First Time Buyer doubts

rickcv

Hello Everyone,

I would like to get some information on buying a house and get a mortgage. I have some doubts like:

1) The process from getting a mortgage from the bank takes a long time? Should I find first the house and then apply for mortgage or after? If I can pay off before the time stipulated by the bank, do i have to pay more?

2) Let's assume I got the loan approval from the bank and paid off to the owner of the house, which documents or procedure should I take? Where can i register the house in my name and my friend's (we are buying together)? Is it expensive to do so? Do I have to pay insurance for the house?

At first, I think these are my top doubts. I appreciate if anybody with more experience could help me out.
Thanks in advance,
Rick

snubbleste

Your post prompts me to ask: Why do you want to buy a house?

rickcv

well, for me it's an investment and also I wouldn't need to be paying rent. Paying rent on something that is not mine, is a waste of money.

Duckjob

Indeed, much better to be paying interest off a loan on an asset that is depreciating in value every day.

rickcv

Well, better be paying interest on something that is MINE than paying rent for something that will never be. If buying a house is so "bad", what's the benefits for me not buying?

Stavro Mueller

Buying a house isn't necessarily a bad thing. It's the timing that could be bad. I'm not telling you your business or suggesting you don't buy but look at the bigger picture. Yes it sucks to be paying rent when you'd rather have your own place. But is that a good enough reason to buy just now? House prices are still falling. Would you be better off holding off on buying for another while? Have you done the sums?

Duckjob

1) There's plenty of non-financial related reasons to want to buy - settling with family, kids etc - which is fine. I just dont understand why people continue to parrot the same cliches - "rent is dead money", "paying someone elses mortgage" etc.

2) You don't have to rent forevermore. If you are looking at buying, then realistically, you should be comparing buying now vs buying in 1, 2, 3 yrs time.

In reality, if prices drop more than a couple of percent then renting for 12 months will very likely save you money, and could save you a lot.

Do your sums is all I'm saying, and leave the "rent is dead money" cliches in the past where they belong.

djimi

rickcv wrote: »

Well, better be paying interest on something that is MINE than paying rent for something that will never be. If buying a house is so "bad", what's the benefits for me not buying?

The main reason I would say not to buy a house now, or at least to reconisder it, is the fact that house prices are still falling. Say for arguements sake your mortgage is €700 a month, and the house you buy now ends up falling €15k in value in the next 12 months. Youll have paid over €8k in that year for a house you could have bought for €15k less had you waited.

Im just plucking the figures out of thin air but you get my point? Renting at the moment is not dead money; not if it means you can continue to save for another year or two, to buy a house that will be almost certainly cheaper than it is now, meaning a smaller mortgage and a bigger deposit saved. Unless the house you are buying is relatively small money or the mortgage is relatively small then to me its a no-brainer to wait. Its unlikely the house will get more expensive so I dont see what you have to lose by waiting and seeing how much further the prices fall.

Dr Turk Turkelton

Sorry to jump in here but what if the house for sale is a once off opportunity not just your usual 3/4 bed semi-d?
Am looking at something myself right now and while it is expensive 300k plus it is unlikely to be on the market again for a long time.

howamidifferent

Cuchulainn1. wrote: »

Sorry to jump in here but what if the house for sale is a once off opportunity not just your usual 3/4 bed semi-d?
Am looking at something myself right now and while it is expensive 300k plus it is unlikely to be on the market again for a long time.

Lots of properties on the market at the moment for over 3 years...Whats so special about that one that it will be bought up immediatly at any price?

Dr Turk Turkelton

It's a large house 6 bedrooms with lovely gardens etc.Also the main thing is,is that it is in the boundaries of a relatively large town so footpaths,lights etc outside.
It was built by the builder for himself when he was building an estate about 12 years ago.

ProudDUB

rickcv wrote: »

Hello Everyone,

1) The process from getting a mortgage from the bank takes a long time? Should I find first the house and then apply for mortgage or after?

No. Try to get your finances in order first. You will be approved for a mortgage for X amount of euros based on your income, your savings, your debt history etc. Then and only then go looking for a house that meets your needs and is within your budget. Your having mortgage approval puts you in a better position when it comes to the estate agents taking you seriously, and having an offer accepted. If you are loan approved, you can move on the deal straight away. If the seller gets an offer that is similar or even higher than yours, but the buyer has to wait for the banks financing to come through, that may put the seller off him. He may not want to wait the months to go by, with the house essentially off the market, for that to happen. If the buyers financing falls through the vendor is back to square one & has lost a sale (you.)

