Read this guide to find out how you can buy your own home
When going about purchasing your very own home, you set down how much you will be seeking from a mortgage lender. Most of that money will be given to you in the form of a mortgage loan with a small percentage from personal savings.
Most lenders will provide 92% of the cost of the house in a mortgage. A mortgage provider will look at each application objectively and will base the decision on how much of a loan to offer on what the applicants can comfortably afford to repay. The finance provider will require detailed financial information from applications to make this decision. It can be reasonably expected that applicants should be able to borrow up to 4 times their annual income.
2. Calculate all costs
Good, realistic financial planning before starting the process of buying a new home is essential. Ignoring this rather sobering and mundane task could prove costly down the line should you overstretch yourself. Many of the main mortgage providers now assist homebuyers in this task, and by providing some details such as income, savings, commitments, loans and outgoings they can inform them quite accurately as to what exactly they can and cannot afford to spend and what expenses they will have to budget for.
It is recommended that this exercise is undertaken early in the process of buying a house; it means that expectations are kept realistic and ultimately saves time by ensuring that homebuyers are not planning on spending more than they will ultimately have at their disposal.
3. Choose your mortgage
A large degree of care and attention needs to be, paid to the decision on a mortgage and should involve detailed calculations of ones financial position and repayment capabilities. The three forms of mortgage that the homebuyer can opt for are an annuity mortgage, endowment mortgage and a pension mortgage. The annuity mortgage, the most common form, allows for both interest and a portion of the principal to be paid off in every payment made.
Both endowment and pension mortgages represent interest only mortgages. The latter is attractive, as pension contributions attract tax relief at the highest rate of tax of the mortgage holder. The eventual value of the endowment mortgage depends on the performance of the fund over the period of the mortgage and does not guarantee the repayment of the mortgage.
In addition to considering the form of mortgage, homebuyers must assess, based on the arguments for and against each, which interest option makes the most sense for them. Fixed, variable, tracker and split interest rate mortgages are all available in many forms from the various financial institutions operating in Ireland. The lender will require proof of identity and current residence along with payslips, a most recent P60 form and income confirmation from your employer before proceeding with an application for a mortgage.
4. Choose your new home
Be fully aware of all of the estate agents and websites that deal with homes in your desired area and do not just rely on one or a few. The old adage of ‘location, location, location’ is all-important in your decision and you should consider all implications of purchasing a property in a particular area. You should never base a decision on a first impression, but visit and revisit an area, preferably at different times of the day and week to get a proper ‘feel’ for the location.
Ask plenty of questions of the estate agent showing a particular house, to help you build up a bank of useful information regarding it, such as why the property is for sale and how long it has been for sale. A decision must be made on the type of property required, how many bedrooms are needed, and what parking, if any, is a must. Your personal circumstances will dictate your location requirements to an extent; for example if you have children you will be interested in local amenities such as schools, playing spaces, clubs and community centres.
Other important considerations include the proximity of a house to shops and amenities, the local transport services, how near a location is to work and other places you frequent, e.g. social outlets and relative’s homes and, above all, the perceived value of the investment that a house in a particular area represents. An extensive study of property prices in any area under consideration is highly recommended before any offer is made.
5. Making an offer
Before an offer is made on a second-hand property is it advisable to have a valuer confirm that the asking price provides good market value for money and that nothing has been overlooked. A surveyor can now also highlight any issues with the property that could potentially add to the outlay in time and help you to adjust your offer accordingly, to account for any defects/ necessary repairs uncovered.
Again, many financial institutions can now provide a list of qualified professionals to carry out this work, and, furthermore, can assess the results with you and help you decide on an appropriate offer to make. These services are especially useful to those with no prior experience in the property market so availing of them is advisable.
Once an offer has been made if it is accepted it will be subject to contracts being exchanged and so provides the opportunity to pull out if you have second thoughts after an offer is made. An offer on a new home is simpler; you pay a deposit upfront and the balance when the house is fully completed.
6. Receiving a Loan Offer
When an application for a loan is successful the lender will send a letter of offer agreeing to offer the applicant a mortgage and that sets out the conditions of the loan in detail. The homebuyer’s solicitor must then go through all of the legal formalities, sign the acceptance and return it to the financial institution.
7. Exchange of contracts
The solicitor will, by and large, guide the homebuyer through the legal exchange of contracts on the property, which formally confirms the purchase. At this point, there will be no going back on the offer and there will be an obligation on the part of the purchaser to pay a non-refundable deposit, normally a percentage of the purchase price.
The solicitor confirms acceptance of the offer in writing. The relevant legal documents will then be drawn up by the seller’s solicitor, and subject to the buyer’s solicitor examining the documents they are signed, thus confirming the purchase of the property.
8. Moving In
An often-underestimated part of buying a new house is the process of moving in when the house is purchased. There are many things to consider. A removal van will be needed and boxes and crates for packing have to be sourced. Many people must be notified of your change of address. Among these groups are friends, family members, banks and credit unions, insurance companies, doctors and other medical services, employers, Revenue Commissioners, schools, gyms and sports clubs, An Post, phone and electricity companies and TV licence people.
Always change the locks on your new property immediately when you move in, and also read the meter to ensure that you pay the right amount in your first bill. Find out about local services such as bin day and other events. Make sure that new home insurance policies are activated. Also, during the move it will very likely be ‘all hands on deck’ so arrange for friends and family to assist in both the minding of children and pets and the physical task of moving house on the appointed day, along with having basic shopping done to get you through the first 48 hours in your new home.
We have provided the above to give those a comprehensive idea of how complex the process of purchasing a home of your own can be.