Published on December 21st, 2015 | by Martin Clancy
Property Advice for First-Time Buyers
Ready to become a home owner? After years of searching through listings on Daft.ie – you’ve decided you want to get your foot on the property ladder.
Here are some pointers from us, to keep in mind as you start your journey.
View our most recent blog post on this: Buying your first home.
Check out our Daft.ie Estate Agent Hub.
Decided to take the plunge? Nervous? No need to be. This is a chaotic time with offers and counter-offers. Be prepared for a lot of paperwork and with some careful planning you can get through the process.
- How much can you afford?
The first step in buying a home is figuring out how much you can afford. The amount that you can borrow will vary from institution to institution. The amount you can borrow is influenced by your credit rating and any existing debts that you may have.
You should shop around the different banks, building societies, brokers and credit unions for the mortgage product that suits you best.
When successful with a mortgage application you will be given “Approval in Principle”. This is how much the lending institution is prepared to give you (in principle – i.e. terms and conditions apply). You now know how much you can afford but you should take into account the costs of buying a home before you go house hunting.
- The cost of buying
You should be aware that there are many costs involved in buying a home other than the obvious.
- Stamp Duty
Stamp duty is a tax on the processing of the documents that relate to buying and selling property. Stamp duty ranges from 1% to 2%, depending on the price of the property. You should take the time to read about stamp duty.
- Legal Fees
There is no standard charge for conveyancing (the term for the legal process of buying and selling property) but you should be prepared to set aside around 1% of the property price for your solicitor.. It’s worth shopping around to get a deal that suits you best.
- Valuation Report
Your lending institution will probably require a valuation report of the property you intend to purchase. This is needed as proof that the property you are buying is worth the money you are paying for it (This information is equally valuable to you). A valuation will cost anywhere from €100- €200.
- Home Insurance & Life Assurance
Most lending institutions will require you to take home insurance on your property in case of fire or other damage. Further, you may also be required to have a life assurance policy with mortgage protection.
Do your homework
Ready to pull the trigger? First find out what the story is with the listing, for instance – how long has the home been on the market, are there other offers on the table and is the owner looking for a quick sale?
By doing some research you can discover a lot about the seller. Such things as figuring out the motivation behind the sale, can arm you with invaluable data when it comes to making your initial offer.
Investigate the market. Take a look at the last six months of sales data to review and compare similar properties.
Take a look at properties that are currently for sale and see if your Estate Agent can give you some pointers on the average number of offers the sellers may have received. Make sure to ask your agent what their opinion of the home’s value is and start to mull over this information.
Types of Offers
If a property is for sale by private treaty. You simply make a verbal offer to the seller or estate agent. If the seller is happy with your offer you get the property. If there are a number of people making offers for the same property it is up to the seller to decide who wins – this is usually the person with the highest offer. The benefit to the purchaser in a private-treaty sale is that the offer made is not legally binding and you can withdraw your offer (you may loose any deposit made). If your offer is accepted, you can then finalise the details with your lender who when satisfied they will give you a Letter of Offer. This letter is a formal agreement to lend you a particular amount.
- Public Auction
In an auction the person with the highest bid wins. A bid at an auction is legally binding and you are unable to withdraw your offer. Generally you are required to pay your booking deposit immediately after a successful bid. Due to the legally binding nature of an auction it is necessary to have a Letter of Offer (i.e. full mortgage approval) from your lender before bidding.
Once your bid or offer is accepted and your lender has given you a Letter of Offer all that is left is the signing of the contracts.
Your solicitor will submit your offer officially in writing and will then perform some background checks (Searches) to confirm that everything is in order with the property & seller before you proceed. Meanwhile the seller’s solicitor will draw up a contract for you to sign. If not already paid, a deposit will be due. A date will be agreed to complete the sale. Once your lender gives you the final cheque, your solicitor will make the final payment. You will be given the keys and will become the proud owner of your first home.
You will have other options
Rarely does a buyer secure the first home they ever make an offer on. And if you don’t, it’s not the end of the world. There will be other homes for sale.
Have faith that another home will come along in the future. There’s no rush, and you should never buy a property overnight or make a snap decision. Have fun, and learn from each offer.
Check out our Daft.ie Estate Agent Hub.