance of any doubt, always confirm this with your Auctioneer before putting down any booking deposit.

Broadly speaking, the following should be taken into account when preparing your budget:

  1. Purchase Price of the property.
  2. The cost of any survey of the property. It is always advisable to have a qualified surveyor / architect / engineer to examine the property before you sign contracts.
  3. Mortgage available to you from your mortgage bank. This will inform you as to the balance required from your own funds.
  4. Legal fees and outlays to include the costs of registering your title in the Property Registration Authority.
  5. Stamp Duty (1% on residential properties up to 1m euro).

 

3. ENSURE THAT YOU HAVE A FINAL AND UNCONDITIONAL LOAN OFFER FROM YOUR LENDING INSTITUTION

There was a lot of media coverage of the Central Bank’s new lending rules when they were brought in and these are briefly as follows:

  • Your Borrowing limit is set at 3.5 times your gross annual income
  • First Time Buyers will need a 10% deposit on properties costing up to €220,000
  • For properties over 220,000 your deposit will be 22,000 plus 20% of the excess over 220,000.
  • Example . For a 230,000 property you need 22,000 plus 20% of 10,000 i.e .2,000 = a total 24,000

However, each bank or lending institution will have its own specific approach to these rules in terms of any exceptions or deviations and it is important to speak with your bank at an early stage to inform yourself fully of the position. The lending institution will require a (sometimes) significant amount of paperwork to include ID, Bank Statements, Payslips etc and the sooner you begin gathering these, the better.

*NB* It is important that you have final loan approval before you reach the point of signing contracts. A delay in the final loan offer issuing will cause a delay in your solicitor being in a position to advise you fully on the terms of the mortgage before signing contracts.

4. ASK QUESTIONS!!!!!!!

One of the biggest mistakes First Time Buyers make when purchasing property is not asking enough questions. If there is any part of the process that you do not understand, or any terminology used that you are not familiar with, simply ask your solicitor to explain this. It is your money, your mortgage and soon to be your property. You are therefore entitled to be kept fully informed at every step of the transaction.

If you are a First Time Buyer or indeed looking to move house, call us on 057 93 24741 or email us at info@nialljmoransolicitors.ie and we will be happy to give you a quotation and walk you through every step.

 

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