Buying a house can seem like a complicated process. But, when broken down into manageable steps, you’ll find it isn’t too tricky. Click here to download the full guide.
1. Set A Budget
When buying a house, it’s important not to set your sights too high. This means establishing a budget, but how can you work out what you can afford? The three things to take into consideration are your current savings; any stocks, shares or investments; and a potential mortgage.
You will need to have all your ducks in a row with the first two, before speaking to a bank about how much money they will be able to lend you for purchasing a home. An independent mortgage broker who covers the entire market should be able to guide you through the process.
Once you have worked out your budget, be sure to factor in legal fees and stamp duty. Most people forget about these, but you will not be able to complete the purchase without paying them.
2. Put Your Finances in Order
It’s essential you carefully go through your finances, as any reputable lender will do the same. After all, they will be offering you a large sum of money, and they must ensure you can afford the repayments. Avoid any unnecessary delays by ensuring everything is in order right from the start.
Red flags to look out for during this process include missed credit card or loan repayments. Pay off as much as you can on outstanding credit card debt and avoid betting transactions, as they tend to make you look like a risky investment.
First-time buyers purchasing property exceeding €220,000 will have a 90 per cent limit applied to the first €220,000, with 80 per cent limit on anything over this.
Lenders also require buyers to have life insurance, sometimes called mortgage protection when applying for a property loan. This will also insure you against any damage or theft that occurs within your home. As this can take time to arrange, be sure to start the process as early as possible.
3. Appoint A Solicitor
Once you’ve found the right home for you, it’s time to enlist the services of a solicitor, who will open a file and put transaction proceedings into motion. This professional will be able to guide you through all the paperwork you need to complete and what exactly needs to be done when.
After you receive approval for the purchase, a booking deposit must be paid to the estate agent. This could be anything from a few thousand euros to three percent of the total sale amount, so be prepared to hand over a substantial amount as a down payment.
As neither parties have yet signed the documents, this deposit will be refunded if the sale falls through. The estate agent can then issue sales details.
Sales details are simply the information prepared by the estate agent and distributed to the buyer, seller and solicitor. It should include the names and current addresses of all parties, the price and the estimated closing date of the sale.
One element to keep an eye on is whether the property is unencumbered. An unencumbered property is one free from any encumbrances, such as creditor claims or debts. These types of properties are straightforward to buy or sell.
One that has claims against it from parties that are not the owner can be harder to transfer or can have its use restricted until the encumbrance is lifted. It is crucial to find out about any hurdles and the effects they could have on the sale.
5. Pay The Deposit and Sign The Contract
You and your solicitor should check the contract closely, sign it and pay the contract deposit. Usually, this equates to ten per cent of the purchase price, excluding the booking price already paid. New builds may require a payment that has been calculated differently.
Your solicitor will duplicate all your documents and forward them to the solicitor representing the seller.
6. Exchange of Contracts
Once the contracts have been exchanged, a binding agreement is made between all parties, which is subject to the terms and conditions set out within the contract.
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