Buying a house will probably be the biggest purchase most people will make in their lives. The process is littered with the baggage of ages, you have to get your own engineer, a solicitor must check the title of the land even though it may be a new estate, money goes here, money goes there and it’s all very stressful.
I went through that hell almost 2 years ago but it was brought to mind again recently when I was asked for advice on the subject. I’m no auctioneer or lawyer but here is a list of what I think you need to do when making a house purchase. The list is tailored towards the first time buyer because that’s exactly what I was when I bought. If you already have a property you have the headache of selling that too.
How big is your mortgage?
Finding the best mortgage is a tricky problem and there are a number of options – go directly to a bank or go through a broker. Hopefully your broker will be independent and will give you the best mortgage he can find but seems unlikely in light of the fact that brokers receive varying commissions from different banks and lending institutions. Brendan Burges answers frequently asked questions about mortgages on the askaboutmoney.com forums covering topics as diverse as mortgage repayment protection, tax relief and insurance.
Budget
You have your mortgage but besides the cost of the house, there are fees for all the services you must use to make the purchase. A solicitor will normally charge 1% or even 1.5% of the house price for their services. An engineer will charge anything from €400 and up depending on the size and condition of the property. You’ll also have to set aside money to purchase furniture and all those things your parents had in the kitchen that you took for granted. I have to admit I completely misjudged how much this would cost. If you like spending money though, buying for your home can be as satisfying as buying the latest gadget or a new pair of shoes!
Hire a solicitor
Look up the Golden Pages and point your finger at the page and you’ll find a solicitor. Some are better than others, some are more paranoid and careful. You want the paranoid one on your side. Ask friends or family for recommendations. If you’re in Cork, email me and I’ll recommend the solicitor I used.
Find your dream home
It may seem strange that this is not top of the list but it’s useless dreaming about owning a mansion if you can’t afford it. Getting mortgage approval first and finding out what your budget is will help bring your dreams more in line with reality and possibly down to earth with a crash. Use myhome.ie, and use Google to find local auctioneers. Examine the prices in the area you’d like to live. If you are really diligent, go down to City Hall or the local council and find out what developments are in store for your area in the next five years. You don’t want a sewage plant opening next door.
Hire an engineer
Your broker or bank, or solicitor, or somebody will recommend an engineer or architect. He’s important because he’ll spot the damp wall that means you may have to spend thousands on a new heating system. It’s also a formality too because he can only do a visual inspection unless he rips up floor boards, moves built-in storage out of the way and peels back wallpaper. There will be things he misses that you’ll curse him for months later. You’ll have signed his disclaimer form so just live with it. The banks want someone qualified to certify that the building you’re spending their money on is something they can sell in the event that you default on the mortgage. Why the buyer can’t hire an engineer and provide that report to each buyer is beyond me, but that’s “how it’s done” here.
House Valuation
The bank will send someone out to value the house, but guess who pays? It’ll cost you, the buyer, about €100.
Haggle and Bargain
By the end of the process, you will regard auctioneers as the lowest form of … Let’s just say, they probably squeezed you for every penny you’re worth didn’t they? If you’re a first time buyer the auctioneer is going to love you. You can be a quick sale, he gets his commission and deal’s done. Use that when you’re haggling over the price of the property. I’m not very good at this, if you aren’t either, it might be worth doing some research and practicing. It could save you a few thousand Euro. You do not not sign a contract yet.
House Insurance
Why do I need house insurance before I’ve bought the house? It’s because you have an interest in the property. You will also want to have the house insured the moment you sign on the dotted line. What if someone burns down your new home the same day you buy it? It’s another requirement that you have house insurance before the bank releases the funds for your mortgage. You can buy from the bank or broker providing you with the mortgage, but you probably shouldn’t. Shop around. 123.ie is one site that springs to mind but almost every insurance company has a website these days where you can get an online quote.
Mortgage protection policy
Nobody likes to think about death but a life assurance policy is another of the bank’s requirements before you can get a mortgage. If you die, the bank wants the loan they made to you paid off quickly and without fuss. A life assurance policy does that. Like the purchase of house insurance, you should shop around. Rates and options can vary wildly, but the cheapest policy is one that covers only death, and where the amount paid out decreases with the life of the policy, in line with the mortgage value.
