First Time House Buyer Guide

[HarshadRanganathan]

Best Practices

• Have 6 months clean bank statements which -

  • show your savings capability per month (used for your repayment capability calculation by bank)

  • doesn't have big outward transactions e.g. transfer to home country (or) has reasonable explanations for them e.g. family maintenance

• Close off any loans you may have otherwise it might either affect your mortgage application or reduce your mortgage amount

Pre-Requisites

• Get HTB Approved

  • If your mortgage will be based on Joint names (e.g. You & your spouse) ensure HTB is generated with both names

  • If you already own a home in a different country then you are not eligible for HTB as the home needs to be your first home across the globe. Your bank will refuse AIP under HTB if they see you already own a home in a different country. This may happen when they request for a credit report from your home country and notice a loan for home purchase was issued which means this is not your first home and legally renders you ineligible for HTB

• Get AIP Ready with your bank of choice (or) with multiple banks

  • Solicitor & property details not mandatory at this stage

  • Some banks may ask for your credit report in your home country/explanations if they notice transactions to your home country

  • Rejection with one bank doesn't mean rejection will all banks

  • AIP mortgage amount depends on your annual salary, repayment capabilities (child, existing loans - all factor), your savings per month, exception approval etc.

  • If your current job is in probationary period (treated differently if you are in public sector jobs) AIP will include a clause saying that you can't drawdown until you complete the probationary period

  • Have clarity on if you are going for fixed or variable - in case of fixed what's the term etc. as amendment to AIP will cause delays with the bank

Solicitor

• Get Solicitor Quotes for your price range

  Professional Fee
  VAT at 23%
  Stamp Duty
  Land Registry Fee
  Search Fees
  Commissioner for Oaths

• Choose your solicitor

Book Your Home

• Book your home
• Transfer Booking deposit via Bank Transfer to EA
• Share Solicitor details & AIP to EA
• EA sends Booking deposit receipt to your home address

Offer Letter

• Share Solicitor details to Bank and initiate revised AIP/Offer Letter process (with any exception approvals for increased borrowing) with property address

  • Share HTB approval and Deposit receipts

• Bank shares the Mortgage pack with your Solicitor for signing

Contract Signing

• Builder's Solicitors share the Contracts of Sale to your Solicitor for signing
• 21 days to sign contracts and pay balance deposit (less booking deposit & HTB entitlement)
• Review and Sign both Contracts & Loan Offer with your Solicitor
• Transfer the balance deposit to your Solicitor's bank account
• Your Solicitor forwards both the signed contracts & balance deposit to Builder's Solicitors
• Your Solicitor forwards the Assignment of Life policy to the Bank
• Get a Letter from Solicitor confirming receipt of any deposit paid to them on signing contracts
• Solicitor receives a receipt of Contract and Building agreement signed by Builders

HTB Claim (to be used for deposit)

• Upload Contract & Building Agreement to Revenue and get HTB Claim Reference & Access Code
• Share HTB Claim Reference & Access Code to your Solicitor to forward it to Builders Solicitor to verify HTB claim with Revenue

Mortgage Protection

• Get quotes for Mortgage Protection

• Get your Mortgage Protection ready without activating it - any GP tests, existing health issues raised and get underwriters' approval

• It's important to have Mortgage Protection ready early for following reasons -

  • If you/your spouse have been in the country for less than 2 years, some insurers ask for GP blood tests to be done and shared with underwriters - this takes couple of weeks depending on GP

  • If you have pre-existing conditions such as diabetes you may find it difficult to find an insurer so you will have to work with your broker/multiple brokers to have it sorted out in advance

Snagging

• Get quotes for Snagging
• Do Snag once Builder notifies the property is ready for Snagging
• Share Snag list to Builder

Valuation Report

• Get Valuation done by an approved valuer based on bank

• Make sure details match as per Offer Letter (both names, property address etc,)

• Ensure valuation report's market price matches property price - any big differences will cause issues with mortgage

  • Some people do valuation twice for this reason - one at an early stage of booking the property to ensure valuation matches purchase price and another closer to snagging date as valuation report is mandatory and validity of each report is only 4 months from date of issue (might vary bank to bank)

• Share valuation report to Bank/Valuer shares it to the bank

Activate Mortgage Protection

Activate your Mortgage Protection with a start date as this will be needed for the drawdown process - this might take few days

• Your policy rate may change depending on if you have crossed your next birthday since the quote

Home Insurance

• Get quotes for Home Insurance

• Decide on Building sum insured value

• Purchase Home Insurance ensuring below criteria

  • Home insurance is taken for an amount equal or higher than the Reinstatement value of the property

  • All applicant names must be noted on your policy schedule

  • Noted interest should be for the bank - use the name shared by the bank

Drawdown Initiation

Once ready for drawdown, share needed documents to bank and initiate drawdown.

• Mortgage Protection policy schedule
• Home Insurance

Your solicitor will work with Builder's solicitor to share other needed docs to the bank such as

• BER rating
• Homebond certificate

Drawdown Of Funds

Transfer any additional funds for purchase not funded through your Mortgage + Solicitor fees to your Solicitor.

• Some banks may have limits on how much you can transfer so plan ahead so that it doesn't cause you stress/delays

Your bank on underwriter approval, will transfer the funds to your solicitor

• Any mismatches in docs (name, property address, EUR figures etc.) will cause further delays

Closing Sale

Your solicitor will inform you once the funds are transferred to the builder's solicitors and the sale is closed.

You can now discuss with the builder/EA to arrange for collection of keys.

While closing a sale is expected to be a straight forward process, it may not be the case for everyone.

• Your solicitor provides guarantee to the bank that he will close the sale only after sufficient verification of compliance/regulations fulfilment on the property - your bank shifts the onus of these checks to the solicitor and transfers the mortgage funds

• Your solicitor will hold on to the funds and will do necessary checks on the property such as searches, council plan approvals etc. If these are not fulfilled by the builder, the solicitor has to return back the funds to the bank in due course.

• Your solicitor will hold on to the funds for certain time (assuming no negative interest rate charge for him) and work with Builder's solicitors to raise his concerns on any compliance issues

• Builder's solicitor has to work with the Builder, architects, county councils etc. to get needed approvals/clarifications on the plan approval conditions attached

• Above will take time and cause more stress to the process and you may have to compromise if certain planning conditions are not yet fulfilled by builder e.g. financial conditions attached by council, parks, sewage, drain tests, provision of ev charging points etc.

• In these cases, you have two options either proceed with sale (you take the risk that you can't sell the property afterwards due to lack of compliance) or get undertaking letters from builder or hold certain amount etc. this will be decided between the solicitors when you share your opinions.

• However, solicitor won't be willing to close the sale if certain compliance conditions aren't met as it puts him at risk.

• You may wonder, shouldn't the builder ask you to initiate drawdown only after he meets all compliance requirements but in reality that's not always the case - builder will be trying to pressure based on market conditions to close sale on the property sooner than keep waiting for all conditions to be met to prevent incurring any loss etc.

Registration

Your solicitor will reach out to initiate registration for your property in the land registry.

The registration process takes more than a year to complete due to backlogs.

[HarshadRanganathan]

https://www.newhomelegals.ie/home-completed/