Your budget – what can you afford?
House purchase cost and associated costs
• Booking Deposit – (€2,500)
• Balance Deposit – (Balance of 10% of purchase price, from €17,500)
• Balance of purchase cost (on contract closing) – 90% of purchase price
When buying a house, the main item, (the house) is usually paid for primarily with a mortgage. First time buyers can usually get a mortgage for 90% of the cost of buying a house. However, this means that they have to come up with 10%, usually called a deposit, which is a lot of cash to save. This can be tough given the current rental costs; however, some have managed to save the necessary funds for a deposit. Others have access to the Bank of Mam and Dad. But a lot haven’t. They’re on the couch with Mam and Dad.
However, First-time Buyers can access the governments tax-back “Help to Buy” scheme, which can give them access to up to €30,000 or 10% of the purchase price (whichever is less).
Not to be forgotten though are the costs associated with buying a house. You need to ensure that you have enough to cover the other costs involved in buying. We’ve set most of them out below along with an approximate cost for each.
Associated purchase costs
A person buying a house must realise that there are a lot of other hidden costs involved apart from the purchase price of the house.
These additional purchase related costs mean who need to budget to have at least €7,500 – €10,000 on top of your deposit. (Ref. to Legal Section for detail on what these costs are
• Legal fees (€2,500 – €5,000 including conveyancing, land registry fees, etc )
• Stamp duty (c. €2,250 based on 1% of the price of the house)
• Valuation survey cost (€200)
• Snagging report (€300-500)
Also to be considered, but not usually thought of by the professionals advising.
• Decorations, floor coverings, curtains & blinds, white goods, furniture – starting from €2,500
(Clos Émer has a package that can include most of this within the price)
• Moving costs
Mortgage repayments and other costs
Once you have an idea of the approximate purchase costs, carefully review your budget to see how much you can afford to spend on mortgage repayments each month. Make sure that you have enough to cover the costs of running and maintaining a house.
• Mortgage protection insurance
• Buildings Home insurance (will be a requirement of the mortgage. It is usually the amount required to cover the rebuilding costs in the event of a fire or some other calamity)
• Management fees, if you buy an apartment or house in a managed complex
• Electricity and heating – (The BER rating will have a significant impact on this)
(Clós Émer’s super-insulated energy efficient homes are estimated to be 70% more efficient and have an energy bill of c. 1/3 that of a 2nd hand house built pre-2008.)
• Local Property tax
• Maintenance and repairs
As it is a new house, you can be fairly certain that you will have no repairs to carry out. The Clós Émer contract includes for a warranty of 3 months on minor allowable snags, and up to 10 years on major snags and structural issues. Check the warranty details in the contract.
(You may already be paying for the following in your rental property)
• Waste / Bin charges
• TV Licence
• Broadband
Use a 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. When you have worked out this amount and what deposit you will have, you’ll be able to work out how much of a mortgage you can afford.
Related Insurances
Mortgage Protection Insurance
Once your mortgage application is approved, you will need to look for mortgage protection cover 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 giving you 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
However, your lender can insist on you having the cover and can refuse you a mortgage if you cannot get it. Most mortgage lenders offer to arrange mortgage protection insurance for you when you apply for a mortgage. You do not have to take your lender’s insurance, you are free to shop around for better value or a more suitable policy.
House insurances
Before your mortgage cheque is issued, you will need to have home insurance in place. Once the property is sale agreed you should start looking for insurance so that the house is covered by the time the sale is closed. If you are buying an apartment, buildings insurance is usually provided through a “Block Insurance Policy” and is usually the main part of your management fee, so you don’t need to arrange this yourself. However, you may still want to arrange contents insurance before you move in.
Insurances
It is essential that adequate insurance be put in place covering the structure of the property when the purchase is completed. It is the vendor’s responsibility to have the property insured up to the date of the closing and then once the deal is completed it is up to the purchaser to insure the property. The lending institution will also insist that mortgage protection insurance be taken out. This ensures that if the borrower dies that the proceeds of the mortgage protection insurance will pay off the remainder of the mortgage.
House hunting – Find a property you like and can afford
– Firstly; What’s new and available in town
– Secondly; is it within your price range? We may all like to live in a three-story house with eight bedrooms but we have to be realistic and know what we can afford or what our bank manager/lending institution will be willing to lend us.
– Thirdly; is the house a good investment? You must look at things such as the area that the house is situated; it’s proximity to major towns/cities, is it near a motorway or is it in the line of a planned motorway.
