Buying a first home is often the biggest investment a person makes in their lifetime. It is also a very exciting time for first time buyers. However, often times it can be challenging when there are many factors to consider. To help ease matters, we at Carter Anhold & Co. have put together 5 points to take into account when looking for your first home.
DEPOSIT & MORTGAGE
Make sure you know how much you can afford to borrow. A first time buyer deposit is a minimum of 10% of the house price. Unless you are buying for cash, you will be in contact with many lending providers to ascertain the most competitive mortgage. Sometimes engaging with a mortgage broker can greatly assist with obtaining the best mortgage for you. Generally, the banks will lend 3.5 times your income. This will depend on other factors such as your credit rating, loan repayments, evidence of savings etc. Once you have obtained your Mortgage Approval in Principle, it generally lasts for 6 – 12 months.
FIRST TIME BUYER SCHEMES
Help to Buy Scheme (HTB) – this is an incentive helping first time buyers of newly built homes or self builds. The scheme allows first time buyers to claim back a refund of income tax and Deposit Interest Retention Tax (DIRT) paid in Ireland over the previous 4 tax years. It applies to properties costing €500,000. or less.
In Budget 2021, the relief has now been extended to December 2021. This is known as the Enhanced Help to Buy Scheme.
If you sign a contract for a new house or draw down on a self-build mortgage between the 23 July 2020 and the 31 December 2021, you can claim relief on the lesser of:
- 10% of the purchase price of the property
- 10% of the completion value of a self-build
- The amount of income tax and DIRT you paid for the previous 4 years
For further information on the Help to Buy Scheme, visit revenues website https://www.revenue.ie/en/property/help-to-buy-incentive/index.aspx
Rebuilding Ireland Home Loans – This is a government backed mortgage for first time buyers who have been refused a mortgage by at least two other mortgage providers. It can be used to purchase a new or second hand property, or for self-builds. Those eligible to apply must satisfy certain conditions, to include a single applicant earning a gross income of less than €50,000, and for joint applicants earning a combined gross income of less than €75,000. Further information can be found on the government’s website http://rebuildingirelandhomeloan.ie/
Once you have found your home, you should strongly consider hiring a qualified surveyor, engineer or architect to carry out a detailed structural survey of the property. This is a comprehensive look into the health of your potential new home. A vendor does not have to tell you of defects in the property. Therefore, you are purchasing the property in its current state at your own risk, “caveat emptor” (“buyer beware”). A survey will therefore highlight any issues you may not have been aware of when you made your offer. This will include assessing the structural soundness of the property generally, confirming whether the property might be subsiding, or if any major repairs are required. As part of the survey, maps will be checked to confirm that they accurately reflect reality. The boundaries will also be inspected, and the survey should confirm that the map provided is correct in all aspects.
The following costs should be taken into consideration when reviewing your budget.
- Stamp Duty – this is a tax payable on the purchase of a property. For residential properties, the rate is 1% of the purchase price for properties valued up to €1 million, and 2% thereafter.
- Legal Fees – your Solicitor will advise you of their professional fee.
- Registration fees – costs associated with registering the title with either the Land Registry or the Registry of Deeds. Fees depend on the value of the property. Further information can be found on the Property Registration Authority Website www.prai.ie
- Survey Costs – your surveyor will advise you on the costs of the building survey report.
- Local Property Tax – an annual tax charged on the market value of residential properties. The amount payable is assessed on the value of the property.
- Other outlay – these will include searches that are carried out on the day of closing.
FINDING YOUR SOLICITOR
When you have finally found your dream house, and your offer has been accepted you will pay a booking deposit to the Estate Agent. (Remember that this booking deposit is completely refundable up to the stages of signing contracts). The Estate Agent will ask you to nominate a Solicitor to act for you. We suggest you make early enquiries with firms so you can raise any queries you have, and to obtain an estimate of proposed fees and outlays.