Thinking of buying house - beginner question.

CiniO

Maybe a silly question, but I have no experience in that field at all.

There is a house for sale we though with the wife would be suitable for us. We viewed it about 2 months ago - property agent said price is negotiable as everthing in this world. We've done nothing since.
Property agent rang yesterday, and said that someone offered certain amount for a house (which is about 20% lower than asking price). He says that seller is not really willing to sell it that low, but if we could offer slightly higher than that, possibly he would agree to sell.

Now the questions:
1. We don't have enough cash to buy it so need to apply for mortgage. My understanding is that it takes a while to get mortgage application approved so what is the normal procedure to secure the house for ourselves that it's not sold in the mean time to someone else? Do we pay deposit on the house to property agent? If so - how much? What happens if we do that, and our mortgage application is refused and they won't give us a mortgage? Do we loose deposit then or what?

2. Is there a way with banks to get from them approval of how much they would be happy to lend us, and only then start looking for a house that would suit that value?

3. First time buyer - what is that exactly? A scheme or something? On mortgage calculators I can see options like "first time buyer", "trading up", "refinance" and "investor". As we own some properties abroad, we wouldn't really be first time buyers, but then we don't seem to suit any other category as we are neither trading up, nor refinancing, and we aren't investors either as we are planning to make this house our own home. Can we avail then of first time buyer rates? Lady in Ulster bank I talked to a while ago, said that we can, and properties we own abroad doesn't matter, but looking at online information this seem untrue. Does anyone know?

Any advice greatly appreciated.

Jen44

To be honest I wouldn't put an offer on a house until you have secured at least approval in principal from the bank. If you already own properties then you would be considered as movers. You can not avail of first time buyers rates as you are not first time buyers I would be very surprised if the banks didnt consider your over seas properties! The best of luck with it all

Jet Black

I got mortgage approval in 9 working days with BOI. I was told at application it would be 3-5 but I was looking for more than what the central bank rules allowed so understand why it took longer. You can't pay a depost for them to hold the property until you get mortgage approval. Don't start bidding on houses until you have it. It's not that long a wait and by the sound of things with that house it won't be moving until more offers are made.

The bank will only lend 3.5 your joint income with exception made based on your personal circumstances. I wouldn't count on getting more than that. Best to get approval for as much as they will give then you can reduce it based on the price of the house. You'll also need 10% depost if the house is valued less than 220k and you are first time buyers or 20% if it is above that.

I don't think you will be classed as first time buyers if you own property abroad. I was asked this during the application.

seamus

CiniO wrote: »

1. We don't have enough cash to buy it so need to apply for mortgage. My understanding is that it takes a while to get mortgage application approved so what is the normal procedure to secure the house for ourselves that it's not sold in the mean time to someone else? Do we pay deposit on the house to property agent? If so - how much? What happens if we do that, and our mortgage application is refused and they won't give us a mortgage? Do we loose deposit then or what?

The booking deposit you give to the estate agent is usually between €5k and €10k. For much larger properties it may be a percentage of the price. The purpose is to illustrate on both sides that there's an intention to proceed to a full sale.
Legally the booking deposit is meaningless. You can withdraw at any time and have your deposit refunded, in full, no question asked. But equally the vendor can accept a higher offer and return your booking deposit, again in full and without penalties.
There's a code of conduct for estate agents where they should stop showing the property once the booking deposit is in.
But the vendor is not bound by any such code.

The "real" deposit comes at the stage where you sign formal contracts. This is usually 10% of the agreed purchase price and comes after your solicitor has done all their research and ensured all of the legal documentation for the property is in order. Once those contracts are counter-signed and the deposit handed over, there's no turning back.

2. Is there a way with banks to get from them approval of how much they would be happy to lend us, and only then start looking for a house that would suit that value?

Yes. It's called "approval in principle". You give the bank a basic overview of your financial situation and they give you a figure which you can use to look for houses.
Full approval then involves an in-depth look at your financials, including a review of the last 6 month's bank statements looking for weird transactions like payments to bookies. No, really.

