Ask anyone whose been through it and they will tell you that buying property is potentially one of the most stressful things that people will do in their lifetime, especially for those who are unfamiliar with the process. This guide provides a synopsis of what happens when you decide to take the leap into the property market.
What Should I Buy?
In looking for a property and assessing its value the point you should consider are as follows:
- Is it a saleable property? (Location, amenities, garden aspect to the sun, etc.)
- Eligibility for local schools is determined by your location within the same church parish as the school and not necessarily a town land/address of the property
- Is the property covered by the Homebond or Premier Guarantee schemes?
- Is rental potential important? Is it a rentable property? How many properties are currently for rent in the area?
- What are the level of rents for this type of property in the local area?
- What mortgage will I need to buy it? How much will the repayments be and will the rents available in the local area cover the mortgage repayments?
- Is it a managed estate? Is there a service charge? What is the level of the service charge? What is included (e.g. refuse collection)?
- What is the BER (Building Energy Rating)?
These important questions allow you to frame the long term view of property ownership, especially if you are borrowing to buy and don’t have the luxury of time to wait for a potentially difficult market to pick up. It should also assist you in determining, given all the circumstances whether the property is good a value purchase.
The First Steps to Buying
Once you have answered all your pre-contract questions, you will place a booking deposit with the sales agent. This is a sum of money which the auctioneer will hold until completion to confirm that the particular property has been reserved for purchase by you. The booking deposit will not bind you to a purchase of the property until such time as you have signed contracts with your solicitors and the Vendor has counter signed. Once the booking deposit has been paid, the solicitors for the Vendor will send out draft purchase contracts auctioneer to your solicitor.
At the same you should be organising your loan approval. This is the facility letter that the Bank or Building Society will issue confirming the amount of the mortgage that you have organised with them and the terms on which it is given i.e., the length of the mortgage, the interest rate, whether it is variable or fixed etc. You should also give the bank the name of your solicitors. They will then forward the “loan pack” to your solicitors.
Often mortgages come with discount introductory “fixed” rates. This means that the rate and therefore the repayment will stay fixed for whatever that period of time is and often you can specify what you would like e.g. one, two, three or five year fixed rates. What you need to note is that if you fix for a certain term and then wish for whatever reason to remortgage with another bank or redeem/pay off the mortgage within that period that a penalty is commonly applied by the Lender for redemption within the fixed rate period.
Meeting your Solicitor to sign Contacts
When your solicitors have received in both the title documents and the Lender’s letter of offer and loan pack, they will make an appointment with you to come in and sign the purchase contract. Your solicitors will require (under the Money Laundering Regulations):
- ID Verification (copy of your passport, driver’s licence or Immigration Bureau ID card)
- Address verification – typically a utility (ESB, Gas, phone) bill with your name at that address.
- If a further sum of money is due on the purchase as a balance deposit (and the sales agents will advise you), you should bring this money with you as a cheque or bank draft made payable to the solicitors acting for the Vendor (again the sales agents or your own solicitors will let you know who this is).
Your solicitors then will:
- Advise you on the relevant matters of title.
- Confirm the purchase price, and any extras or variations that you have agreed (e.g. purchase of contents)
- Have you confirm the identification, dimensions and location of the property on the title map.
- Pass you the specification, (new builds) if you have not already seen it
- Advise you in relation to the Management Company, service charge and terms/obligations of membership
- Discuss the completion date
- Go through and advise you on the mortgage loan offer and its terms and ensure that it is the correct offer letter (terms haven’t changed). Advise in relation to the length of time within which you have the accept the offer letter and how long it stays valid for.
If everything is in order, you will sign the contracts and the loan documents and pay over the balance deposit. The contracts are then countersigned by the Vendor and exchanged. At this point the contract is bindng on you for a purchase at the price in the contract, for completion on the closing date agreed and inserted in the contract document.
After You Sign Contracts
Once the contracts in the purchase have been exchanged and made binding on all parties, your solicitor will work with your bank to ensure that the loan funds will be available for the agreed closing date.
During this time you should start organising the final items required for you to organise with your lender, usually as follows:
- Mortgage Protection. This is an insurance policy designed to cover the repayment in full of your mortgage in event of your death.
- Property Structural Insurance/ Fire Cover. If you are purchasing a house, you must insure the property for the re-build cost (not the open market value) so that if the property is destroyed by fire or one of the insured risks, a policy exists to cover the costs of reconstruction.
The Usual obligations under a mortgage are that you must maintain both the property insurance and mortgage protection for the duration of the mortgage.
You will be advised by your solicitor of the amount needed to complete the purchase, including the mortgage funds you are borrowing from the bank and costs such as stamp duty and registration fees. You must have these funds in place in advance of the closing date.
Buying Your New Property and Getting Your Keys
When the closing dates arrives. The balance of the purchase money is paid over, final checks are carried out by your solicitor and if everything is in order, money and keys are released.
At this point in time the property is yours.
After the closing of your purchase your solicitor will require you to sign your purchase Deed. Your solicitor will then organise payment of Government Stamp Duty, and the registration of the property in your name in the central Government Registry. In Ireland currently the rates of stamp duty on purchases for residential property are 1% of the purchase price of the property (up to €1,000,000.00) and 2% of the portion of the purchase price above €1m.
On completion of registration you will be advised and the Deeds are sent to your Lender where they will be held by it for the duration of the mortgage it has on the property. If you are a cash purchaser you may take possession of your own Deeds.
We act extensively in the purchase, sale and remortgage of residential property in Ireland. The office has a long standing tradition of property transactions which is reflected in our considerable expertise in this area. Our service is welcoming, our rates are very competitive and our focus at all times is to ensure the maximum benefit to our Clients with the minimum of stress.
Please Note whilst every care has been taken with the accuracy of the above, this guide has been prepared for information purposes only and should not be regarded as a definitive legal document. You should always seek the advice of your solicitors on any issues concerning purchases of property and never execute any documents without having first having sought legal advice.