Purchasing a property is sometimes the largest financial and most important transaction that a person will make during their life. It can be an exciting and stressful time. Our experience of property transactions is extensive, in the buying both of residential property and commercial property. Our aim is to guide you through the process and deal with third parties on your behalf.
WHAT ARE THE STEPS TO BUYING A PROPERTY?
1. APPOINT A SOLICITOR
When you are considering purchasing a property, you will need to instruct a solicitor to act on your behalf in relation to the purchase. Our experience of property transactions is extensive, in the buying both of residential property and commercial property. You should contact our firm and we will give you a quote for the fees involved in the transaction, an indication as to the stamp duty due, and advice on dealing with third parties in relation to your purchase.
2. PAY YOUR BOOKING DEPOSIT
Once you have decided to purchase a property, you should pay a booking deposit to the Estate Agent. The amount of the booking deposit can vary and depends on the purchase price of the property. A booking is fully refundable until such time as contracts for the property are signed by both you and the seller of the property. You should always ensure that you receive a receipt from the Estate Agent. The Estate Agent will issue a Sales Advice notice to all parties involved, which include you, your solicitor, the seller and the seller’s solicitor.
If you are purchasing a property through a private sale. I would be reluctant to advise you to pay a booking deposit directly to the vendor; instead you should pay a full 10% deposit on signing of contracts.
3. LOAN OFFER
While it is correct to say that you don’t need a loan offer until you have found a property that you wish to purchase, I would advise you to get a loan approval in principle from your bank before you start your search. Loan approval in principle means that the bank tells you how much they are prepared to lend you based on your income, credit record, employment, savings/deposit etc. It will give you an indication of the amount they are prepared to lend to you, also what requirements they will require together with an indication as to what your monthly repayments are likely to be.
Loan approval in principle is not binding on you but it can be a favourable to have it when looking at property as a vendor will be more inclined to do a favourable deal if they know you have loan approval, particular if there is another party looking to buy the same property.
I should also point out that while the loan approval is not binding for you it is also not binding on your bank and will be subject to a property valuation and other conditions.
Once you have paid your booking deposit you should contact your Bank straight away. Once your bank has formally approved your loan in writing on the basis of the price of the house and information furnished by you, a loan pack is issued.
Normally a Letter of Offer setting out the details of the loan, the amount, repayment term, the interest rate, monthly repayments, conditions etc, is issued to you and the Loan Pack comprising Mortgage Documentation is issued to your Solicitor. You should go through the loan offer in detail and make sure that the rates and term in the loan offer correspond with what you have agreed with the bank. When your Solicitor has checked the Loan Pack and discussed key terms with you, various documents are signed and completed to enable the Bank to proceed with your loan.
4. LIFE COVER/LIFE INSURANCE
All lenders require you (and your partner in the case of a joint mortgage)to have Life Insurance in place when taking out a mortgage. This is life cover in the event that either you (or your partner) dies before the mortgage has been repaid, insurance is designed to cover the mortgage amount outstanding, at the very minimum, depending on the type of life cover selected.
There are different types of life cover. Generally banks require that you have mortgage protection. With this policy, should you die with an outstanding loan on your home, your mortgage will be cleared. The disadvantage to this type of mortgage is that it declines in line with your mortgage – so even though you initially received protection for your total mortgage, 25 years down the line this will have reduced significantly. In addition, if you move home after 10 years, and are 10 years older at the time, you might find getting a new policy has become more expensive.
With term life insurance, your cover is not limited to the size of your mortgage. So, if for example you take out a policy to cover a mortgage of €350,000, should you die when the outstanding mortgage has fallen back to €100,000, your estate will still be entitled to the full amount. With such a policy you can also carry it across to a new property, which means you would not have to be reassessed for life cover. The type of mortgage you choice will depend on your circumstances.
It is important to review your mortgage protection policy every few years, particularly where there are fluctuations in property prices and ensure that you take out additional cover, if necessary ,eg to cover extensions of the mortgage term or extensions to the property itself.
In commercial property banks do not always require life cover but this will depend.
5. PROPERTY INSURANCE
A type of insurance that covers damage to property, eg damage from fire, flood, among other risks. It is a requirement by all lending institutions to insure your home/ property. Home insurance is also advisable even if you are a cash purchaser. Your home is probably the most valuable asset that you have and it goes without saying that this asset should be properly protected
Household insurance is made up of two parts, namely building insurance and contents insurance.
Buildings – This part covers buildings which are generally defined as the main structure, including all domestic outbuildings, such as garages, garden sheds and also walls, gates, fences. Every home is different. When insuring your buildings you are not insuring the sale value of the home as is a common misunderstanding, but the rebuilding cost of your property and the contents of your property.
Contents – This covers your furniture, furnishings, household goods, and other appliances, food and drink, televisions, videos, computers and audio equipment, clothing, personal effects and valuables such as jewellery and personal money up to the stated limits.
There can be differences between policies in terms of what they exclude and the extras included. When you buy insurance, it is essential to read the policy details first so you are aware of what your policy covers does and dos not cover.
6. CONTRACT RECEIVED
The seller’s Solicitor on receipt of the Sales Advice Notice from the auctioneer will issue the contracts to your solicitor. The Contracts are sent in duplicate together with a copy of the Title Deeds to your Solicitor. Included in these documents are the planning documents and BER certificate. Your solicitor will go through the contracts with you in detail. It is likely that you solicitor will need to raise pre-contract enquiries, which are queries based on the contracts and title documents furnished.
