The Buying Process

Being a first-time buyer can be quite a stressful experience – dealing with estate agents, solicitors, surveyors and movers. Here is a simple step by step first-time buyers guide to give you an overview of the process and the stages involved in buying a home.

1. How much you can borrow?

The amount you can borrow can vary from one financial institution to another.  However, there are some general guidelines which will give you an idea of the amount you can potentially borrow.  In general your current salary including bonuses, overtime and commission will usually determine the amount a bank or building society will lend you. Some lending institutions determine the amount you can borrow by a multiple of your income, while others will look at your net or take-home pay. As such the amount you will be offered may vary from one financial institution to another.

The maximum you can borrow is usually 90-92% of the value of the property which means that you must come up with the rest of the money irrespective of your income.  In addition you will need to cover the costs of solicitors, surveyors and stamp duty (if applicable).

2. Get Approval in Principle

It is recommended that you obtain Approval in Principle even before you start looking at properties as this will give you a clear indication of how much you can afford to spend.  This avoids wasting time looking at properties you can’t afford.  It could also be the case that you could be offered a loan for more than you had originally anticipated and could therefore consider properties in a higher price range.  The best thing to do is to complete a mortgage in principle application form and submit this with supporting documents and therefore supplying the lender all the necessary details to support your application.  Once this has been done you can begin your search for a property knowing exactly what your price ceiling is.

3. Finding a property

View properties and make a note of the features that you like.  Find out what exactly is included in the sale.  How “finished” will the development be?  Familiarise yourself with an area that appeals, maybe stroll there in the evenings and at weekends.  Check out what the area has to offer, such as local transport links, shops, social/leisure activities within the area, schools, etc.

4. Contacting an Estate Agent to enquire about a property

When you find a property that matches your search, you will need to contact the estate agent and arrange to view the property/showhome.  If you decide to reserve the property, you will need to place a booking deposit with the estate agent.  Contract documentation will then be issued to your nominated solicitor who will advise you from that point on.

5. Finding a Solicitor

As soon as you place a booking deposit on a property, you will need to employ a solicitor.  You should inform your solicitor about any transactions that have taken place, along with the address of the property and the agents you are dealing with.  If you are a first-time buyer it is probably the case that you have never employed the services of a solicitor before.  In this case, buyers will normally find a solicitor based on personal recommendation.

Try and line up a few to choose from and get the cost of each before making your decision.  Prices can vary a lot, with some charging a percentage of the purchase price and some firms charging a flat fee.

For example if you are buying a house for €300,000, solicitor X might charge 1% of the purchase price, which will be €3,000 plus VAT and outlay and solicitor Y might charge a flat fee of €1,250 plus VAT and outlay.  The first part of the fee is for the solicitors' time and expertise and the outlay is other costs such as registration of the property.

Check to see if the firm has a dedicated specialist conveyancing team as this will probably mean a smoother and more efficient service.

6. Letter of Offer

This is the official document offering you a mortgage.

At this stage your lender will arrange a valuation on the property and a “letter of offer” will be issued by the financial institution.  The valuation contains information about the property in terms of condition and size.  This is done so that you can be confident that what you are paying for the property is actually what it is worth.

Once a loan has been offered by a financial institution it remains valid for 3 to 9 months from the date it was issued.   If this period lapses, you will probably need to supply the financial institution with up-to-date records of your income before they will issue another loan offer.

7. Signing Contracts

Once you have signed contracts, you are committed to the purchase of the property. This is usually done when the letter of offer has been issued and the survey is complete. At the signing of contracts you will need to pay the balance of the deposit which is usually about 10% of the asking price (this 10% includes your initial booking deposit).   It is important to note that there is no turning back at this stage. You need to be sure that this is the property for you. If you back out at this stage, you will lose your deposit.

8. Closing the deal

On exchange of contracts, a completion date is normally agreed. Prior to this completion date, you will be invited to have a snag of the property carried out by a professional surveyor of your choice. When all the works are satisfactorily completed, the solicitor will finalise the legal paper work with the balance of the purchase monies been transferred at this stage and you are then presented with the keys.

Now all that's left is to move in and enjoy having your foot firmly on the property ladder. So celebrate!