Sign on the dotted line
Once your mortgage has been finalised, your house insurance bought and all the land registrary checks made by your solicitor, then you can sign the contract to buy the house. If your mortgage isn’t ready, and on the off chance that something goes wrong (perhaps a problem with your life assurance?) that makes buying a mortgage impossible, the seller could sue you or make life very difficult for you by looking for the agreed price of the property. If all goes according to plan then well done, you’re on the property ladder! You’ll owe the bank a huge sum of money every month for the foreseeable future “but at least you own your own home”! I owe the bank a big fat mortgage too so I’m in the same boat. 800 mortgages are issued every day in Ireland and despite the rise in interest rates that doesn’t look like it’s going to slow down any time soon.
Related Links
- Your local library will have a booklet called “Using the Internet for… Buying a home”. It’s part of the Life Steps Government scheme and the contents are available online too. Their quick guide is an excellent collection of links to sites such as Oasis.gov.ie, moving.ie and the independent Irish Financial Services Regulator (ifsra) who are an excellent source of advice.
- The mortgages and home buying forum on askaboutmoney.com is worth a visit too if you have questions to ask.
If you have any suggestions for improvements to this list don’t hesitate to leave a comment below. Thanks Mel for reviewing my original list and making suggestions!
PS. The bungalow pictured above is in Blarney, I won’t say where but the list price on the auctioneer’s website was €330,000. Apparently it finally sold for €375,000!
If you are selling a house, about.com have a guide on how to prepare your house for the sale and showing it off. This might be useful too when you’re buying. You’ll spot the tricks!
Kathy Foley warns that you may be paying too much for conveyancing. She advices that by shopping around you should be able reduce your bill to less than €1,800.
So I shouldn’t have to pay more than €1,200 or €1,300 if I go for the best deal?
You should be able to get the conveyancing done for this amount, although you might have to pay up to €1,800. “If you pay more than €1,000 plus Vat and outlays for a standard conveyancing, you are paying too much,” said Leonard.
Nice post Donncha. It’s all a little ahead of me yet, not looking forward to it.
Nice article. Unfortunatly it’s about the same amount of trouble when buying a house in the states.
I think you should add a paragraph on “minimising stamp duty in Ireland” because there are some clever twists that people can use to buy first, second or third homes and not pay the Exchequer on the transaction. It’s all in the paperwork worked by the solicitor, the condition of the home certified by the solicitor and whether the house purchased is unoccupied. Alert solicitors have saved me more than EUR 10000 on several occasions.
Bernie – that’s well beyond my knowledge! I may expand this post in time with details about tax relief and other topics, but the mortgage FAQ on askyourmoney.com covers that already. Hopefully I can steer people in the right direction when they plan to buy a house. Good luck Adam when you decide to purchase! 🙂
On a related topic, there was some sort of trouble last week about people buying houses off the plan, putting a down-payment on it but selling the house before it was built for a highly inflated price. Through some loop-hole they were able to get away without paying any tax on the sale, something to do with them not “really” owning the house in the first place because it wasn’t built. Does that ring a bell?
“There will be things he misses that you’ll curse him for months later.” Oh lordy, I hope not!
Great post Donncha. Myself and Ryan have just started the process of buying our first home. The first step been, that the bank will actually loan us the money. But, gee the stress has already started. Luckily, we have plenty of people to ask for advice etc.
At the moment i am trying to pull together all the various costs of buying the actual house. Madness!!
Hey there Donncha,
Thanks for all the effort – it’s a great help to us all! You mentioned that you would supply the name of the solicitor you used. I’m in Cork too & looking for one at the moment, ( as well as someone to do a structural survey!). You mentioned fixed rate prices for conveyancing…. does such a thing exist if one is “trading up” – i.e. selling one house & buying another? Any & all advice greatly appreciated.
Thanks,
Louise
Hi Donncha, Just like Louise I’m in Cork and looking for a lawyer.
