First-Time Homebuyer's Guide to Purchasing a Home and getting First Mortgage

First-time homebuyers have a very difficult time dealing with solicitors, real estate agents and surveyors to name only three. These people make the home buying process appear very complicated, so to help you, here is a guide to the various stages involved when you are purchasing property.

Before you can get the benefits available to a first-time buyer, you have to make sure that you qualify. To be legally termed a first-time buyer you must not have purchased a house anywhere previously, and the home you are buying must be for your main residence and not as a holiday or second home. You must also not get rent from the property for five years from date of purchase, unless thorough the rent-a-room scheme. On a more positive note, you will be exempt from Stamp Duty.

Here are the major factors that you should be aware of:

• The amount you can borrow.
• The amount of deposit you will need.
• The repayments you will have to make.
• Any additional costs you will have to pay.
• The type of mortgage to go for.

With regard to the mortgage, you can opt for a fixed interest rate, a variable rate or a split between the two.

Here is a summary of the steps involved in purchasing your first house.

The Amount to Borrow

This will depend largely on the mortgage lender, although your income should give you a rough guide as to a ball-park figure available to you.

Your gross income is the important figure, including any overtime, commissions or bonuses, although a few prefer to calculate your mortgage on your net, or take home, income. You will generally be offered a multiple of your income, say three or four times your annual income.

You won't generally get a 100% mortgage, the best you can expect to be offered being around 90% - 92%. You have to come up with the remainder yourself as a deposit.

Approval in Principle

It is important to get Approval in Principle before you start searching for properties.

This will enable you to know precisely how much you can afford to offer for a property. With this knowledge you will avoid wasting time looking at out-of-reach houses. Sometimes, a lender may offer you a higher loan than you had expected, allowing you to consider houses in a higher price band than you were originally looking at. You should fill in an application form for a mortgage in principle, together with any supporting documentation required, and you will then be more confident in making an offer you can afford.

How to Find Property

To find a good property, decide what you want in terms of location, number of rooms, garden or not and so on, and then go house-hunting armed with the amount you are able to borrow.

You should know the percentage deposit you will have to pay, and hence what you can afford to offer. You can search local press, use search engines or visit real estate agents in the area you want to stay and inform them of your ball-park price. Go slightly higher than you can afford, and you might be able to get a lower offer accepted.

Contact with the Realtor

Once you have found something that attracts you, you have to get in touch with the estate agent selling the property to make an offer.

When you do that you will have to make a booking deposit that holds the property for you whilst you get the mortgage arranged. This will usually be in the region of two thousand euros, and during this period you should have a survey of the house carried out to ensure that it is structurally sound and that nothing is wrong with it. If problems arise here, you can withdraw your offer and have your deposit returned.

Get a Solicitor

Once the booking deposit has been paid, you should retain a solicitor to handle the purchase for you.

If you don't have one already, ask any of your friends or relatives that might have purchased their house if they can recommend one. Let the solicitor know of any transactions that have already taken place, plus, of course, the seller's details such as the address of the house you are buying and the estate agent or solicitor handling it.

Letter of Offer of Mortgage

This indicates that the mortgage has been offered, and will generally be provided by the mortgage lender after a satisfactory valuation of the property.

The lender is not concerned with the state of the house, only if it worth the amount being lent, and can be sold for the amount of the mortgage if you fail to pay. The valuation should also give you confidence that the price you are paying is a fair one. The offer of mortgage will normally be valid for 3 to 9 months, after which you will have to apply to have it renewed with an update on your income.

Signing of Contracts

Once the letter of offer has been received, you have retained a solicitor and a satisfactory survey has been completed, you can sign the contracts.

You then have to pay the balance of the required deposit which will normally be around 10% of the price of the property (price offered less mortgage offered). Once this has been done, and the contracts have been signed, both parties are committed to the deal and cannot legally back out. If you do so, you will lose the deposit. You must therefore be certain that, before you do this, this property is the one that you want. If you see something better from now on, then tough luck.

Completion

Once the payment has been paid in full, both by you paying the deposit and the lender paying the mortgage loan, you will be informed of the completion date when the house will belong to you.

You are now advised to insure the house and your mortgage, and most lenders will insist on this as part of the agreement.

Final Closure and Key Transfer

Once the final cheque has been received by the real estate agent or solicitor representing the seller, the deal is regarded as complete, you will get the keys to your property.

The deeds will be held by the mortgage lender until it has been repaid in full, and until then they can legally take possession of the property and sell it without your permission if you fail to meet your part of the agreement and maintain your monthly repayments.

However, given that everything is order then you are now the proud owner of your new home.