The amount you get AIP for and the amount you get fully approved for, are often not the same. Full approval is usually a bit lower just because there are things that the AIP doesn't check for. So when house-hunting, assume the price you can pay is 10%-20% less than your AIP (though obviously you should aim to pay as little as possible )

3. First time buyer - what is that exactly? A scheme or something? On mortgage calculators I can see options like "first time buyer", "trading up", "refinance" and "investor". As we own some properties abroad, we wouldn't really be first time buyers, but then we don't seem to suit any other category as we are neither trading up, nor refinancing, and we aren't investors either as we are planning to make this house our own home. Can we avail then of first time buyer rates? Lady in Ulster bank I talked to a while ago, said that we can, and properties we own abroad doesn't matter, but looking at online information this seem untrue. Does anyone know?

Depends on who you're dealing with really. As far as the state is concerned, a "First Time Buyer" is someone who has never purchased or built a property before, anywhere in the world. However, the state no longer provides any incentives or schemes for first time buyers, so whether Revenue considers you a FTB is irrelevant.

For banks' purposes, a first-time buyer is someone who has never had a mortgage on a property.

Confusing? Yeah.

General process is:

1. Go to all the banks, get approval in principle. A broker is good for this.
2. Find yourself a solicitor
3. Go house hunting
4. Make your offer (and counter-offer and counter-offer) and hope it's accepted.
5. Pay your booking deposit and notify your solicitor
6. Apply for full mortgage approval
7. (Several weeks later) Sign contracts and pay full deposit
8. (Several more weeks later) Close the sale and move in.

CiniO

That's very exhaustive info.
THanks for that.

Goodweather

seamus really gives a great advise.

I have a question, that I'm giving an offer to a property in Dublin 18, the agent told me it is freehold but later I find on the website which write it is leasehold, so I emailed back and been given the answer of they "presume it is freehold". But eventually I got email said that is free hold, I wonder would the agent change it again to leasehold or I can trust the email?

seamus

It doesn't really matter that much either way; your solicitor will find out if it's leasehold or freehold before you get anywhere near to handing over contracts.

Rule of thumb is that if it's a house, it's probably a freehold. If it's an apartment/duplex, it's probably leasehold.

Many older properties (older than the 70's) may still be leasehold on paper, but these should be converted into freehold before being sold. This is an artifact of the older ground rents system. Very few houses sold in Ireland would be sold with a leasehold interest.

All it really does is add a a bit of hassle to the sale.

Goodweather

Thank you Seamus,

You seems expert in property area, could you give any advise regards to Levmoss Avenue in Dublin 18? There is on concern that 24 council apartments in that area but the agent saying it's all been bought by the people who live in that area, so it wouldn't as bad as Ballyogan Avenue, but i still feel that the value of the house is not easy to going up if there is council house nearby, any opinion?

seamus

Far from an expert, just someone who's recently gone through the nightmare of it

Another rule of thumb - all estate are lying bastards. Do not believe a word that comes out of their mouths. They want to make a sale. They will say everything and more, regardless of truth, to convince you to put your money down.

I don't know that area myself personally. Looking at it on street view, and looking at the prices in the PPR, it's very firmly a middle-class area, comparable to Aiken's Village in Sandyford or Dalriada in Ballycullen.

So with that in mind, even if there are social/council housing going in, they're unlikely to be housing junkies with 12 kids and 3 horses. It'll be more likely working families in need of assistance.

But you'll have to do your own legwork really - find out what type of housing it to be built - is it mostly aparments or 3-bed semi-Ds, for example.

riclad

Theres a website , https://www.propertypriceregister.ie/website/npsra/pprweb.nsf/page/ppr-home-en
gives info on all houses sold in every town ,city, in ireland.
look on it, see whats the average house sold 3bed semi in the area before you bid.
the agents job is to sell you the house,
your lawyers job is to check up and obtain, all the documents on the house to complete the sale .
eg is the esb,gas bill paid.
old houses 20 years plus may need a full survey cost ,a few 100 euro .

blukee

Goodweather wrote: »

Thank you Seamus,

You seems expert in property area, could you give any advise regards to Levmoss Avenue in Dublin 18? There is on concern that 24 council apartments in that area but the agent saying it's all been bought by the people who live in that area, so it wouldn't as bad as Ballyogan Avenue, but i still feel that the value of the house is not easy to going up if there is council house nearby, any opinion?

Hi,

I'm also looking at buying in this development? Did you buy the property and how was you experience of the development?