Climbing on the property ladder: a first time buyer’s guide
| There are a multitude of things a first time buyer needs to be wary of when buying a home. For reasons of clarity I am only going to outline the main ones in this article. Firstly and obviously finance is of paramount importance.
Simply put – can you afford it? If the answer is yes the first time buyer must also be aware that there are ancillary costs involved eg. Stamp Duty, Legal Fees, Property Registration Fees and an Engineer’s survey (possibly). When all these are factored in can you still afford the property?
If you are a cash buyer then there is no issue here but if you are getting a mortgage have you shopped around? At the present time obtaining a mortgage is extremely difficult. Have you considered a mortgage broker? They may be able to get the best deal at the best rate on the market. Assuming you get mortgage approval before you sign it, it is imperative that you are sure that you can comply with all the special conditions contained therein.
Interest rates are at historically low levels. You will need to factor in repayments were rates to increase.
So you have found the property you want and you have secured mortgage approval. You are now ready to put down a booking deposit. Remember that when you do to tell the auctioneer that you are putting the deposit down and that it is subject to contract. This means that for any reason the transaction doesn’t proceed you will get your full deposit back. The booking deposit will usually secure the property for 21-28 days to allow you to complete your mortgage documentation.
If you are buying a second hand property then it is important that you find out if it is still covered by HomeBond Insurance. This home insurance covers new builds for 10 years against structural defects. Anything over 10 years will require an Engineer’s survey. Also when buying a second hand home it is wise to see what contents are included with the purchase price.
You will need to be satisfied that all planning issues are in order. If it is a new development – are there any new developments planned that will affect your property? Have the existing roads and services have been taken in charge by the local authority? And if not, why not?
If you decide to proceed with your mortgage your lender will want you to put in place suitable home cover and also life cover or a mortgage protection policy. It would be wise to shop around again when investing in these products as there are savings to be made.
If you are satisfied to proceed you will sign the Contract for Sale. It is important that you are aware that the Contract deposit is refundable only in rare exceptional cases.
Once the Contract has been signed the Solicitor carries out all the legal work necessary to close the sale satisfactorily. Your lender gives your Solicitor a cheque for the balance of purchase monies and this in turn is given to the solicitor for the vendor and the keys are handed over. In the process the purchaser’s solicitor hands over to your lender what’s called “good marketable title”.
Having considered all of the above the buyer will still be grappling with the question is this a good time to buy. What if the property is not sold now and prices fall a further 10%? No one has a crystal ball but the website Daft and other media have reported growth in parts of Dublin over the past year. This positivity is filtering down to the country to other cities like Galway, Limerick and Cork. The buyer needs to be aware that there will always be a demand for good properties in good sought after locations.
There has been a lot of talk here so although it doesn’t strictly relate to first time buyers I think it is worthy of a comment. Where tracker mortgages are concerned it appears some lenders are willing to allow mortgage customers to move to a new home and have a tracker rate on the new mortgage for a period of five years. (After the 5 year period the mortgage reverts to a variable). Whereas other lenders allow customers who are moving up to keep their tracker and transfer it to the new mortgage on the new property. It all depends on who your lender is.
A first time buyer needs to see does the property not only match their expectations now but also into the future ie just because a small apartment may suit you now, in five years you may have outgrown it. The first time buyer needs to think as long term as they can. They may be happy with the location now but what about in 5 years time? Does it have adequate schools, shops etc. Are family close by?
Niall Colgan is a practising solicitor based in Cork City. |
Tags: property ladder
