Mortgage Approval in Principle
Talk to your Mortgage Broker or the bank/Building society as early as possible. You are looking for Mortgage Approval in principle at this stage. There is no point in viewing properties before you know what a lender is prepared to loan you and how much the repayments will be.
At this stage you will need photo ID, P60 or your last 3 payslips, Salary Certificate or last 3 months bank statements. An answer shouldn’t take long as it is just “Approval in principle”.
Factor in Costs of Purchasing
Factor in 1% of the purchase price of the property for Stamp Duty (2% for properties over €1 million). A structural survey, carried out by an engineer, will be anywhere between €300-€500 plus vat. You will also have to pay for the mortgage valuation which will be approx €110 plus vat. Finally your solicitor costs will vary but expect approx 1% of the sale price plus vat. To sum up a good rule of thumb for costs associated with purchasing is 2.5-3% of the house price.
Agree the Purchase
In Ireland properties are sold mainly by Private Treaty. Essentially this means that a property is agreed for a sale when a suitable offer is accepted by the seller (vendor). A booking deposit (Can be 2.5% to 5% of the agreed price) is required at this stage and is paid to the estate agent. This deposit is refundable should the sale fall through and contracts don’t get signed and exchanged.
The estate agent will send out sales letters detailing all of the particulars of sale to you, your solicitor the vendors and the vendors solicitors. There are no legal obligations at this stage and either party can withdraw from the sale.
Properties can also be purchased at Auction. A date and a venue are decided by the agent. A reserve price is normally set on the day of the auction, or during the auction, by the seller. At this price the property “is on the market” and will be sold to the highest bidder. If the reserve price is not reached the property will be withdrawn from the auction and either withdrawn completely from sale or placed back onto the market by Private Treaty. If purchased at auction the successful auction bidder will be required to sign contracts immediately after the auction and to pay a 10% deposit to the vendor’s solicitor. This is a legally binding contract. It is therefore prudent, prior to an auction, for an interested party to have the property surveyed, have a solicitor check the title and have the necessary finance obtained.
Instruct an Engineer and Solicitor
As soon as possible you should instruct a solicitor to handle the sale (conveyance) of the property from the vendor to you. You should also instruct an engineer to check out the property for any structural faults or boundary issues. If it is a new house the engineer will make out a “snag list” which will be sent to the builder. The estate agent will inform all parties when they receive the booking deposit and the vendor’s solicitor will issue contracts, in duplicate, out to your solicitor along with a copy of the title deeds and folio maps.
Finalise your loan offer
Once your mortgage provider is in receipt of all documentation they will instruct a Valuers to carry out an independent valuation on the property. You will have to pay this fee approx €110 plus vat. If your mortgage provider is happy to proceed they will formally approve the loan application and will send out a letter of offer and mortgage pack to your solicitor which will set out the provisions of the loan. The lender will have required you to take out life assurance and home insurance/building cover.
Your solicitor will check the contracts, title, survey report and loan pack. Once your solicitor is happy will all of the documentation they will ask you to sign the contracts and at this stage you will have to pay a total of 10% of the purchase price (you can deduct the money already paid to the estate agent, as the booking deposit, just so long as a total of 10% is paid). Your solicitor will send off this documentation to the vendors solicitor and once contracts are signed by the vendor, the deposit becomes non refundable and a binding contract is entered into.
On exchange of contracts your solicitor will return the signed loan acceptance and ancillary documents to your bank. Your solicitor will raise requisitions (a lengthy questionnaire) on the title which is sent to the vendor’s solicitor together with the draft purchase deed. The deed is approved once the vendor’s solicitor replies to the requisitions.
If there is a snag list of jobs to be done by the builder the engineer will recheck the house and will advise the purchaser accordingly.
A closing date and time is finalised to suit all parties and you or your solicitor should check with the mortgage provider to see that everything is in order for the loan cheque to issue. This will be a bank draft payable to your solicitor and will be issued the day before the completion date. On the completion date both solicitors will meet. Your solicitor will check the title and will then hand over the balance of the funds to the vendor’s solicitor who will then hand over the keys to your solicitor.
You are now free to take possession of your property as you are the legal owner. Inform all of the utility providers and a good change of address shortcut is www.myaddress.ie.
After the Purchase
Your solicitor will proceed to stamp the purchase deed and will register same with the Land Registry. This can take months however. Once the deed is registered your solicitor will then return the title deeds to your mortgage provider and your file is then closed.