2) Let's assume I got the loan approval from the bank and paid off to the owner of the house, which documents or procedure should I take? Where can i register the house in my name and my friend's (we are buying together)? Is it expensive to do so? Do I have to pay insurance for the house?

Your solicitor will take care of the paperwork in transferring it over to you. Some solicitors charge a flat rate to do all this. Some do it based on a % of the value of the house that you are buying. There is no way to say in advance how much it will cost. Shop around for the best deals from solicitors. But remember that you are getting what you are paying for. For example, a bargain basement solicitor may or may not do as thorough a search on the title deed of the house, or move as promptly as a solicitor who charges more will. Who is this "friend"? Do you and him/her have any legal ties? Would definitely suggest drawing up a legal agreement setting out what happens if one of your circumstances changes, and one of you wants to sell and the other doesn't. Your bank will probably make your taking out insurance on the house as one of the terms of the mortgage.

Given how property prices are still falling, I am in full agreement about rent being "dead money" being a total cliche. I am in a position to buy right now, but I am still renting and plan on doing so for another year at least. I pay 12,000 a year on rent. Dead money? Nope. The average asking prices for houses in the area that I have my eye on have dropped by 50,000 to 75,000 over the past 2 years. If they fall even further, when I do buy in a years time, the 24,000 that I have paid on rent in the interim will have been a smart investment in my future. Far from being "dead money" imo.

Monty Burnz

rickcv wrote: »

well, for me it's an investment and also I wouldn't need to be paying rent. Paying rent on something that is not mine, is a waste of money.

You pay rent either way:

'Rent' is the rent you pay on a building.
'Interest' is the rent you pay for money.

You need to talk to someone who can explain this stuff to you before you do something you will regret. And if you are counting on property prices rising to make money, you may be waiting a decade. And you will certainly be looking at actually losing money in the short term.

Buying with a friend is a whole other can of worms.

Thoie

rickcv wrote: »

Hello Everyone,

I would like to get some information on buying a house and get a mortgage. I have some doubts like:

1) The process from getting a mortgage from the bank takes a long time? Should I find first the house and then apply for mortgage or after? If I can pay off before the time stipulated by the bank, do i have to pay more?

2) Let's assume I got the loan approval from the bank and paid off to the owner of the house, which documents or procedure should I take? Where can i register the house in my name and my friend's (we are buying together)? Is it expensive to do so? Do I have to pay insurance for the house?

Going back to the original questions - bank approval times can vary - best thing is to pop into a few of your local banks and ask to speak to their mortgage advisors - many of the banks have "First time buyers" information packs, which give you an idea of the processes involved.

In my case, the approval took a couple of weeks to come through, then I had x amount of time to take up the offer (a couple of months I think), after which it would expire. While the sale was going through, the bank will arrange for the property being purchased to be valued, through your solicitor or the seller's - can't remember which, but it's not something you personally have to organise.

Different mortgage products have different T&Cs - my mortgage doesn't incur any penalties for paying it off early - other mortgages do. If it's something you think you'll do, discuss that with your mortgage advisor to find out what product is right for you.

When buying a house you'll hire a solicitor to do the conveyancing - they'll draw down the mortgage and pass it to the seller's solicitor. Your solicitor will take care of all the paperwork - ensuring the title is clear (ie, that the seller has the right to sell the house), registering the title in your name etc. She can also draw up an agreement between you and your friend, outlining what you agree will happen in various different situations. I've seen figures of about €1200 for conveyancing, though shop around and get recommendations from friends.

The bank will insist that you insure the property -at a minimum you will have to have the structure insured for the cost of rebuilding, and you will need life insurance (to pay off the mortgage in the event of your death). Your mortgage provider will generally offer you life insurance (cost depends on your age, health, whether you're a smoker, etc), but you don't have to take theirs, you can shop around and get it elsewhere if you like.

Loraco

Thoie wrote: »

The bank will insist that you insure the property -at a minimum you will have to have the structure insured for the cost of rebuilding, and you will need life insurance (to pay off the mortgage in the event of your death). Your mortgage provider will generally offer you life insurance (cost depends on your age, health, whether you're a smoker, etc), but you don't have to take theirs, you can shop around and get it elsewhere if you like.

