First-time Buyer - Where to start...

Hi,

Apologies if this is something that is asked repeatedly, I couldn't see it covered in the threads I checked.
I'm looking to purhase my first house. I have savings of approx €40k, and am looking to purchase a house for €200k or a little less.
I've seen a few that I'm interested in, but am wondering what the first step should be.
Should I go to the banks first to see how much they'll offer me (and on what terms)?
Or should I go view the houses, make an offer, and then see if the banks will give me the money!?
Given that interest rates are so low at the moment (and likely to stay that way for a while I'd imagine), is a variable mortgage the way to go?
Finally, how much are the 'extras' usually? E.g. solicitor and estate agent fees, survey fees etc

Apologies for all the questions, but I don't want to dive straight in and find I've made some stupid decisions when it's too late!

As mentioned above, the first step would definitely be to meet with the banks and find out how much you can borrow.

In terms of the extras mentioned, I'm currently going through a purchase at the moment and the following is what I was charged:

Solicitor:
€1,000 + VAT and fixed outlays of:
€500 - register land
€125 - register mortgage
€81 - searches
Worked out at just under €2,000 all in but you may be able to get a better offer by shopping around.

There is also 1% stamp duty.

Valuation required by the bank cost me €175

Engineer to do the survey cost €240 initially and an extra €120 for follow up work which may not be required in most cases.

There was no 'estate agent fee'. Can't think of anything else I've had to pay as a one off cost but had to set up Life/Home insurance also which obviously incurs an additional cost.

CitizenKeane said:

Hi,
Should I go to the banks first to see how much they'll offer me (and on what terms)?
Or should I go view the houses, make an offer, and then see if the banks will give me the money!?

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Yes, definitely see if you can get a formal letter of offer from one or more banks, which should not cost you anything, though you'll have a fair bit of effort in providing all the documentation the bank will require. The letter of offer is binding on the bank, but usually limited to the property you specify in the application.

Importantly, the letter of offer will be subject to valuation by a bank supplied valuer (who's time you'll have to pay for). There's plenty of anecdotal reports of such valuations being a lot lower than the sale price agreed between the property vendor and buyer, resulting in disappointment all round (except for the bank, who can still add the depleted offer to their stats of 'loans offerred').

CitizenKeane said:

Given that interest rates are so low at the moment (and likely to stay that way for a while I'd imagine), is a variable mortgage the way to go?

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IMO, this depends on how close your variable rate repayments will be to your tolerance for how high you would be prepared to pay. In other words, if you do the sums and could tolerate repayments based on your current best rate plus say 3%, then you will probably be better with a variable rate over a fixed rate. My simplistic reasoning is that the bank is going to be better than you at pricing fixed rate loans, just like a bookie will be better at pricing horses. Unless you cannot tolerate the risk of higher repayments, then don't start off paying extra for the peace of mind that fixed rates provide.

CitizenKeane said:

Finally, how much are the 'extras' usually? E.g. solicitor and estate agent fees, survey fees etc

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Gcsm9's figures strongly resemble my experience. Good luck!

Brian,

Your reference to the valuation being lower than the agreed price is something I've been worrying about. Have picked out a few different properties and gotten approval from the bank for x amount and also a list of acceptable 'valuers'. Since I'll be paying for the valuation and they will essentially be working for me. What's to stop me getting a valuation done on the property before settling on an agreed price? (apart from cost - you don't want to be doing this on numerous properties)

Technically it's just like getting a structural survey done on the property. Would appreciate anybodies thoughts on this.

There is no point in getting a separate valuation on a property. Banks will have their own panel of valuers and will generally insist on an "independent" valuation being completed by a panel member. valuations are just that and not structural surveys. The inspection by the valuer may raise some issues which could lead to a requirement for a structural valuation. This would be need to be completed by an engineer.

Clseeper said:

Technically it's just like getting a structural survey done on the property. Would appreciate anybodies thoughts on this.

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IMO if you use one of the bank's approved valuers, you can use the figure that emerges to inform your negotiation with the vendor. At least you'll know your absolute maximum based on the valuation combined with your deposit (and any savings you decided to put in on top of those, if you feel the valuer is coming in too low, and you are prepared to go higher).

On the downside the practicality is that this is an expensive option. From what I hear from friends currently trying to buy houses, good quality properties still attract strong bidding interest, although the days of competing bids shooting up by multiples of 000s seems to be gone. Coming out second in a bidding process can be very disheartening. If you add in the sting of a €175 charge for valuation too, then you will quickly become demotivated, and find it difficult to get back up and start looking for somewhere you like again.

