Top Tips for First Time Buyers

Alder Homes have teamed up with Campion Insurance to put together our Top Tips for First Time Buyers!

Get Yourself Mortgage Ready

Is Buying a House for you?

A mortgage is a long term commitment. You need to be happy on a fundamental level, that buying a home is the life choice you want to make. Other options could be long-term rental or living with your parents (you better include them in the discussion in this case!). Be aware that house prices can go down as well as up.

Start Regular Saving

Start regular saving as soon as the idea of buying a home crosses your mind. Set yourself a savings target (such as the approximate deposit amount for a house in your price range), and aim to reach it with a certain period of time. 

Cut back on discretionary expenditure

To meet your saving target, decide what discretionary purchases you can sacrifice. Whether it’s the expensive handbag addiction, cutting back on festival tickets or eating out every other day, make sure you’re comfortable with your choices as you might have to stick with them for some time!

Be realistic about saving goals. Over-committing to saving isn’t advantageous, especially if you find your current account or credit card management suffers as a result.

Get ready to pass the stress test!

When you apply for your mortgage, banks will look at your income, spending habits and your ability to repay the loan. You will have to demonstrate your ability to repay your mortgage through rent or regular saving or a combination of both. This amount should match or exceed your proposed mortgage borrowing.

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Ready to start house hunting?

Do you qualify for the Help to Buy Scheme?

If you (and your partner) are first-time buyers, you may be eligible for the government’s Help-to-Buy Scheme. The Help-to-Buy incentive allows First Time Buyers to claim a refund of income tax and DIRT that you have paid over the last four years. As a first-time homebuyer, you could now be eligible for up to 10% of the purchase value of your new home (to a maximum of €30,000).

Leave plenty of room for living expenses

Lenders will look to see that your financial commitments allow for reasonable “living expenses” per month. A single person should have about €1250 net disposable income per month to live on before any borrowings, and a married couple should have approximately €2000 available. Each dependent child will increase this requirement by around €300 per month.

Your Employment Status

Getting a mortgage will depend on your employment status:

  • Full-time permanent employment
    You will need to be in full-time permanent employment for a minimum of 6-12 months (not including the probationary period).
  • Self-employed individuals
    You will have to provide a minimum of 2 years of audited accounts.
  • Contract employment
    Contract employment will be considered. However, you'll need to demonstrate a consistency of employment and previous employment history is paramount.

House Hunting

Decide where you want to live

Location is often the number one priority when house hunting. Write down your preferences and do a little research on Daft.ie or MyHome.ie see if you can afford a property in your preferred location.

Be open to exploring other locations too. Outside of the usual urban centres’, you will find a greater choice of property and often significantly lower prices for second homes and new builds. Consider that working from home is becoming the new norm for many employees. This might influence your choices, including the location and size of the property. (But don’t forget to check the broadband coverage In that area!)

Other Considerations

Energy ratings can have a significant impact on your annual energy costs. From the end of 2019, new builds have had to conform to stringent measures to ensure houses meet NZEB (nearly zero emissions building) compliance. For example, an A2 rated 3-bed semi-detached home has an estimated annual fuel cost of around €300.

Don't settle for just getting your foot on the ladder

Stretch yourself a little to get home you want but only do so if you are happy that you can afford repayments, even if rates go up. Grow into the proposed property being purchased rather than grow out of it. If you’ve always wanted 5 children and an Bernese Mountain Dog, then a two-bedroom apartment might not be the best option – even it’s just to “get on property ladder”.

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Applying For a Mortgage

Get Professional Advice

It is essential to receive professional advice about your mortgage options. We would recommend using the services of a recommended mortgage broker. They will provide you with professional advice about repayment amounts, interest rates, terms and insurance policies from a range of financial institutions.

Preparing to Apply for a Mortgage

Prepare well in advance. Keep your current accounts well maintained, avoid credit card debt and other short-term loans and save regularly.

Think about your personal situation for the years beyond the house purchase. What is likely to change? Childcare, new car, increased utility costs. Only borrow what you can afford, and if you can lower the amount that you have to borrow (by saving a bigger deposit), that’s even better.

Don't Clear Loans

We don’t recommend clearing loans in advance of applying for a mortgage. This can be conditioned and ensures that your savings are intact when formally applying for mortgage approval. Clearing loans and reducing savings in advance of applying can sometimes affect repayment capacity.

Choice of Rate of Interest

Fixing your mortgage can provide certainty of cost and repayment for a period of time. It is often easier to budget with a fixed rate, but professional advice is needed here. Be very careful with introductory rates and always consider the rates that apply after the expiry of the discount period.

Cashback offers can be misleading, and again professional advice is key to securing the most competitive mortgage offering.

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Additional Costs

  • Insurance
    Lenders may require that mortgage protection cover and home Insurance cover are In place. Always budget for adequate protection insurance to cover your home, life, sickness and redundancy. Your mortgage broker should be able to advise you on these.
  • Conveyancing Fees
    Legal costs vary but, set aside a minimum €2000 to cover these.
  • Stamp duty
    Stamp duty is 1% of the purchase price (up to €1million). Example: you will have to pay €2500 stamp duty on a house that costs €250,000.
  • Valuation
    Set aside €150 for house valuation.
  • Structural Survey
    If you are buying a second-hand property it is highly recommended to carry out a structural survey. This costs approximately €300.

Campion Insurances Ltd trading as Campion Insurance, Future, Bestquote.ie, and ISME Insurance is regulated by the Central Bank of Ireland. We have a range of experts with the knowledge and experience to advise you on both mortgage and insurance products. We have eleven office locations nationwide which gives us a clear understanding of the property market as a whole. 

Alder Homes
Further Reading and Resources