Hey all

Any idea on who is offering the best life/home insurance at the moment?

Crazy as I may be I have just put in an offer on a house (but have bided my time and watched the price in this nice estate drop over past three years until something I can finally afford and think it is now worth the price)....would not have changed renting over past 10 years :-)

Thanks!

Thoie

Loraco wrote: »

Hey all

Any idea on who is offering the best life/home insurance at the moment?

Crazy as I may be I have just put in an offer on a house (but have bided my time and watched the price in this nice estate drop over past three years until something I can finally afford and think it is now worth the price)....would not have changed renting over past 10 years :-)

Thanks!

Loraco, there are too many factors in life insurance, such as your age, medical history, family history, etc for anyone to name a good insurer for you - you'll just need to call around a few places for quotes. If you google Mortgage Life Protection you should get the names of a few companies.

rickcv

cymbaline wrote: »

Buying a house isn't necessarily a bad thing. It's the timing that could be bad. I'm not telling you your business or suggesting you don't buy but look at the bigger picture. Yes it sucks to be paying rent when you'd rather have your own place. But is that a good enough reason to buy just now? House prices are still falling. Would you be better off holding off on buying for another while? Have you done the sums?

I agree with you. I am not buying it now, I just wanted to have information for the questions I made before. I am saving up money together with my partner to give a good amount of money as deposit and loan the rest, however I would like to know more about the whole process of buying a house in Ireland, so I wanted someone who had experience to tell me the details of how to proceed.
I appreciate your comment.

rickcv

Duckjob wrote: »

1) There's plenty of non-financial related reasons to want to buy - settling with family, kids etc - which is fine. I just dont understand why people continue to parrot the same cliches - "rent is dead money", "paying someone elses mortgage" etc.

2) You don't have to rent forevermore. If you are looking at buying, then realistically, you should be comparing buying now vs buying in 1, 2, 3 yrs time.

In reality, if prices drop more than a couple of percent then renting for 12 months will very likely save you money, and could save you a lot.

Do your sums is all I'm saying, and leave the "rent is dead money" cliches in the past where they belong.

I am sorry, but I didn't post it for people judge me for my decisions in life. Of course I would save from rent, which, for me, is dead money, and also I have my inspirations in life, like have a place for me, my partner, animals etc. Maybe you misunderstand my post but I am not asking people if I should buy a house or not, I would like experienced people to tell me the procedures or things I need to check before buying. The buying thing is already decided, and no matter what people say, it won't put me off or let me down.
Stop judging people. It's not nice of you.

Monty Burnz

rickcv wrote: »

I am sorry, but I didn't post it for people judge me for my decisions in life. Of course I would save from rent, which, for me, is dead money

Ok, at this point it's fair to say that anybody who has intelligent advice can avoid wasting their time sharing it with this poster. It would be wasted.

rickcv

Thoie wrote: »

Going back to the original questions - bank approval times can vary - best thing is to pop into a few of your local banks and ask to speak to their mortgage advisors - many of the banks have "First time buyers" information packs, which give you an idea of the processes involved.

In my case, the approval took a couple of weeks to come through, then I had x amount of time to take up the offer (a couple of months I think), after which it would expire. While the sale was going through, the bank will arrange for the property being purchased to be valued, through your solicitor or the seller's - can't remember which, but it's not something you personally have to organise.

Different mortgage products have different T&Cs - my mortgage doesn't incur any penalties for paying it off early - other mortgages do. If it's something you think you'll do, discuss that with your mortgage advisor to find out what product is right for you.

When buying a house you'll hire a solicitor to do the conveyancing - they'll draw down the mortgage and pass it to the seller's solicitor. Your solicitor will take care of all the paperwork - ensuring the title is clear (ie, that the seller has the right to sell the house), registering the title in your name etc. She can also draw up an agreement between you and your friend, outlining what you agree will happen in various different situations. I've seen figures of about €1200 for conveyancing, though shop around and get recommendations from friends.

The bank will insist that you insure the property -at a minimum you will have to have the structure insured for the cost of rebuilding, and you will need life insurance (to pay off the mortgage in the event of your death). Your mortgage provider will generally offer you life insurance (cost depends on your age, health, whether you're a smoker, etc), but you don't have to take theirs, you can shop around and get it elsewhere if you like.

