1. Save for a deposit
You will need to save a deposit for your house. Different Central Bank of Ireland rules apply to the amount of deposit you need depending on whether you are a first-time buyer or not.
If you are a first-time buyer a 90% limit will apply to the mortgage you can get. So you will need a minimum deposit of 10%.
The Help to Buy (HTB) incentive is a scheme for first-time buyers The amount that you can claim is the lesser of:
- 5% of the purchase price of a new home. For self-builds this is 5% of the completion value of the property
- the amount of Income Tax and Deposit Interest Retention Tax (DIRT) you have paid in the four years before your purchase or self-build.
The maximum payment is €20,000 per property. You can find more information about the scheme from Revenue.
If you are not a first-time buyer, you can borrow up to 80% of the value of the property.
In order to help you save a deposit, it’s important to work out where your money is going and how much you can afford to put away. We have lots of tools to help you:
- Our spending calculator can help you work out what you are spending your money on now and where you can cut back.
- We have lots of handy money saving tips to help you save your deposit.
- Opening a regular savings account is a good way to help you save a deposit, and will also show any mortgage lender that you have a solid savings record. This will be important when you apply for a mortgage. Our regular savings comparison will help you compare the different savings accounts available.
2. Work out your budget
Make sure you review your budget to find out how much you can afford to spend on mortgage repayments each month and that you have enough to cover the other costs of buying a house, including survey costs, stamp duty, moving costs and legal fees.
Get your house valued by three estate agents and find out how much is outstanding on your existing mortgage to see how much equity you have to put towards your next home.
Use our budget planner to work out what you can comfortably afford to repay each month. Include a regular amount for ‘unforeseen expenses’ in your budget such as medical expenses, interest rate increases etc.
When you have worked out this amount and what deposit you will have, you’ll be able to work out how much of a mortgage you can afford to take out.
3. Research and apply for your mortgage
Be careful with special offers
Buying a home is one of the biggest financial decisions you will make. So it pays to compare the current rates on offer. You may be able to save significant amounts of money by comparing your options before you take out a mortgage.
When you start to compare options for getting a mortgage, you’ll see that most lenders have special offers to encourage you to move your mortgage to them. These usually include:
- a percentage of the value of your mortgage back in cash
- a set amount of cash back
- paying all, or part, of your legal and/or valuation fees
Cashback offers are attractive because they give you money in the short term. But they might not make financial sense in the long term if you look at how much the mortgage will cost you overall. The lenders that have these special offers often have higher interest rates, so it’s important to look at the interest rate they are offering.
Don’t be swayed by cashback payments and other offers from lenders. A mortgage is a long-term product so consider the total cost of credit when deciding who to take out your mortgage with. Look at all your rate options – fixed and variable with the CCPC mortgage comparison tool.
The Mortgage Credit Regulations were introduced in March 2016. These regulations prevent lenders from requiring mortgage holders to repay cash-back payments if they took out a mortgage since March 2016. So if you take out your mortgage after March 2016 and get a cash-back payment from your lender, you don’t have to repay this money if you switch your mortgage to another lender in the future.
Approval in Principle
You may find the property you want to buy first, and then start looking for a mortgage. But there is no point looking at a new home if you don’t know whether you can get a mortgage or how much you can borrow. Getting ‘approval in principle’ means that your lender approves you for a mortgage of up to a certain amount, based on the details you have given in your application.
Having approval in principle does not mean that you need to buy the most expensive home you can. When you are looking at property, try not to be guided by the amount you can borrow. Any offer you make should be based on what you think the home is worth versus others in the same area, or similar homes.
Applying for a mortgage
Good money management and a steady savings record will work in your favour when applying for a mortgage. Get more information on applying for a mortgage.
Mortgage protection insurance
Once your mortgage application is approved, you should look for mortgage protection insurance which is insurance that will pay off your mortgage if you die within the term of the policy. You should not wait until you have made an offer on a house or apartment before shopping around and applying for mortgage protection insurance. It can take some time to get approval, particularly if you have had poor health in the past. This could delay the sale as, by law, your lender must make sure that you have this cover before taking out a mortgage. Your lender may agree to give you a mortgage without you having this cover if:
- you are over 50
- you are buying an investment property
- you have enough life insurance in place already or
- you cannot get cover.
However, your lender can insist on you having the cover and can refuse you a mortgage if you cannot get it. Most mortgage lenders offer to arrange mortgage protection insurance for you when you apply for a mortgage. You do not have to take your lender’s insurance, you are free to shop around for better value or a more suitable policy.
