Buying your dream house
Steps in buying a property
- Some things to consider when purchasing a property
What is your budget? How much you are able to borrow will depend on your income. Generally, for a first time buyer they are eligible to borrow 3.5 times their gross annual income.
- A deposit of between 10% and 20% of the purchase price of the property will typically be required. This can vary depending on your circumstances and your mortgage providers requirements. Shop around the various lenders for the best mortgage that suits your needs.
- When a mortgage application is approved, you will be receive a ‘Approval in Principle’. This details how much the mortgage has been approved for. Normally an Approval in Principle lasts for 6 months from date of issue.
- What type of property are you looking for? When you know your budget and have your Approval in Principle in place, get in touch with your agent and give them your wish list. What type of house are you looking for…town house, rural house, detached, semi-d, bungalow, apartment, how many bedrooms, garden, parking, location? Sign up to daft.ie email alerts and you will be notified as properties in your search criteria become available.
As part of this process you should also factor in other costs when buying your first home:
- Valuation Fees: pays for a professional valuer to give your lender an estimate of a property’s market value.
- Legal Fees, you need a solicitor to look after the legal aspects of your mortgage. Fees vary, and may be either a percentage or a flat fee.
- Stamp Duty this is a government tax levied on all properties new build or second hand. It is calculated at a percentage of purchase price and is subject to change. (https://www.revenue.ie/en/property/stamp-duty/current-rates-of-stamp-duty/residential-and-non-residential-land-and-buildings.aspx)
- Building Surveyor Fees, to look over the property for you before you make the purchase.
- Property Tax, the amount of local property tax due depends on the value declared for the property and the local property rate applying to your property for the year that you buy.
- Mortgage Protection, you may be required by your lender to have this in place.
- Home Insurance, to cover your home in the case of any type of damage.
Steps and Terms
When a property is for sale by private treaty. You deal directly with the vendor or estate agent; all you need to do is make a verbal offer. If the vendor is happy with your offer they will accept the offer. If there are others also interested in the property and making offers, the vendor will decide who is successful – this is usually the party with the highest offer. The offer made is not legally binding until a contract is signed and the purchaser can withdraw their offer.
Once the offer is accepted the property goes ‘sale agreed’. At this point the booking deposit is paid 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 and enter a legally binding agreement.
- Once the offer is accepted, the estate agent will prepare a ‘sales memo’ and send this to the seller’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 Vendors 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.
- Your solicitor will carry out the conveyancing – the legal process of transferring a property from one person to another and investigate the legal aspects of the property – the boundaries and what’s included in the sale. They will also carry out a ‘search’ – to find anything which could undermine the value of your property.
- Exchange of Contracts – This is the last stage and assuming that the survey didn’t show up any problems, formal contracts are ready for both seller and purchaser to sign. These are legally binding.
- Closing – On the mutually agreed day the mortgage funds will be released to your solicitor who in turn transfers them to the seller’s solicitor. Final searches will be carried out and keys are handed over once this has been completed.