Other things to consider
– New or 2nd hand
Property websites, auctioneers and estate agents are the main ways of finding property for sale. The Property Services Regulatory Authority maintains a public register of auctioneers and estate agents on its website.
You are now ready to start your search. It is important to thoroughly check out the area you are interested in moving to. You can look online for information about the area and speak to members of local community or sports groups for any information that may be helpful in making your decision.
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. If you are ready to make a bid on a property, ask if the vendor’s solicitor is in possession of the title deeds. If they are not, this can add 4-8 weeks to the time it takes to complete the sale.
Private Treaty or Auction
Although most property is bought and sold privately in today’s climate, property is also sold by way of public auction. Approaching an auction can be a daunting task for a proposed purchaser. In this situation it is normal for you to instruct a solicitor to make the necessary precautionary enquiries. He will also attend the auction with you. It is also essential to have the property surveyed before the auction.
Also before the auction the title will have to be investigated (see Step 4) and the financial arrangements will have to be in pace before the auction begins. When the auctioneer says ‘SOLD’ you are committed to the purchase if your bid has been successful. This means that you have to pay a deposit immediately and the balance is then due within the month.
Estate agents and auctioneers
Estate agents and auctioneers act on behalf of the vendor and in the vendor’s interest. There are rules and a Code of Practice outlining how they should behave when delivering their services, and they are regulated by the Property Services Regulatory Authority (PSRA). If you have a complaint about an estate agent or auctioneer, you should contact the PSRA – see ‘Where to apply’ below.
– Freehold or Leasehold
WHAT KIND OF TITLE IS IT?
In general in this country land is either freehold or leasehold. A freehold interest in property is the highest interest that can be held by an individual and in general such an owner is free to do as he wishes with the property.
A leasehold interest is less than a freehold interest in that it is for a term of years and accordingly will end at some date in the future. The owner of the freehold is granting a lease for a period of time. It creates a relationship of landlord and tenant and is governed by the provisions of Deasy’s Act 1860.
Land Registry and Registry of Deeds.
‘Title’ in relation to property means not only the documents that show that it is you that owns the property but also it guarantees that no one else can come along and say that they own the property. There are two types of title in Ireland known as Land Registry title (Registered) and Registry of Deeds title (Unregistered).
The owner of property that is registered in the Land Registry will have a numbered folio. This document records the name and address of the owner, a description of the property and a map of the property known as the file plan. A folio is conclusive evidence of the person’s ownership of the property. When Land Registry property is being sold the folio must be produced in order to sell.
Registry of Deeds title is that which is registered with the Registry of Deeds. This occurs where the title has built up over a number of years. These documents would include Deeds of Conveyance used to transfer freehold-unregistered land or Deeds of Assignment used to transfer leasehold unregistered land.
On completion of a sale of unregistered property the purchase deed is lodged with the registry of deeds where the details of the registration and the time of the registration are noted on the Deed. The main reason for registering a deed in the Registry of deeds is that the time of Registration governs conflicts between two different deeds, e.g. if two mortgages on the one property are lodged on the one day the one that is registered first will have priority.
Advantages of buying a new house
– BER
– All homes for sale must have a Building Energy Rating (BER). A BER will tell you how energy-efficient the home is. It will help you make an informed choice when comparing properties.
A Building Energy Rating (BER) certificate is required by anyone advertising a home for sale or rent, or before a new home is occupied for the first time. It shows how energy efficient the property is and checks energy use for space heating, water heating, ventilation and lighting. A home is rated between A and G, with A-rated homes being the most energy efficient. A higher energy rating can have a significant impact on reducing the ongoing cost of running your home.
For more information on BER ratings, go to the website of Sustainable Energy Authority of Ireland (SEAI).
– Radon
The Environmental Protection Agency (EPA) recommends that you check whether the home is in a High Radon Area on its Radon Risk Map and enquire about if it has been tested for radon. More information on radon in homes is available from the EPA and in our document on measurement of radon levels.
– Help to Buy
– no need to get a survey (structural, valuation) / Freehold
Surveyor’s Fees
Again depends on the details of work to be done but it is essential for a surveyor to assess the condition of the property.
Starting the house buying process – private treaty – contract stage
– Booking deposit
Once your offer is accepted the property is considered to be 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 €5,000, or a small percentage of the offer you have made. The booking deposit is refundable up until you sign the contracts. 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 vendor’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 vendor’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.
