This article first appeared in the Irish Examiner on 18th January 2020.
As 2020 begins and new year’s resolutions are set, there will be many taking the first steps to owning their own home.
The prospect of buying a house, whether you are a first-time buyer, trading up or downsizing can be both daunting and exciting. Many people are uncertain of the details of the process and the order of events.
While each transaction will have its own nuances and peculiarities to be addressed, there are several legal and financial steps that are common to every purchase with a mortgage via private treaty (offers made through an auctioneer and not a purchase at an auction).
- Identify and secure the right property at the right price
The first step is, of course, to identify your budget, taking into consideration all your savings and earnings. It’s important to also take into account all possible fees that may come up throughout the entire process.
Once you know how much you have to spend, you can then begin house-hunting for a suitable property.
- Pay a refundable booking deposit to the auctioneer
This is a holding deposit only and a gesture of good faith. It should mean the property will not be actively marketed while you carry out due diligence in respect of the legal elements, surveys etc. This agreement will not be binding until the contract is signed by you and the vendor of the property
- Instruct a solicitor to act on your behalf
Ensure it is someone you can have confidence in and relate to. Cheapest isn’t always the best! Your solicitor should provide you with a budget for the purchase that includes the fees, costs and outlays (e.g. stamp duty and land registry fees) which you will incur if you proceed with buying this property.
- Organise a survey of the property
A survey should be carried out by a suitably qualified engineer with appropriate professional indemnity insurance. The engineer should also be asked to check the boundaries and, in particular, that the boundaries on the ground are accurately reflected in the title map. The engineer should also be asked to carry out a planning search and advise you of any relevant matters before you commit to a contract.
- Secure a formal loan sanction
Be aware of the terms under which the bank will lend you the funds to complete your purchase. Usually, conditions include life insurance, fire cover and home insurance valuation.
- Due Diligence
Your solicitor will carry out due diligence once they have received the contract from the vendor’s solicitor. The due diligence will include the following and a report is to be provided to you as the purchaser; (a) investigation of the title and whether it is leasehold or freehold and report any relevant consequences; (b) advice on planning in conjunction with the surveyor’s report; (c) investigation of access and services (i.e. water/sewer) at the property; (d) review of relevant property taxes, including local property tax (LPT) and non-principal private residence charges; (e) review and advice on any special conditions in the contract for sale.
- Signing the contract
Only once you are satisfied with all of the above will you be in a position to commit to the contract. This process usually takes around four weeks from the payment of the booking deposit. On signing the contract, a 10% deposit is payable less any booking deposit already paid. The vendor then counter signs the contract at which point it becomes binding and the completion date is agreed, which is usually two to three weeks after.
- Drawing down the loan
Your solicitor will attend to the drawdown of loan funds and provide a statement of account for you to provide the balance, including stamp duties, land registry fees and costs.
- Getting the keys
On completion, your solicitor pays over the balance of funds in return for the title deeds and the keys. You can then look after the transferring of utilities, e.g. organising your electricity, gas and broadband.
- Registering the title
Your solicitor will attend to stamping and registration of title and mortgage. Once the registration process is completed, the deeds will be returned to the bank who will hold the deeds during the term of the loan.
While the above is a simplified guide, we hope that it allays some concerns and queries. Difficulties can arise at any stage of this process. However, if you are organised and have trusted advisors on hand, you can ensure that you purchase your new home with minimal stress and worry.