Thanks very much for your response. It was very much appreciated as I could have a bigger picture of how the process might be. I am still waiting to get more money saved and have the prices of the houses go down. Let's see then how things are going to go. I don't know if i will need mortgage but it's good to know how the process is.
Anyway, thanks for replying what I asked.

Sarn

rickcv wrote: »

I am sorry, but I didn't post it for people judge me for my decisions in life. Of course I would save from rent, which, for me, is dead money, and also I have my inspirations in life, like have a place for me, my partner, animals etc. Maybe you misunderstand my post but I am not asking people if I should buy a house or not, I would like experienced people to tell me the procedures or things I need to check before buying. The buying thing is already decided, and no matter what people say, it won't put me off or let me down.
Stop judging people. It's not nice of you.

I wouldn't say the advice given was judgemental, I would see it as additional information to consider before purchasing. Being aware of all of the pros and cons is important before makng the biggest financial decision of your life.

rickcv

Monty Burnz wrote: »

Ok, at this point it's fair to say that anybody who has intelligent advice can avoid wasting their time sharing it with this poster. It would be wasted.

Well, once again, I didn't come here to be judged. My questions were not related to if I should buy a house or not. I just wanted to know the whole process. I don't know why you are all making such a big deal..

rickcv

Sarn wrote: »

I wouldn't say the advice given was judgemental, I would see it as additional information to consider before purchasing. Being aware of all of the pros and cons is important before makng the biggest financial decision of your life.

I understand you are point of view, but I just wanted to have information of the whole process to buy a house. I wanted to check how is to have a mortgage, how the process to register the house after bought etc.. Maybe I don't even need a mortgage, but i wanted to know, if i did, how would it be.

Monty Burnz

rickcv wrote: »

I don't know why you are all making such a big deal..

We are making a big deal because this is the biggest financial decision you will make in your whole life, whether you know it or not. Its frustrating taking time out of your day to give good advice to somebody you will never know out of the goodness of your heart, and then they turn around and ignore it or don't take it seriously because they think they know better.

This is not a morality/judgement issue - it's just some people taking time out of their day to try to make you think about what you are doing to prevent you making a big mistake. We have no chance of profiting from our advice, so you should not question our motives for giving it. Anybody who can profit - doubt them!

Jogathon

Please do not buy with a friend. I did in 2006 as an investment and because rent was "dead money" and regret it every day! If you're buying with a girlfriend then that's great. Houses have become affordable and for some friends of mine it's been an opportunity to buy a home that they'll have forever instead of a shoebox of a first time buy.

rickcv

Monty Burnz wrote: »

We are making a big deal because this is the biggest financial decision you will make in your whole life, whether you know it or not. Its frustrating taking time out of your day to give good advice to somebody you will never know out of the goodness of your heart, and then they turn around and ignore it or don't take it seriously because they think they know better.

This is not a morality/judgement issue - it's just some people taking time out of their day to try to make you think about what you are doing to prevent you making a big mistake. We have no chance of profiting from our advice, so you should not question our motives for giving it. Anybody who can profit - doubt them!

I appreciate your post and your time spent on replying but my intention here is to capture information of the process of buying a house. Maybe I don't even need a mortgage, I don't know, I am just capturing information to give this "big step". I already bought a house, not in ireland, and the process may be different, so I wanted to know what to do and procedures in general.
Thanks once again.

rickcv

Jogathon wrote: »

Please do not buy with a friend. I did in 2006 as an investment and because rent was "dead money" and regret it every day! If you're buying with a girlfriend then that's great. Houses have become affordable and for some friends of mine it's been an opportunity to buy a home that they'll have forever instead of a shoebox of a first time buy.

Oh no, it's my partner Thanks for your tip :P

Thoie

rickcv wrote: »

Thanks very much for your response. It was very much appreciated as I could have a bigger picture of how the process might be. I am still waiting to get more money saved and have the prices of the houses go down. Let's see then how things are going to go. I don't know if i will need mortgage but it's good to know how the process is.
Anyway, thanks for replying what I asked.

Some of the paperwork you'll need to provide when applying for a mortgage are things like payslips, bank statements, and credit card/loan statements, PPS number, proof of address, etc. You'll need to have at least 6 months of each, some places might want 12 months. If you have any big, regular loan payments going out, try and clear those as best you can before applying for the mortgage.

