First Time Buyers Guide

Step by Step guide to buying your First Home

1. Qualifying as a First Time Buyer
2. Reviewing your assets, setting up a budget
3. Related costs in your purchase
4. Researching Mortgages
5. Mortgage Protection/ Home Insurance
6. Making a wish list of your ideal home
7. Finding and viewing homes
8. Offer made -Offer accepted!
9. Meeting with your solicitor
10. Signing the contracts

Owning your own home is a dream most of us have. It is one of the biggest purchases we'll make in our lives, which warrants careful planning. But if you plan your steps and ask questions you will find it easier to get through the process.

1. Qualifying as a First Time Buyer

If you are a First Time Buyer you will qualify for exemptions from stamp duty. Stamp duty is a tax payable to the government based on the value of the property.

To see if you qualify as a First Time Buyer check out the Revenue Website at www.revenue.ie.

2. Reviewing your assets, setting up a budget

You will need to review your monthly income and expenditure. This will also give you some of the information you will need to provide for mortgage approval. In general, your current salary including guaranteed bonuses, overtime and commission will usually determine the amount a bank or building society will lend to you. You may want to maximise the amount you can borrow, but it's important to have an idea of what your budget will allow. Take into account possible future events such as rising interest rates - which will increase your mortgage payments.

3. Related costs in your purchase

In most cases, the deposit on the home will be one of the biggest costs. Generally the maximum you can borrow for an owner occupier mortgage is 92% of the value of the property. Some institutions provide 100% mortgages, however there are more strict qualifying criteria regarding income and property types. In most cases the customer is still required to pay the initial deposit until the mortgage is drawn. There are other costs involved in the purchase of your home: A solicitor, who will do the conveyancing, meaning the legal work connected with the purchase or sale of land or property. Any outlay costs they incur will be billed on to you, such as title deed registration fees, search fees, etc. A solicitors fee is generally 1% of the purchase price (+VAT) including outlay costs. While some solicitors charge on the basis of the value of the property plus outlay costs, other solicitors charge a flat fee plus outlay costs.

You may also wish to have a survey on the property to insure the house is structurally sound and a valuation to confirm the asking price is a reasonable one. A structural survey could cost between EUR300 and EUR500 and a valuation usually costs between EUR100 and EUR200.

4. Researching Mortgages

Now you're ready to research the various mortgage options. A mortgage is a long-term loan secured against your chosen property. Plan to shop around and ask questions. Over the last few years there have been a variety of new mortgage products that have become available, which include Fixed, Standard Variable or Split rate mortgages. Get an approval in principle from your selected lender so you can begin looking at properties within your price range.

5. Mortgage Protection/Home Insurance

Life Cover is required under the Consumer Credit Act and must be in place before a mortgage cheque is issued. Most lenders will also require that you arrange Buildings Insurance, which covers rebuilding the house if it is destroyed. Look into extending your home insurance to also protect your personal possessions. Review how to protect your home if you become unable to pay your mortgage, either due to critical illness or other reasons.

6. Making a wish list of your ideal home

Create a list of locations, property types, price ranges, number of bedrooms and other features that you are looking for in a home. Remember that you will have to be flexible, perhaps having to look in another neighbourhood, accepting a smaller garden, etc. Divide the list into what you absolutely must have - such as public transportation, and what you would like to have.

7. Finding and viewing homes

You have a distinct advantage as a First Time Buyer in that you don't have to worry about selling an existing home you're ready to move. If you've done your homework and have been pre-approved for a mortgage you are a very attractive, serious buyer. The Internet has provided an incredible platform to the property market - you'll find you can do the majority of research at your computer. Useful property websites include myhome.ie and daft.ie. If you are also looking in a very specific area,  locate local estate agents that may not have an Internet presence.

8. Offer made ? Offer accepted!

Once you've located the house you want, make an offer to the estate agent who will convey it to the seller. If your offer is accepted, you will probably then put down a booking deposit or an offer subject to contract. A booking deposit is usually several thousand euros, and is part of the full deposit you'll make later. Though you have now set the wheels in motion, until contracts are signed and exchanged you are not legally bound to buy the house and the seller is not bound to sell to you. (Do check the conditions of the booking deposit in case the deal falls through.)

9. Meeting with your solicitor

If you do not already have a solicitor, you will need to engage one. While Irish solicitors are, in the main, both highly competent and ethical, it is always best to seek a reference to a good solicitor from a trusted colleague or friend. The Incorporated Law Society also provides the names of suitable professionals on its website at www.lawsociety.ie. Your solicitor will communicate with your lender and the sellers solicitor. Once you have obtained mortgage approval from your lender and they are satisfied with the valuation and survey on the property, they will issue you a Letter of Loan Offer before issuing a loan cheque. Your solicitor will perform background searches to confirm everything is in order, and will correspond with the sellers solicitor as the contract is being drawn up, confirming what is included in the sale of the house, such as any contents, etc.

10. Signing the contracts

If not already paid, your deposit will now be due. A date will be agreed to complete the sale and the contracts will be signed and exchanged. Once you sign the contracts you are committed to the purchase of the property. Generally the home loan cheque is sent to your solicitor who will then complete the purchase of the house for you. You will be given the keys and will become the proud owner of your first home.

Legal Notice

The information provided in this guide does not constitute tax, legal, investment or any other advice. Any figures quoted are correct as of publish date shown above and are subject to change.

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