Finding a solicitor
– Why (what do they do) and what to look for
– When do I appoint a solicitor?
– While you are looking for a property, you should also look for a solicitor to do the conveyancing – this is the legal work involved in buying or selling property to transfer ownership of the property from the vendor to you. Your solicitor acts to protect your legal interests and will check that the sale of the property is legal, i.e. 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.
What does a conveyancing solicitor do?
– We review the contracts for sale, title documents and planning permission
Planning Permission
Any house built since 1 October 1964 requires Planning Permission. It is the responsibility of the purchaser’s solicitor to ensure that the necessary planning documents are in order. An architects certificate will usually be required confirming that a second hand house was built in accordance with the conditions of the planning permission.
– We liaise with your bank or lending institution in respect of your mortgage, which we register as part of the overall property purchase process
– We advise you on any issues of concern
– In larger apartment developments we also review all aspects of the property management company for you as well as offering a full review of the Home Bond documentation.
– If you are selling one property and buying another we liaise with the lending institution and with the purchaser’s solicitor.
It is a good idea to choose a solicitor before you start looking at properties, because as soon as your offer is accepted, the estate agent will ask for your solicitor’s details to pass onto the vendor’s solicitor. You will need the details of your conveyancing solicitor once you have agreed a purchase price and placed a deposit with the auctioneer. This booking deposit is refundable until you sign the contracts. At this stage, your solicitor’s details are given to the auctioneer and your lending institution. To speed up this process, it is worth having instructed your solicitor before placing a deposit.
Where to look
You can use the Law Society’s website to find a solicitor in your area.
See our finding a solicitor guide for more information
Pre-selected
Why choose Eimear Hall?
Support through each stage
We are experienced property law solicitors and know that buying your first home, or selling and purchasing at the same time can be a daunting time. We are with you every step of the way and will guide you through each stage of the process so that you can get the keys to your new home with ease.
Legal fees
Solicitors Fees
Conveyancing charges can vary between solicitors, so it is worth contacting several solicitors to compare prices. Solicitor’s fees can vary considerably and may be either a percentage of the property price or a flat fee. You will usually be charged extra for services like telephone calls, postage, search fees and registering deeds. So, before you choose one, ask several different solicitors for written quotes and details about their professional fees and other costs.
What are legal outlays?
Legal outlays are costs in addition to the professional fee charged by solicitors. Examples of some outlays include:
Stamp Duty
Stamp duty is the tax you pay when you buy a property. The rate is 1% of the purchase price for properties valued up to €1 million, and 2% on any amount over that. Your solicitor will arrange to pay the stamp duty for you, but bear in mind you will need to pay the money to your solicitor when they are closing the sale.
Search Fees
Will vary depending on the title and extent of the enquiries to be made.
Registration Fee
Registration fees are the costs associated with registering the title with the Land Registry (or sometimes the Registry of Deeds). Fees can range from €400 to €800, depending on the value of the property. Get information on fees here. www.prai.ie
Commissioner for Oaths
Local Property Tax –LPT
If you buy a new house, this does not apply. When buying a 2nd hand property you may have to pay some or all of the Local Property Tax (LPT), which is charged on all residential properties in Ireland, depending on the time of year you buy or sell. The LPT currently falls due on 1 November each year. Visit Revenue’s website for more information on the LPT.
The Contract
– What is in it
– The sale and purchase of land and houses are governed by Section 2 of the Statute of Frauds (Ireland) Act, 1695.
– The general rule according to this statute is that all contracts for the sale of land must be in writing. However, this definition is not strictly true as what the Act requires is that any agreement to sell land be evidenced in writing.
– At a very minimum it is necessary that there be written evidence in relation to the parties, the property and the price paid. In practice most conveyances use the Law Society’s standard form of particulars and conditions of sale.
The contract for sale binds the parties to the completion of the sale. If you withdraw from the sale after this contract has been signed, you may lose your deposit.
A private treaty sale is where the property is not put into an auction. You can contact the vendor or the vendor’s agent, usually an estate agent, to agree a purchase price. If you buy through private treaty your solicitor will check that the contract is in order before you sign it. The completion date will be set out in the contract and the balance of the agreed purchase price will be due on that date.
If you buy at auction you must immediately sign the contract for sale.