I would like to ask something else on the same topic guys..
Do you need to have a mortgage adviser (wich may charge u a comission aswell)? Or u just get the loan from the bank and let the lawyer to look after ur paperwork

mihaela said:

I would like to ask something else on the same topic guys..
Do you need to have a mortgage adviser (wich may charge u a comission aswell)? Or u just get the loan from the bank and let the lawyer to look after ur paperwork

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The person you work with from the bank to get the loan will generally be some kind of mortgage adviser.

I certainly didn't need to get any special advice which would require me paying a fee. Although, I know some people like to go with a Mortgage Broker to try get the best deals and they can charge fee's.

mihaela said:

I would like to ask something else on the same topic guys..
Do you need to have a mortgage adviser (wich may charge u a comission aswell)? Or u just get the loan from the bank and let the lawyer to look after ur paperwork

Click to expand...

Most mortgage advisors are paid by commission and if so, the commission is charged to the bank and not the customer. You get the same rates by going to a broker as by going directly to a bank, but a broker can offer you a choice of lenders. Different lenders have different rates and different methods of assessing loans.

That said, brokers don't have access to all lenders. For example, National Irish Bank and others don't pay commission to brokers. So if you go to a broker, find out which lenders they represent.

Disclosure - I'm a broker.

44brendan said:

There is no point in getting a separate valuation on a property. Banks will have their own panel of valuers and will generally insist on an "independent" valuation being completed by a panel member. valuations are just that and not structural surveys. The inspection by the valuer may raise some issues which could lead to a requirement for a structural valuation. This would be need to be completed by an engineer.

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You're absolutely mad if you buy a house without an independent structural survey commissioned and paid for by yourself.

HI,

I am half way through the process of buying house, going to sign contract on Thursday. In my case, i had mortgage approved from boi and i made an offer of approx 81% of asking price, BUT i told the agent that i have approved mortgage which they refused and i increased it by 5k and told them that its my final offer and it was accepted,(make sure to mention that you have mortgage approval once u get it, it makes u attractive buyer). I paid 785 euros for solicitor fees plus outlays plus, 325 for survey+valuation (i paid cash...)

Hi,

I was just wondering when do people actually get the engineer to look at the house to do the structural survey?

As in do you:
1. View the house and if interested make an offer, when an offer is accepted, do you then get the engineer in for the structural survey?
OR
2. View the house, get an engineer to do the survey and based on the engineers survey make an offer??

I would have thought option one would have been the norm but what happens if you make an offer and its accepted, then the engineer does a survey and something structurally would have to be done on the house that might cost a good bit ..Can you revise your offer on the house then based on this?

I'm currently looking myself and wary about how to handle this?

It would be usual to get the survey done after your offer has been accepted but before contracts are exchanged. If something turns up on the survey that will require attention, you can either (a) ask the vendor to fix it, (b) negotiate that the price be reduced by the amount required to fix it or (c) let it go if it's not a big issue.

Dave Vanian said:

It would be usual to get the survey done after your offer has been accepted but before contracts are exchanged. If something turns up on the survey that will require attention, you can either (a) ask the vendor to fix it, (b) negotiate that the price be reduced by the amount required to fix it or (c) let it go if it's not a big issue.

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+1. You'll find that lots of bids won't get accepted, be that through other bidders going higher, unrealistic seller expectations, or sellers taking the house off the market - a thoroughly annoying one.

I have had an offer accepted on a house.
The EA is looking for holing deposit of 5k and wants my structural survey done ASAP.
I hace told them i want to speak with solicitor first and sort everything, i presume money will be exchanged through the solicitor and not through the EA?!
Also, it was said in previous post, but its defo advised to have the structural survey done before the holding deposit is handed over??

Is there anyhting in particular i should be wary of and keeping an eye out for at this stage .... is uppose thats the same as me asking how long is a piece of string!!!

There are two forms of deposit - a booking deposit, which is paid to the Estate Agent when you agree a price. This does not bind either side to sell or buy the property. After you've paid the booking deposit, contracts are sent out to your solicitor. It's at that point that you would normally get the structural survey carried out. Then if you and your solicitor are satisfied, you sign contracts and pay over the contract deposit, which is typically the balance of 10% of the purchase price. Once you exchange contracts, you're committed to buying the property and the vendor is committed to selling. At any point up to then, either side can pull out and your booking deposit will be refunded.