Basic Mortgage Steps Advice

noodler

Just looking for some advice on timelines and going about this. Thinking about buying somewhere small on a 15 year Mortgage.

In the process of getting approval from the bank but looking for clarity on next steps.

I have an apt in mind but realsitically it could be gone before I am sorted so I'll have to organise a house hunting mortgage or equivalent.

I have never had a solicitor before nor a surveyor to check a place over if the bid was accepted.

Should I have a solicitor in place before I get approval? (What kind of fees should I be looking at here in circumstances where I make a bid through him but that the purchase never comes to pass?). Would it be a good idea to have the solicitor suggest a surveyor or would someone I have found by myself be more appropriate?

OREGATO

Hey Noodler,

Here's a post I posted here in another topic. Hope it helps, best of luck with the hunt.


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Hey guys,

I've been lurking on here for a long while but thought I'd share my own experience and something I wrote up on another forum to do with buying a house as there were some good questions raised around the process.

Here is a post I put up on a separate forum, hopefully it'll be of use to some of you in the same boat. Before November last year, I knew nothing only the high level of whats expected, having gone through the cycle, I decided to put together some of the insight I gained from my own experience on buying a house. It goes through the steps (we took) and some risks we identified along the way

Some details about me:

First Time buyer with OH, no dependencies, no loans etc. Bought in SCD

I feel that the information below should give most people in a similar position some idea of what to expect..

Just for some more information, here are some risks we identified with each step that could have or could still potentially affect the sale. Some will not apply but it might just give you an insight of some of the stuff you might encounter. Some didn't apply for us but these are generic things that I think would be useful for someone close to our position. I'm by no means an expert or working in the field so please do update or chime in with something constructive that may help others.

Hope this is helpful to some of you.

1. Do the math, have your savings in place, solicitor fees, stamp duty and statements etc ready (online banking is a godsend). A further step we took was to have a surveyor, valuer, solicitor, builders, electricians all lined up. Trust me, it's a lot easier to be able to pick up a phone to any of these guys sooner and ask them a question than cold calling when you have a query when you're sale agreed.

- You may realise that the cost of builders/electricians etc will all mount up into costs that you weren't expecting.
- Things like permanent employment for less than 6 months, outstanding loans etc may affect or limit your borrowing power.
- Do the math on costs of commuting, schools and other factors as well. Factor in contingency as you never know what'll happen.

2. Get Mortgage approval in principal - go through a broker or go to a few banks, see what's on offer and do the math again

- The bank may not offer you what you expect depending on your own financial situation. They were very tough after the crash but have seemed to loosen up a little (this is from talking to others in a similar position to us) - for example, if you have an existing mortgage and want to take out a second, back in the good dsays, they would have taken rental income into account, they don't any more.

3. When approval in principal is sought, we went a step further here as I have a close relationship with the bank and was told to put in a house that we'd be interested in. We filled out all the forms, got the salary certificates signed, P60's lined up, statements lined up, utility bills, passports and driving licenses etc and submitted it to make sure that we were fully approved and didn't just have the in principal approval.

- All quite straight forward, one thing to note is, for your salary, be sure that you put down your basic pay and not factor in bonuses or overtime (if it isn't guaranteed) We were fine for this but a few contacts I have did mention that some applicants got approval in principle by stating they were earning €70k PA and when the time came for the actual mortgage application, they were declined because the figure of €70k was made up of €25k basic and €45k potential bonus/commission.

4. Go and look at houses - by far the most daunting and frustrating part - but a necessity all the same

- Your biggest risk with this is dealing with idiotic estate agents. Take a look at boards.ie and other property related websites for some insights into some of them. We're dealing with some very professional and decent crowd and have had no issues. Emails/phone calls answered promptly etc.

5. When you've found a house or houses that you're interested in, make an offer if you are ready. This process can take a while depending on other bidders, the seller etc.

- Biggest risk is being outbid or getting caught up in the whole process and going above and beyond what you can afford in a bidding war.

6. If your offer has been accepted, you will then need a booking deposit, typically €5,000 which is payable to the estate agent. You are now officially sale agreed. The estate agent will take the house off the market and issue instruction letters to both parties' solicitors.

- No big risk here, just make sure you have the booking deposit - forgot to mention, the booking deposit comes off your 10% deposit. So if you are buying a house for €100k, have a deposit of €10k and require a booking deposit of €3k, it'll mean that you pay €3k to the estate agent when you go sale agreed, €7k will be given to your solicitor (which is the rest of the 10%) and you'll be paying back the €90k mortgage (and the interest of course)

- Booking deposits are also refundable by law, up until the point that the contracts have been signed.

7. In the mean time, you should get the valuation and the survey done on the house - Valuations will depend on bank and each bank will have their own form that they want filled in. Just make sure you notify the company as to which bank requires the valuation.

- Like a used car check, you may find that there are some substantial issues with your house which may make the purchase implausible - that's the worst case scenario. Most of the time, the surveyor will find some - relatively small items that need doing.

8. Receive the survey report and if you have anything, raise it with your solicitor for further clarification or the estate agent - in the case that you need a builder in or some other professional to look at a certain aspect of the house

- See point 7, I'd recommend that you get any points on the survey report you're unsure of, checked out prior to signing.

9. Your solicitor (make sure you get a good one) will inform you when contracts have been received by the vendors side, (when the vendor gets the letter of instruction, their solicitor will go about getting the deeds if not already in their possession, doing checks on same and then drafting up and sending a contract to the buyers side) In the letter, you will be advised of a closing date, by which the contracts should be signed and you will hopefully get your keys. Inform your bank - they will issue a letter of offer to your solicitor - this is the document they fill out with you when you go in to sign the contract.