4. Sell your home
If you are selling a home as well as buying, you’ll be in a better position if you have already found a buyer for your home when it comes to making an offer on another property. It is possible to sell your home privately, without using an estate agent, but most people enlist the services of an estate agent to help.
It’s a good idea to ask a number of estate agents for their fees and to value your property. Don’t necessarily choose the cheapest or the most expensive. Check that they are licensed and agree a sales fee. Expect to pay a percentage of the price your property eventually sells for. Most estate agents charge an upfront marketing fee on top of their fee – this will cover, for example, professional photography.
Many factors can influence how quickly property sells, such as property market conditions, location and condition of the property itself. Make sure when signing your agreement with your estate agent that you can break out of the agreement with reasonable notice without penalties. This will mean that if you are not happy with the way the sale is going you can change your estate agent. If you paid for professional photographs you can use those with another estate agent.
You will also need a Building Energy Rating (BER) certificate when selling your house. It shows how energy efficient your home is and checks energy use for space heating, water heating, ventilation and lighting. Your home is rated between A and G, with A-rated homes being the most energy efficient.
At this point you’ll also need to hire a solicitor and agree a fee. If you have a mortgage, make sure your solicitor looks for your property deeds from your lender as this can cause long delays in the process.
5. Start house hunting
Download our checklist here:
Looking around for a property (PDF 130Kb)
When you find a home you are interested in, remember to ask the estate agent any questions you have which might help you make your decision. We’ve included these questions in Finding out More About a Property:
Finding out more about a property (PDF 230Kb)
6. Find a solicitor
While you are looking for a property, you should also look to hire a solicitor to do the ‘conveyancing’ – this is the legal work to transfer ownership of the property from the seller to you. It is a good idea to choose a solicitor before you start looking at properties, because as soon as you have an offer accepted, the estate agent will ask for your solicitor’s details to pass onto the seller’s solicitor. Your solicitor will also check that the sale of the property is legal – that the person who is selling the property owns it and has the right to sell it, and that nobody else could claim to own it.
Solicitor’s fees vary and may be either a percentage of the price of the home, or a flat fee. You will usually be charged additional fees for things like telephone, postage, search fees and registering deeds. So, before you choose a solicitor ask several different solicitors for written quotes and details about their professional fees and other costs.
See our Finding a Solicitor guide for more information
Finding a solicitor (PDF 130Kb)
7. Making an offer
When you have decided on the home you want to buy, you can make an offer to the seller. Contact the estate agent and say that you would like to make an offer on the property and tell them what price you are offering. Tell them your offer is ‘subject to contract and survey’ – this means that you are offering to pay this amount in principle, providing there are no legal or structural issues with the property. Your solicitor will check there are no legal issues, and you will need a surveyor to check that there are no structural issues. If your survey reports something you were not aware of when you made your initial offer, you can withdraw your offer, or revise it. The seller will normally specify what is included in the sale of the property – for example, if kitchen appliances, curtains, carpets etc. are included or not – so be clear when telling the estate agent what you expect to be included in the offer.
If your offer is accepted it is usually called ‘sale agreed’ and you will need to pay a booking deposit to the estate agent. Booking deposits vary – they can be a specific amount such as €5000, or a small percentage of the offer you have made. The booking deposit is refundable up until you sign the contracts. Paying your booking deposit is a strong signal to the estate agent that you intend to buy the property and will usually mean that the home won’t be put on the market again for three to four weeks.
Once your offer is accepted, the estate agent will prepare a document of sale details 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 seller’s 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.
8. Check everything
Get a survey
You should strongly consider hiring your own surveyor, engineer or architect to carry out a detailed structural survey, especially if you are buying an older property. This will help highlight any issues you may not have been aware of when you made your offer. For example, if your surveyor discovered that the roof needed to be completely replaced, you could change your offer to account for this, or decide not to buy.
If you are buying a property at an auction, you would usually have your survey completed before the auction. Ask the auctioneer for the terms and conditions of the auction, which will be available before the auction date.
Get a valuation
Once the property is ‘sale agreed’, you can arrange for a valuation. Your lender will want a professional valuation completed on a home before they formally agree to lend you the money to buy it. You may need to hire a professional valuer yourself, or your lender may have a valuer they use. The valuation will only look at the general state of the property and the location. The valuer will send their valuation to your lender who will base their formal loan offer on this valuation.