At this stage you should also be instructing an engineer to complete a structural survey of the property. Your engineer will spot things that will not be obvious to me or me. Your engineer should also check the map that you receive with the property to ensure that the property and area included in the transaction corresponds with what is on the map. This survey is very different to the survey carried out by your bank and is significantly more detailed.
I can’t emphasise enough the importance of a structural survey, in Ireland if a defect or a major defects are discovered in a property after the purchase has finalised the purchaser will have no recourse against the seller. If there are any extensions to the property it is important that your engineer also checks the extensions and the relevant planning documents.
Your engineer should also carry out a Planning Search in the Local Authority office to ensure that the property that you are purchasing house is fully compliant with Planning Permission and Building Regulations.
You should also attend the local authorities’ office yourself and investigate if there are any developments planned for the area etc., e.g. major roads, large housing estates, dumps, etc.
If the property is in a poor condition, I would advise that you should consult a builder on the cost involved in repairing the property as you will need to take this into account in your budget.
7. SIGNING OF CONTRACTS
When your Solicitor is satisfied that all matters are in order with the contracts, title documents and planning documents and you are satisfied with the contents of your engineers report. You will attend your solicitor’s office to sign Contracts and pay the Deposit. The deposit paid is 10% of the purchase price, you can deduct from this any booking deposit that you have already paid to an engineer.
In relation to new house what you will be signing are contracts and a building agreement. The building agreement is an agreement between you and the builder where the builder agrees to build the property as per the plans and specification attached to the agreement. Therefore, it is necessary that you go through this is detail as your solicitor will not be aware what has been agreed. With a new house payment for the property often paid in stage payments. The amount of the stage payments is set out in the building agreement. Your solicitor returns the Contracts and Building Agreements in duplicate signed by you together with the Deposit to the Seller’s Solicitor.
At this stage you should also be signing your mortgage documents which your solicitor will return to your bank together with a date for draw down of funds. It is important that you keep in touch with your bank or mortgage broker if you are using one, throughout the process. Your bank will require that the conditions set out in your loan offer are all completed before you can draw down funds. These conditions typically include:
- Life Cover which may include attending a medical examination
- House Insurance
- Valuation of the house
- Completing all relevant mortgage documentation, bank mandates, ID documents, P60’s etc.
8. EXCHANGE OF CONTRACTS
The Seller’s Solicitor returns one copy of the Contract to your solicitor, the Building Agreement is also return in the case of a new house. This creates a binding agreement between you and the seller to complete the sale.
9. REQUISITIONS ON TITLE
Your solicitors draft the deed (which transfers the property into your name) and raises various questions on the title of the property, ownership of the property and other questions in relation to the property. The Sellers Solicitor replies in writing to these series of questions.
Once all queries raises and the Requisitions have been satisfied and all matters are dealt with a closing date and time is finalised to either parties are agreeable too or which has been agreed on the outset and written into the contracts. It is important at this stage that you contact your bank and ensures that everything is in order to draw down your funds.
In the case of a new house, things are a little different. The building agreement sets out that the house will be completed within a particular time scale. When the house is completed the builder sends a completion notice which sets out that the property is completed. On receipt of this you should instruct your engineer to complete a “snag” the house. Your engineer will inspect the property and do up a list of unfinished works that need to be completed by the builder. You should add to this list any items that have not been completed to your satisfaction. This list is given to the fore man of the site. The foreman should contact you when this list is completed, you should make sure that all items on the list have been completed to your satisfaction.
Your Solicitor will prepare a Statement setting out the balance required to complete the purchaseof the property. This is sent to you in advance of the completion in order that you can deliver the balance of funds to your Solicitor. Your solicitor requests your loan cheque in advance of the completion date.
11. CLOSING OF THE SALE AND RECEIVING THE KEYS
The completion of your purchase takes place at the Seller’s Solicitors offices. Your solicitor attends and closes the sale on your behalf. Once your solicitor is happy that all title documents have been signed, your solicitors hands over the purchase money and receives the keys.
I would always advise where possible that you attend the house prior to the handing over of money to make sure that all contents have been removed from the house and the contents included in the purchase price remain in the property.
12. FINALISING MATTERS.
After the sale is completed your solicitor will contact you and ask you to sign the Purchase Deed. This is an important title document which transfers the title into your name. Your solicitor would have received this document at the closing. You must sign as soon as possible as there is a strict time limits for the payment of stamp duty to the revenue commissioners. When you have signed your solicitor will proceed to stamp the deed and then send the Deed and your Mortgages document to the Land Registry so that the property can be registered in your name. The period of time required for registration to be completed can vary. Don’t be alarmed if registration takes a long time it doesn’t affect your ownership of the property and doesn’t stop you selling the property before registration is completed. When registration is completed you will receive a Folio (title document) which shows you as registered owner of the property. The mortgage will also be registered on the folio. If you have obtained a mortgage with a bank your tile deeds when registration is completed is sent to your bank. Your bank will hold onto the deeds until such time as the mortgage is paid in full.
When matters finalise in relation to your purchase of property you should considering making a will or updating your will to take into account the property that you have purchased. Click on the section below to find out more information on making your will.