First Time Buyers

Are you a first time buyer?

Here are our top ten tips to get you started in applying for your first mortgage –

  1. A mortgage is a long term commitment .At a fundamental level you need to be happy that buying is the route you want to take and to be aware that prices can go down as well as up
  2. We believe that is is very important to use an independent adviser. We have years of knowledge and experience that is available for your benefit free of charge and a range of experts to advise you.
  3. Remember that if you deal directly with a lender, they will only offer you, their limited range of products.
  4. Before you start looking, find out how much you can borrow,
  5. Only borrow what you can afford and the lower the borrowing, the better.The amount you can afford can be assessed by looking at your current savings and/or rental payments.For example, if you are paying rent of €700 and saving €250 regularly this indicates you can afford no more than €950 per month.
  6. Leave plenty of room for living expenses.
  7. Prepare well in advance.Keep your current accounts well maintained,avoid credit card debt and other short term loans and save regularly
  8. Stretch yourself a little to get the home you want but only do so if you are happy that you can afford repayments, even if rates go up.
  9. Always budget for adequate protection insurance to cover sickness and redundancy.
  10. Try and fix your mortgage if at all possible and if reasonable fixed rates are available.
  11. Be very careful with introductory rates and always consider the rates that apply after the expiry of the discount period.

Important Information for First Time Buyers

Building Your Own Home

Self build mortgages are mortgage facilities arranged for individuals building their own home. This mortgage category encompasses both direct labour construction and houses built by contractors under a building agreement. We have vast experience in the provision of self build mortgages. Building one’s home is not for everybody but, in almost all circumstances results in lower house purchase costs when compared to a ready-built house.

Choosing a lender

There are a whole host of considerations to take into account when choosing a mortgage lender. We monitor the ever changing market place so that we can keep you informed and assist you in making the right decisions on your choice of lender. Banks have reacted differently to the credit crisis with the bottom line being that it is harder to get money and it costs more. Our role is to provide you with a mortgage that meets your long term requirements.

Why choose us?

Should you deal directly with an Irish lender / lenders or should you use our services? Generally speaking when you deal directly with a bank, they tend to have their own rates and mortgage criteria only. This means you can be limited in choice. If you were to work directly with a mortgage broker, who works on your behalf to secure the best deal for your individual circumstances, it seems logical to think you would have a better chance of securing the right mortgage that is most suitable to your needs. This is where we come in!

Renting a room

Sometimes, first time buyers are seeking to add to income by renting out rooms in their newly acquired houses. Most lenders will not take the potential for such income into account when assessing borrowing capacity.

Loan Arrears

Some home owners have problems paying their mortgages. This could be for many different reasons such as the end of a relationship, the loss of a job, or unexpected expenses such as having a baby.

If you are having financial problems, you need to act quickly, even if the problems are only temporary. If you don’t, you could lose your home.

Act quickly

If you fall behind on your mortgage payment contact your lender.If you are currently in arrears contact your lender today.

If you have difficulty paying your mortgage (or think that you will have, for example because you have lost your job) it’s important that to talk to your lender as soon as possible. Don’t be put off because you think your situation is hopeless. There is often a solution. If you haven’t yet decided what to do about the problem, explain to your lender that you are going to get specialist advice about your options.

Pay as much as you can

Paying your mortgage has to be your top priority, even if you are under pressure to pay other debts as well. Losing your home through repossession would only make your debt problems worse, so it’s essential to keep paying as much as you can afford. This will help to stop your mortgage arrears from rising too quickly. It will also show your lender that you are trying to tackle the problem.

Choosing an appropriate mortgage product.

A guide to choosing between the different types of mortgage that are available.

As an impartial adviser our role is to advise you both on an appropriate lender and on a product to meet your needs .As lenders offer different product mixes and lending levels we work to match your needs with the best available product. Matters to consider in regard to product choice include:

*Your attitude to risk..do you want certainty over repayments?

*Future interest rate expectations…..We will advise you on our view of future interest rates to assist in deciding whether to go fixed or variable.

*Your current and expected cash flow…..What repayments are you comfortable with? What term is appropriate? Do you expect to have cash available for early settlement

Fixed rate mortgages

A fixed rate mortgage guarantees the mortgage rate you will pay for the term of the fixed period.

For example a five year fixed rate guarantees that the mortgage rate you are paying will not change during the five year period.