If you are buying a newly built home, you and your solicitor will receive a “completion notice” from the builder once all the work is finished. As soon as you receive this, it is important you arrange to have a ‘snag list’ drawn up. This is a list of incomplete jobs or things that you want put right. Examples of item for snag lists include:
- cracks in ceilings or walls
- skirting boards not correctly placed
- doors that don’t open and close correctly
- uneven plaster work
- broken light switches
- loose wiring
- leaking pipes
You can make a snag list yourself, but it is recommended that you hire an architect, engineer or chartered surveyor who will have experience in this area and knows what to look for when snagging new homes. Once the snag list is complete, you give a copy to the builder. The builder will then work on fixing all the snags.
You should do a final inspection of the new property to make sure that all the snags have been fixed. You can do this on your own, or with the person you hired to do up the snag list. The cost of hiring them may be higher if you want them to inspect the property with you.
You should think about agreeing a “defects liability period” with your builder before you sign any contracts. This means that you agree that the builder will fix any further problems that arise free of charge within a certain period of time. Sometimes you can withhold a small percentage of the purchase price of the home until the end of this period and then pay it to the builder. Discuss this with your solicitor first to see if this is possible.
9. Exchange, complete and move in
Once your offer has been accepted, contact your lender and inform them. Your lender will ask for details of the property such as the address, the type of property and the age of the property. Once a valuation has been completed and the lender is happy with the valuer’s reports, they will approve your loan for the property and the amount, and will send you a formal ‘letter of offer’. This sets out the details of the mortgage your lender is offering you, including:
- The value, length, cost and repayment schedule of the mortgage
- The address and description of the property to be bought
- Any terms and conditions which apply to the offer
- Expiry date of the mortgage offer
Your lender may want to see a surveyor’s report before issuing you a letter of offer if the property is very old. Your bank will also send a copy of your letter of offer to your solicitor, along with other legal paperwork, so you should meet with your solicitor as soon as possible after getting your letter of offer.
When you meet your solicitor, they will explain and complete various documents with you. If you are happy with all the details, you formally accept the letter of offer from your lender through your solicitor. Your solicitor will also check that the contracts are in order. If they are happy with the contracts, you will sign two copies. Your solicitor will return both of these copies to the seller’s solicitor. At this point you have legally agreed to buy the property.
You will then need to pay a deposit – usually 10-20% of the purchase price depending on whether you’re a first-time buyer or not, less any booking deposit you have paid – to your solicitor, who will arrange to have it paid to the seller through their solicitor.
Once the seller’s solicitor receives the contract you have signed and the deposit, they and the seller will sign and return one copy of the contract to your solicitor. At this point the seller has legally agreed to sell you their property.
Both solicitors will arrange for a final “closing date” and time at which stage you will be given the keys to the property. Before this, the remainder of the money must be paid, which means all the paperwork and approval for your loan must be completed and returned to your lender by your solicitor.
Before your mortgage cheque is issued, you will need to have home insurance in place. Once the property is ‘sale agreed’ you should start looking for insurance so that the house is covered by the time the sale is closed. If you are buying an apartment, buildings insurance should be part of your management fee, so you don’t need to arrange this yourself. However, you may still want to arrange contents insurance before you move in, regardless of whether you are buying a house or an apartment.
Once your lender is happy that they have all the paperwork and it is in order, the mortgage cheque will be issued to your solicitor. Your solicitor will arrange to have these funds transferred to the seller through their solicitor.
Stamp duty is the tax you will have to pay when you buy a property. Since December 2010, the rate is 1% of the purchase price for properties valued up to €1 million, and 2% on any amount over that. Your solicitor will arrange to pay the stamp duty for you, but bear in mind you will need to pay this money to your solicitor when they are closing the sale – so you will need to have this amount of money available.
Collect your keys and move in
Once the balance of the funds have been transferred to the seller before the agreed closing date and time, the estate agent will call you and explain that everything is in order for the closing. The estate agent will also remind the seller of the closing date and time. If you are also selling a property you should try and exchange contracts and close on the same day as your purchase so you can move straight to your new home if possible. Once the estate agent tells you that the keys are ready to be collected, the property is officially yours, so the seller must have left the property, and removed any items not included in the sale, before this time. It is also now your responsibility to make sure that the property is safe and secure, so even if you are not moving in immediately you should still visit the property. You should also make sure you have insurance in place.