Any recommendations will be greatly appreciated.
By the way could Bernie expand on how to minimise stamp duty. I’m buying for the first time in Ireland but because I’ve owned in the UK I’m getting stuck with the full amount of duty.
The house I’m buying is empty, owners moved to Limerick.
“The first step been, that the bank will actually loan us the money. But, gee the stress has already started. Luckily, we have plenty of people to ask for advice etc”
Remember that there are many banks out there and YOU can bargain the mortgage rates. People are too afraid of banks.
hi,im in the same situation,would you eble to recommend a good solicitor that wouldnt cost the price of the house?!!thanks a million for our help,
david
hey
just put a deposit on a house galway cant believe how long it takes to actually get into it like 2 months apparently and solicitor is €2080 its crazy they charge you for photocopying postage and calls. but hopeflly will all be worth it
Hi there,
Am wondering is it actually legally required or even really necessary to hire a solictor? Can’t we do a DIY buy your own house like people do DIY divorce?
Hi Dee. I’m from Australia and it may be different in every country but I doubt that there is anything legally prohibiting you from doing your own conveyancing just as there is nothing stopping you from fixing your own car or doing your own heart surgey.( actually there may be laws on the heart surgey but you take my point )
It’s just that buying a house represents the largest financial commitment most people will ever make so it’s not something to take chances with. Things do go wrong and you want a legal professional if that were to happen. Believe me I’m in favour of diy , after all we run a diy sales site.. but I think when it comes to conveyancing take no chances. That doesn’t mean you shouldn’t shop around for the best deal though.
It is always a hassle to buy a house, no matter where you are 🙂
Buying a house isn’t that difficult if you have a good law firm on your side and if your willing to give the mortgage lender a good deposit, I would say to leased $5000, or a bit less if you can’t afford that much. This shows the leaner you can save money and will reduce your monthly payments.
Some people take on the stress of buying a new home to seriously, you have to accept, they will be red tape and things do happen but in the end it should work out just fine.
Unfortunately, any advice issued about buying houses in Ireland in 2006 should simply have been 1 word – don’t.
P.
Hello Donncha,
I’m in the process of buying a house and I smiled at your line “I went through hell 2 years ago buying a house” – that’s exactly how I would describe it.
You had a lot of very useful info in your “Buying a house in Ireland” segment. Can I ask what is the name of the solicitor you appointed in Cork – hopefully he/she charge reasonably!!
Many thanks.
Kind Regards,
Kerry.
I’m in the middle of trying to purchase my first home, have come up against so many problems…ugh… on the verge of giving up at this stage. Thanks for the advice, nice to know someone else has gone through similar! 😉
Reading this i feel so unsafe. Just come out of university working in a well paid job and this is ever creeping so close and i have no clue about anything. Anyone recommend to me a book that will clear everything up? so this is the big bad world everyone larked on about.
Me and my boyfriend live in egland but we are looking to buy in ireland. what is the cheapest part of ireland to live in and u got more for your money. I would love to buy near the coast but i think it would b to expensive
Btw,
If you’re hiring a solicitor, TRY get a fixed price
If they want a % of the mortgage, tell them to take a flying leap .. at the moment, there solicitors have been hit as hard as builders, so they will bargin alot
We got a solicitor out in Fermoy, Justin McCarthy and he was WAY cheaper than any of the lads in the city
How can you buy a house in Ireland if you are not an EU citizen. for cash that is?
Our estate agent recommended a good solicitor at a good fixed rate.
Could you recommend engineer and/or solicitor in Mallow/North Cork/Cork area please?
Unfortunately not. It’s been 6 years since I bought my house. I have no idea who’s working in this business any more!
anyone know if there is a kit I csn buy on doing own conveyancing in ireland ? I always did my own in Uk and in Australia and never had a problem and you can do a bwetter job than a solicitor as you have more intetest in it. I did mine after rreading “the conveyancing fraud” by michael Joseph and I have always kept the book as my bible . Worth reading if you get the chance
my only concern is that the Irish system might be very different from UK system but I doubt it . The main problem will be finding addresses of the diffetent bodoies for searches etc .