- From what I gather, once you go sale agreed, there isn't really any driving force in the process, so sit on your solicitors if required.
- Letter of offer is the form your solicitor will fill out and send to the bank, if you got mortgage approval six months ago, you may find that the bank will not offer you the same amount as 6 months ago, based upon your current situation and their thresholds.

10. Sort out your life assurance and home insurance - your bank will be able to advise and get this in place for you.

- Life assurance may require a medical, if you are in ill health or receiving treatment for something, this may delay you/hike up your preimum

11. The next step will involve your solicitor going through the contract and making sure all is in order - there may be delays if there are questions over different points within the contract. Your solicitor will also do their own check on the property in terms of deed and title checks

- Lost title deeds, delays in if it's a repossessed house, judgments against the property etc can cause delays here.
- With regards to a house that is occupied - discussions may arise from the contents of the house and if you'd like to purchase these with the house etc. Something to factor in as well is what will be left and what will be taken. Simple things like curtains and basic furniture like bed frames and white goods should be taken into consideration.

12. Once your solicitor is happy with the contract, they will get you in to sign, normally, the days leading up, you will be able to go into the house to take a look, potentially meeting the sellers.

- No real risk here.. I don't think.

13. Once you sign, then the contract goes back to the sellers side and they will go through the same exercise with their solicitor.

- If you're buying from someone who is also going sale agreed on another property, they have up until this point to pull out and they could well do if the house they're purchasing falls through for whatever reason.

14. If all goes well, you will get your keys (the date will be determined by the closing date but could be before or after depending on delays etc

From here, the risk is you can't afford your mortgage!

tawfeeredux

OREGATO wrote: »

...judgments against the property etc can cause delays here.

Anyone know what implications there are from a buyer's point of view if you find yourself sale agreed on a property that has a judgement on it? Presumably, if you've gotten this far (survey done, solicitor instructed), and you decide to pull out because of potential delay due to a judgement, it's at your own loss? I'm thinking of a scenario where either the vendor has not advised the estate agent, or perhaps isn't aware of the judgement (not sure how likely this is).

OREGATO

tawfeeredux wrote: »

Anyone know what implications there are from a buyer's point of view if you find yourself sale agreed on a property that has a judgement on it? Presumably, if you've gotten this far (survey done, solicitor instructed), and you decide to pull out because of potential delay due to a judgement, it's at your own loss? I'm thinking of a scenario where either the vendor has not advised the estate agent, or perhaps isn't aware of the judgement (not sure how likely this is).

You're solicitor should be doing these checks prior to you signing, with this in mind, he wouldn't allow you to sign unless the judgment(s) were rectified and removed. You are entitled to pull out and get a refund of your booking deposit up to the point when you have signed the contract.

Hombre Lobo

Thanks Oregato.

I was about to post a thread similar to the OP.
I've been looking to purchase a house now for about 18+ months or so but I haven't really come across a property I really wanted yet. The ones I had been interested were being listed as for sale when they had actually already been sale agreed for months when I contacted the EA so it ended at that. I've not even viewed a house yet but recently some properties have come onto the market in my area that I am interested in.

I'm looking for something around the 230k - 260k mark. I have about 280k+ in the bank but right now I have no solicitor or mortgage AIP with my bank. Although when I spoke to them they said it shouldn't be a problem and I would have it in a day if I needed it with an estimated approval of around 225k.

However because I have a considerable amount of cash in the bank I was thinking of maybe using 180k - 200k of the funds and then take a mortgage out on the rest depending on the value of the house. This would still leave me with money to pay fees, stamp duty and furnish the house and anything else for a rainy day.

In my case, should I still proceed to line up a solicitor (I already have one in mind) and mortgage AIP before viewing a house and considering putting in an offer?
I don't want the EA to think I'm some kind of joker but all of this is new to me and I'm not really sure where to start.

OREGATO

Hi Hombre, it sounds like you are in a good position.

My advice would be to go and do some house viewings, even if you are only slightly interested, there is no harm, depending on whereabouts you are in the country, it can be quite an eye opener. It will give you a feel for what to expect, bring a measuring tape, and a notepad, take down notes etc. You'll feel a lot more comfortable after doing a few of them, talking to some estate agents etc.

We are based in Dublin, our first Saturday of viewings really had us shocked at A) the amount of people arriving for viewings, the crazy offers that were already on the houses, for instance, one house was asking €450k and had an offer of €480k on it.

In terms of AIP, I would say there is no harm in booking some time with their mortgage advisers and going through the process. It really does sound like you don't need it with the substantial savings you have but there would be no harm, there may be specific mortgage and house purchasing questions you may have that they could give you some good advice on.

It is a good idea to keep funds for a rainy day, we had saved aggressively over the last few years and had a rather healthy deposit and only put down half on the house, the rest is saved for contingency. Bear in mind that you will be paying more interest if you borrow more, something we had factored in and were happy with doing so.

If you have a solicitor in mind, you could always ring them to enquire about their services and a rough estimate of costs for them handling a house purchase. This should give you some ball park figures you are looking at.

For putting in offers, do not disclose your budget or limits to an EA, they are working for the seller and want to get the highest price possible for their client. If you are able to purchase without the mortgage, being a cash buyer will put you in a very favourable position.

Another random tip is, a lot of viewings happen on the weekend, Saturday and Sunday. If you are eager for the property and want to make a bid, wait until the Monday. I've overheard conversations where couples have gone up to the estate agent at the viewing and told them they want to bid X. EA's mostly will tell you to call the office on Monday anyway. Good ones will give you a follow up call to see if you're interested in the property.

Best of luck with the property hunt Hombre!