Fixed rate prices are determined by the markets expectation of future interest rates.

It is important to check what follow on rate is built into a mortgage agreement where a fixed rate is taken out. You should not enter a fixed rate for a term greater than the period over which you expect to hold the property. Most fixed rates contain penalty clauses for early settlement .

Discounted mortgages

Some lenders offer special mortgage rates for the first year of the mortgage. It is important that you look beyond this term and ensure that any introductory rate offered has a viable option after this first rate.

Costs before you buy your house:

Savings / Deposits

Savings are a key part of the house buying process.

A steady savings record helps an application. It demonstrates financial discipline which is one of the most important criteria underwriters look for when assessing an application.

Banks will require evidence of your deposit. Gifts from parents very often form a part of the deposit but as a general rule you should save at least half the deposit yourself

Avoid all forms of borrowing wherever possible if you are contemplating buying a new home. The level of any existing loans will affect the amount you will qualify for.

Stamp Duty Rates

The first Million is charged at 1% of the purchase price .

The excess over €1 million is charged at 2%

Legal fees

Solicitors act as your legal advisers in the buying transaction and provide you with comfort in regard to the title of the property you are buying.

Choosing a solicitor is not all about choosing the lowest price on offer.

A first time buyer should budget in the region of €2,000 for legal fees.

SURVEYORS FEES

It is recommended that you employ the services of a qualified surveyor to check the property for any structural problems or to advise you on any matters that may involve significant outlay e.g. dry-rot, subsidence, dampness etc.

The structural survey is usually not a condition of the loan offer and is a completely different matter to the valuation, which is carried out on the lenders behalf.

Use a reliable firm, agree their fees at the outset and insist on a written report. Budget €300 approx.

VALUATION FEES

Before a lender will issue a formal offer letter in respect of a property, they require an independent valuation from a qualified valuer. We will arrange this for you. Budget €135 approx.

Post purchase expenses

These costs will be ongoing from the first month of your new mortgage.

LIFE ASSURANCE

All home loans require mandatory life cover. This means if you or a joint applicant dies during the term of the mortgage, an insurance policy covering death, is payable and repays your mortgage ensuring you need not worry about the repayments.

Premiums depend on age, health status, occupation, smoking habits and can vary from one insurance company to another. Mortgage company of Ireland will be pleased to provide quotations.

The minimum cover you will need is as follows options for life and health cover are as follows:
1. Decreasing life cover (mortgage protection) – as the name implies, your mortgage balance is covered and as it decreases through capital being repaid, so does the life cover. This is the cheapest of the types of life cover available.

Optional cover includes

1. Level term assurance – this means whatever the original sum borrowed is covered for the entire term irrespective of what the balance is when the life assured dies. This is therefore more expensive than decreasing cover.

2. Total care cover – this is top of range and you are covered both on a level term basis against death but also on a level term basis for serious illness cover. Effectively, should you receive a serious illness during the term of the loan, the full original sum borrowed is payable. In this case, you do not have to die to receive the benefit. However, this is the most expensive of the types but it is also the most reassuring !

3. Serious illness cover – covers the assured against most of the serious illnesses for the specified period. Illnesses include heart attack, stroke, cancer and a list of others. Separate and stand alone cover can be obtained.

4. Income protection insurancer – if you are incapacitated and unable to work, this cover will pay up to two thirds of your income until either you can resume employment or you retire and your pension kicks in. This is also expensive, but again reassuring.

5.. Mortgage repayment protector – this covers your repayments for up to one year in the event of accident, illness or redundancy.

HOME INSURANCE

All mortgage lenders in ireland require that properties they are lending against be insured for fire and perils risk (earthquake, storms, flooding etc) and they have their interest in that property noted by the insurance company.

Virtually all borrowers require that their personal possessions, furniture, clothes and other belongings are insured against the same risks. Whereas this is not compulsory from the lender’s viewpoint, it is advisable to cover potential personal losses in the event of fire for example, items over €5000 must be valued separately and listed on the policy.

Your home insurance depends upon:

  • Location
  • Required insurance amount
  • Contents cover
  • Extra all risks cover Discounts may be applicable depending on:
  • Age
  • Smoke detectors
  • Alarm
  • Security
  • Occupation and
  • If your home is occupied during the day.
  • Neighbourhood watch