This contract deals with the following matters:
a) Makes provision for consent of a non-owning spouse under the Family Home protection Act 1976. Under this Act a spouse cannot sell any property, which is a family home without the consent of the other non-owning spouse. This must be a prior consent and accordingly must be endorsed on the contract prior to it being signed by the spouse who is the owner of the property.
b) Makes provision for the names and addresses of the parties.
c) Sets out the purchase price and the deposit.
d) Sets out the closing date. This is the date on which the parties to the contract agree the deal should be finalised, the purchase money paid over and the deeds and the keys to the property handed across.
e) The contract will also list the various documents, which have been shown prior to the contract being signed. A purchaser who signs the contract without inspecting all the documents which have been made available to him is deemed to have full notice of them and is caught by the consequences of any onerous conditions which may appear on them.
f) The contract then continues with a number of standard conditions. The most significant of these contains the procedure to be followed when a property is bought and sold at auction, a number of warranties and in particular a warranty that any development of the land since 1st October 1964 has full and proper planning permission.
MISCELLANEOUS TERMS
(a) Easements
Land and buildings can involve other people’s rights to or over the property, for example rights to way, rights to fish etc. All of these matters will be properly investigated before proceeding with the purchase. These are made as part of the Requisitions on Title during the contract stages mentioned earlier.
(b) Fixtures and Fittings
Fixtures, which are attached to the land, are presumed to be part of the sale unless specifically excluded in the contract.
(c) Family Home Protection Act, 1976
As already laid out above this Act curtails the right of an owner to sell the family home without the prior consent of his or her spouse.
Signing the contract
– Once all the conditions of the mortgage have been met, your lender will approve your loan for the property and the amount, and will send you a formal ‘letter of offer’. This sets out the details of the mortgage your lender is offering you, including:
– 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 bank will send a copy of your letter of offer to your solicitor, along with other legal paperwork, so you should arrange to meet with your solicitor as soon as possible after getting your letter of offer.
– Signing contracts
– Your solicitor 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. Your solicitor will also check that the contracts are in order and if they are happy with the contracts, you will sign two copies. Your solicitor will return both of these copies to the vendor’s solicitor. At this point you have legally agreed to buy the property.
– You will then need to pay your deposit, usually 10-20% of the purchase price depending on whether you’re a first-time buyer or not, less any booking deposit you have paid. You pay your deposit to your solicitor, who will arrange to have it paid to the vendor through their solicitor.
– Once the vendor’s solicitor receives the signed contract and your deposit, they and the vendor will sign and return one copy of the contract to your solicitor. At this point the vendor has legally agreed to sell you their property.
– Both solicitors will arrange for a final closing date and time at which stage you will be given the keys to the property. Before this, the remainder of the money must be paid, which means all the paperwork and approval for your loan must be completed and returned to your lender by your solicitor.
– Once your lender is happy that they have all the paperwork and it is in order, the mortgage cheque will be issued to your solicitor. Your solicitor will arrange to have these funds transferred to the vendor through their solicitor.
The Estate Agent
If there is an estate agent involved, once you have agreed to buy the property you may need to pay a booking deposit to the estate agent. The legal process to buy the property may only start when the estate agent receives your booking deposit. This deposit is refundable up to the signing of the contract for sale (see below).
Completing the purchase
Requisitions on Title and Deed of Conveyance
After signing the contract and before the completion date of the sale, your solicitor raises some general queries about the property with the vendor’s solicitor. Requisitions on Title are a standard set of questions relating to the sale of a property that deal with such things as whether fixtures and fittings are included in the sale.
These are enquiries that a purchaser should make in the course of purchasing property. There are some, which should be made prior to the contract being executed, and some which are made on the date of closing the transaction.
The pre-contractual ones are as follows:
(a) Planning search: This can be made in the planning office. This will let the purchaser know how the property is zoned, be it residential, commercial or otherwise; whether there any proposals for road widening in the area; and whether or not any applications for planning permission in respect of the property have been granted or indeed rejected.
(b) A Licensing Search: this will arise when the property is a pub or a hotel. It will establish the nature of the licence and the extent to which the premises are licensed.
(c) A Compulsory Purchase Order Search: This can be made with local authority. If a CPO has been made the vendor can no longer give good title as the title no longer vests in him strictly speaking.
When your solicitor gets a satisfactory reply to Requisitions on Title, they will draft a Deed of Conveyance which is then approved by the vendor’s solicitor.
The following searches are done on the day of closing:
(a) A Land Registry search:
This is a search in the land Registry to inspect the register or folio to find what the up to date position is. Such a search will establish the ownership of the property, the title whether absolute or possessory, whether it is leasehold or freehold, whether or not there are mortgages, rights of residence or other restrictions on the folio.