When you get the details of mortgages and monthly payments, sit down and do your own sums to see what would happen if the interest rates rise by 3%, 6%, 10% or 15% (google amortisation calculators) - would you still be able to pay each month if the interest suddenly soared? Work out your sums to see what would happen if one/both of you became unemployed - basically, don't trust the banks' stress tests

Let's say you could currently afford somewhere for 150k, @5%, paying 850a month (taking figures from http://www.calculatorweb.com/calculators/amortcalc.shtml for a 25 year mortgage). If interest rates rise to 10%, that monthly payment becomes 1300 a month. If you decide that 1,000 a month is your max, then @10% over 25 years, you might want to cap your borrowing at 110k(instead of the 150k you can currently afford). This will cushion you against future interest rate rises. While the interest is still low, and provided you've picked the right mortgage, you can pay off the extra 150 a month, thereby reducing the principal, and shortening the term of the mortgage.

Duckjob

rickcv wrote: »

I am sorry, but I didn't post it for people judge me for my decisions in life. Of course I would save from rent, which, for me, is dead money, and also I have my inspirations in life, like have a place for me, my partner, animals etc. Maybe you misunderstand my post but I am not asking people if I should buy a house or not, I would like experienced people to tell me the procedures or things I need to check before buying. The buying thing is already decided, and no matter what people say, it won't put me off or let me down.
Stop judging people. It's not nice of you.

My cat's breath smells like cat-food :pac:

muttley-dps

Loraco wrote: »

Hey all

Any idea on who is offering the best life/home insurance at the moment?

Crazy as I may be I have just put in an offer on a house (but have bided my time and watched the price in this nice estate drop over past three years until something I can finally afford and think it is now worth the price)....would not have changed renting over past 10 years :-)

Thanks!

Chrome insurance by far and away quoted me most competitive and with same bells and whistles as other companies. Their customer service has also been excellent as I bought, then had to withdraw, then bought again all without fuss.

stered

Regarding rent being dead money, it would be foolish to say that if property prices in your area are still dropping. However, interest relief for persons who buy in 2012 is considerably greater than if they hold off until 2013.

You've obviously made the decision to buy this year as have I, however I completely understand peoples suggestions to hold off for another year or two which to be honest is probably right.

However, sometimes there is only so long you can rent a 2 bed apt for without wanting your own four walls and back garden, if someone see's the house they are looking for in an area that there's not many affordable houses for sale, should they not jump?

Learpholl

stered wrote: »

Regarding rent being dead money, it would be foolish to say that if property prices in your area are still dropping. However, interest relief for persons who buy in 2012 is considerably greater than if they hold off until 2013.

You've obviously made the decision to buy this year as have I, however I completely understand peoples suggestions to hold off for another year or two which to be honest is probably right.

However, sometimes there is only so long you can rent a 2 bed apt for without wanting your own four walls and back garden, if someone see's the house they are looking for in an area that there's not many affordable houses for sale, should they not jump?

I genuinely find it laughable when people say rent is dead money and I know it most likely doesn't make complete financial sense but having waited the past 2 years to buy, I finally bit the bullet and purchased this month so I'm in a similar situation to yourself.

The house I got is exactly what we'd be looking to get for the past 2 years and approx. 40 viewings so I couldn't be happier with the decision now despite knowing it may not be the best move I make financially. However, the house is more than big enough to be our home for the rest of our lives and I've stress tested payments +3% and would be able to cope fine so thought I'd go for it.

I fully understand I may not feel the same way in another couple of years time though!

djimi

I suppose it depends on the situation. I would consider rent to be dead money if youre paying the same on rent as it would cost to buy a similar house, and the price of said house is assured not to fall. However, at the moment house prices are falling, and I dont see how it doesnt make sense to rent if the price of the house you are looking to buy will fall in price by more than the rent will cost in a 12 month period.

Its a bit different if you have found a house that you absolutely want; the price is good and the timing is right then by all means go for it. But the people who have this attitude that they have to buy a house, any house, rather than rent really need to do the sums again, because its not a great attitude to have; certainly until house prices bottom out.

Victor

Duckjob wrote: »

My cat's breath smells like cat-food :pac:

Constructive posts only please