Where do I start?
The first thing you need to do is establish an approximate amount that you can borrow to buy your home. This amount is based on many factors including your income from employment, your savings and your financial commitments. Mortgage Search can help you establish this.
Once you know how much you can borrow, put this together with your own personal resources (e.g. savings, inheritance) and you have a fair idea of how much you have at your disposal to buy your home. Note you should also budget for costs associated with the purchase process (e.g. solicitor’s fees, moving costs) and post-purchase costs (e.g., furnishing and decorating your home).
Note that you need to have sufficient resources to ensure that the “loan to value” of your mortgage does not exceed a certain percentage (e.g.90% ). Work out all the costs that you need to buy your property (including the purchase price of the property itself). Then subtract the amount that you should be able to borrow. The amount you are left with is the amount that you need to finance from your own resources.
How can we help you?
Financial institutions will lend up to 90% of the purchase price of a property for first time buyers, which means that you rely less on having savings than otherwise. We have relationships with most Irish financial institutions, and are well placed to help you on your road to owning your first home. Contact us on 021 4220019 to speak to a mortgage advisor.
Mortgage Process Explained (step by step guide)
Once you have started and established what you can borrow approximately with the help of Mortgage Search, next, find a property that you are interested in buying.
We recommend you apply for mortgage approval as early as possible, to ensure you are looking at properties within a price range you will be approved for. When you find a property the financial institution will also typically send out a valuer to check that the property is worth the amount you are paying for it. However, this valuer is only looking after the lender’s interests and you should consider having a full structural survey of the building done.
Once you’ve applied, and all the relevant checks have been made, which will include confirming that you can afford to repay the loan applied for, your lender should send the loan offer to you. You will also need to apply for other products such as mortgage protection insurance and buildings insurance at this stage. Mortgage Search will shop around to ensure you receive the most competitive and most suitable insurance for you.
You may want to view a number of properties and can do so by arranging viewings with Auctioneers. When you decide on a property you like, contact the seller’s estate agent, find out if anyone else is interested in it and decide how much you would like to offer for the property. If your offer’s accepted, for private treaty sales it will be ‘subject to contract’.
This means that you and the seller have agreed in principle to go ahead but neither of you are legally bound. You may at this stage be asked to put down a deposit, which you should confirm is fully refundable in case you decide you do not want to proceed. At this stage, you should ideally have contacted your solicitor and asked for a quote for dealing with your purchase.
Your solicitor will check the legal documents relating to the ownership and use of the property. He or she will also make local authority and other searches to check if there are any matters which may affect the value of the property.
Once your solicitor has completed all the checks, you and your seller are ready to exchange contracts. This means signing your identical copies of the contract for sale. Then the solicitors exchange them. This is when you pay your deposit through your solicitor. At this point, both of you and the seller are legally bound to proceed with the transaction. If you pull out after exchanging contracts, the seller can keep your deposit.
Interest rate options
Most financial institutions will offer a variety of interest rate options, but they can be broadly classified into fixed and variable rates. Fixed rates remain the same for the stated period, no matter what happens in the money markets throughout the period. Typically, fixed rates are quoted for periods between 1 and 5 years. After the fixed rate period ends, your mortgage will normally revert to the lender’s standard variable rate, unless you specify another option.
Variable rates are either the lender’s standard variable rate, which normally moves with money market rates and which the lender may increase or decrease from time to time in line with the markets, or ‘Tracker” mortgage rates, which are variable but which are tied directly to the European Central Bank (ECB) repo lending rate. Tracker rates are not widely available at present, most institutions have discontinued offering this type of rate to new customers.
Types of Mortgages Available
Generally for first time buyers, lenders will offer you a standard repayment mortgage, where you pay interest on the mortgage and repay capital over a certain term, e.g., 30 years. Some lenders may offer interest-only mortgages for a certain limited time, where you do not pay back capital but merely pay the interest charge. This will reduce your monthly payments but will lengthen the time it takes for you to pay off the mortgage.
What deposit do I need?
The amount of deposit that you need depends on (a) the “loan to value” of the loan (i.e. the amount as a% of the purchase price of the property that the lender will lend) and (b) the amount that is needed to fund upfront costs such as solicitor’s fees, stamp duty and furnishings.
Will my debts affect the amount I can get?
Yes. Lenders will generally determine the amount that you can borrow with reference to your after tax income and also take into account existing loan repayments in arriving at the amount that they are prepared to lend you. Generally, you should seek to be debt-free before you apply for your first mortgage. However, if you have a reasonable amount of personal debt, ideally for specific purposes such as car finance, then this may not pose a problem.
Help to buy
The Help to buy Incentive is designed to assist first time buyers with obtaining the deposit required to purchase or self build a new House or apartment to live in as their home. The incentive provides a refund of Income Tax and Deposit Interest Rentention Tax (DIRT) paid over the previous four tax years to first time buyers who purchase or self build a new home or apartment to live in as their home
Extra Costs (e.g. Stamp Duty)
Examples of extra costs that you may need to budget for are as follows: stamp duty, solicitor’s fees, surveyor’s fee, decoration and furnishings, carpets and flooring, alarm installation. Examples of extra costs that may be payable throughout your ownership of your property include: property service charge, mortgage protection insurance, buildings and home contents insurance, utilities (gas, electricity, telephone).