Your solicitor should also find out where the title to the property is held (either in the Land Registry or the Registry of Deeds) to ensure that there is nothing unusual relating to the property, for example, an outstanding mortgage.
(b) A Company Search:
This is a search made in the Companies Registration Office, which will confirm that the company exists and is still on the register and also will disclose any charges, which exist against it. It will also disclose the existence of a winding up order or petition. It is normal on closing to get a certificate from the Company Secretary certifying that no resolution has been passed.
(c) A Judgement Search
(d) Bankruptcy Search
(e) Sheriff and Revenue Sheriff Searches
Your solicitor will check that there are no judgements against the vendor (for example, bankruptcy or sheriffs’ searches).
(f) Registry of Deeds Searches
Stamp duty
Your solicitor will calculate how much stamp duty is due on the property and request this amount from you before the sale is closed. The stamp duty is paid to the Revenue Commissioners, who place a stamp on the deeds. Without this stamp, the deeds cannot be registered. The deeds name the owner of the property.
Notice of Practical Completion
If you are buying a newly built home, you and your solicitor will receive a completion notice from the builder once all the work is finished.
Pre-closing survey/Snag lists
Ref below
Exchanging contracts
– Once the Deed of Conveyance is approved by the vendor’s solicitor, your solicitor will contact your mortgage provider to request the approved loan cheque. This is the remaining balance of the purchase price. It is paid to the vendor’s solicitor and all documentation, and keys to the premises are handed over to your solicitor.
CLOSING PROCESS – Clós Émer – Snagging & Utilities
Snagging & Snag Lists
As part of the closing process you are given the opportunity to “snag” the house. ‘Snagging’ does not have a universally agreed meaning. It is a non-contractual slang expression widely used in Ireland to define a site inspection process in order to compile a list of defects (usually minor), omissions, poor quality workmanship or overlooked work in all parts of your new home.
Some people inspect and compile the snag list themselves, others hire a building surveyor or other professional to carry out the inspection on their behalf. Professional surveyors often produce Snag Reports that include items that are either covered by or are contrary to the Sale Agreement terms. These items do not belong on a snag list and will not necessarily be agreed. When the snag list is completed, we will review and agree with you or your agent what items will be rectified.
What should be on a snag list?
It is typically something that is damaged or broken; not fitted properly or looks unfinished – think a window that won’t close or has cracked glazing, poor paintwork, a toilet that won’t flush, incomplete bathroom grouting or a missing hinge on a door. These kinds of issues can either be classified as a cosmetic or functional snag however more serious defects can be identified such as major cracks and kitchen fixtures that are not fitted properly.
Agreeing a snag list
We want to clear all reasonable snags prior to you moving in. This leads to the question “What is reasonable?”.
If something is not working as it would be expected to, then it is reasonable that they should be fixed. However for example, an internal door can stick, as it has expanded with moisture and will shrink as the heating warms up and dries out the house. Time will remedy this issue, but if it doesn’t, we’ll be happy to return when it is humidity settled.
Defining a snag can be subjective, particularly with decorative issues. You might consider something to be a defect but we are entitled to argue it is not. We refer to UK standards (NHBC Standards 2021 Section 9.1), for guidance on what is a valid defect, e.g. obvious decorative issues that can be seen from across the room, e.g. gaps in wood work, decorative issues, etc. will be addressed. However if one needs to stand next to it in order to inspect the defect, then this may be considered trivial and may not agreed. Minor plaster shrinkage cracks may not be agreed, while nail pops will be remedied. Also we use timber and other natural products that may vary in colour, texture and finish.
Can we refuse to fix an issue?
We will correct any defect caused by our failure to build in accordance to building regulations standards. However, if there is the expectation of delivery of an item that is not in the contract documentation, then it will not be agreed. If an item becomes particularly contentious, we will refer to our consultant engineer to give us his independent opinion and will follow his recommendation, even when we don’t agree.
Cleaning:
Prior to handover, we will carry out what is often called a “builders clean”, i.e. all packaging, etc. will be removed and the surfaces left clear of debris and cleaned of any residual label adhesives.
Note: Surfaces will not be polished and there may be dust that has settled and various smudges left after cleaning. We do not commit to providing a five star hotel level of cleaning.
Defects found after you move in:
If issues arise in the first month or two after you move in that weren’t picked up or stopped working through no fault of yours, e.g. dripping tap or light switch not working, then we will make every effort to remedy in a timely fashion. It is important though to take steps immediately to stop damage from occurring or getting worse as soon as the issue is noticed, e.g. water drips / leaks, as we are not liable for repairing damage caused in such circumstances.
Utilities:
We have mains electricity connected with Electric Ireland. The supply is via a smart meter – bill pay account. On the closing day we will take a meter reading and advise Electric Ireland that we have sold the property and provide them with your name and phone no.
It is solely your decision which utility company you decide to enter into a contract with.
We will also advise Irish Water of your details. We do not have any other utilities connected.
Collect your keys and move in
Once the balance of the funds has been transferred to the vendor by the agreed closing date and time, the estate agent will call you and explain that everything is in order for closing. The estate agent will also remind the vendor of the closing date and time.
If you are also selling a property you should try and exchange contracts and close on the same day so you can move straight into your new home, if possible. Once the estate agent tells you that the keys are ready to be collected, the property is officially yours, so the vendor must have left the property, and removed any items not included in the sale, by then.
It is also now your responsibility to make sure that the property is safe and secure, so if you are not moving in straight away you should still visit the property. Make sure you have appropriate insurance in place, keeping in mind that some policies may not fully cover you if the house is vacant for an extended period of time. You may also want to consider changing the locks, as other people may have been given keys to the property by the previous owner.
After the sale is completed
Deeds
Once a sale is completed, your deeds, showing the new ownership details must be registered with either the Registry of Deeds or the Land Registry. The Property Registration Authority (PRA) is responsible for both systems of registration.
Your solicitor will help you to finalise the deeds to your house with the PRA. This can take months or years to complete. Even if this does take a long time, you are still the owner of the property and, if you want, you can sell the property before registration is complete.
Your deposit
Proof of Funding
Before committing to buy a property a purchaser must make sure they either have the necessary money to buy the house or otherwise has secured a mortgage for the value of the proposed purchase.
You can start talking to lenders either before or after you have saved your deposit. When thinking of buying a house, the lending institution should be approached as early as possible. They will give you an idea of the amount they are willing to lend you. You will then know how much you may be able to borrow and that will help you work out how much you need to save, can spend on a house, and thus the type of house and the area that you will be looking in.
The lending institution will require you to fill out an application form and give them certain information as regards your income.
Why a mortgage
Very few people can buy a home without getting a mortgage.
A mortgage is a long-term loan secured against the property you buy. When a borrower and a lender enter into a mortgage transaction the lender takes a legal charge over the property. This is the security for the loan in the event that the borrower fails to repay the mortgage. This means if you don’t repay your mortgage, you may lose your home.
You should try to get mortgage approval in principle before you start looking at properties, so you have a clear idea of the price range you should be looking at. It also means you will be taken seriously by the vendor when making an offer on a property.
It is very important for a person who is considering purchasing a house to consider the financial commitment that is involved.
When you find a property you like and want to buy, you must get formal mortgage approval before you sign the contract for sale (see below).
If you sign a contract to buy and then don’t get mortgage approval, you will lose your deposit and there may be other penalties. For more detailed information, see our document on taking out a mortgage.
Mortgage Sources
There are different types of mortgages and different mortgage providers. You can apply directly to lenders for a mortgage or use a mortgage broker. You should contact a number of different mortgage providers to find out who can offer you the best deal.
The most important thing to think about is the interest rate. Many lenders offer incentives such as cashback which can seem very appealing, especially if you are a first-time buyer. However, you need to consider the overall cost of the mortgage and the interest rate, along with the number of years, will have the biggest impact on the total amount your mortgage will cost you. The market for home lending is currently quite competitive between the banks and the various lending institutions.
More information on mortgages and choosing the best one for you is available from the Competition and Consumer Protection Commission (CCPC). The CCPC has a mortgage calculator that shows what your monthly repayments will be depending on the amount you borrow, how long the mortgage will last and the interest rate.
You can view and compare all of the mortgages available in the Irish market using our mortgage Money Tool. These include fixed and variable rate mortgages and all of the different interest rates available.
What will you need
Your mortgage provider will give you formal mortgage approval and issue you with a loan pack. You will need to think about mortgage protection insurance and home insurance. You can organise these with your mortgage provider but it is advisable to shop around. When your solicitor has checked the contract for sale, you will sign it and pay a deposit (less any booking fee).
