Buying a home is an exciting and life-changing event, but it can also be daunting, especially when it comes to preparing for your mortgage. In this comprehensive guide, we will walk you through the steps to prepare for your mortgage, save for a deposit, apply for a mortgage, and the additional costs of buying a home.
Saving for a Deposit
Saving for a deposit towards a mortgage can be a daunting challenge, but it is possible with careful planning and budgeting. Limiting your spending greatly increases your ability to save. Opening a regular savings account is a good way to help you save a deposit and will also show any mortgage lender that you have a solid savings record. This will be an important reference when you do apply for your mortgage. Depending on the price of the property you think you can afford will determine how much of a deposit you will require.
As of January 2023, new rules from the Central Bank of Ireland; prospective first-time home buyers will be able to borrow up to four times their income when applying for a mortgage. A 90% limit will generally apply to the mortgage you can get. This means you will need a minimum deposit of 10%. For example, if you can afford to buy a house worth €250,000, your lender may lend you up to €225,000. You will need to have the remaining €25,000 yourself. The Help to Buy (HTB) and the First Home Scheme (FHS) are other incentives for First-Time Buyers that can help with your deposit. (see previous blog on FHS).
Applying for your Mortgage
You can apply directly to lenders for a mortgage or use a broker like us here at Ezfees Financial. (see our previous blog; Broker vs Bank). We research and compare on your behalf all of the mortgages available in the Irish market, getting you the best deal. These include fixed and variable rate mortgages and interest rates available.
The most important thing to think about is the interest rate. Many lenders offer incentives such as cashback, which can seem very appealing, especially if you are a first-time buyer. However, you need to consider the overall cost of the mortgage and the interest rate, along with the number of years, as they will have the biggest impact on the total amount your mortgage will cost you. You should try to get mortgage Approval in Principle (see our recent blog on AIP) before looking at properties, so you have a clear idea of the price range you can afford. It also means you will be taken seriously by the seller if it comes to making an offer on a property.
At Ezfees Financial, we would be delighted to assist you throughout your mortgage journey. Our advisors work with leading Irish lenders, researching and finding the most suitable and best value mortgage for you, and assisting throughout the whole process. Call us on 0818 910800 or email us at email@example.com. We’d be delighted to hear from you!
Additional Costs to Factor in Before Buying Your Home
Buying a home involves more than just the cost of the property. There are other additional costs that you need to factor in before making a purchase.
- Legal Fees: You will need to appoint a Solicitor to handle all the legal aspects of buying your new home. Legal fees can vary but typically range from between €2,500 to €5,000.
- Stamp Duty: This is a tax to be paid when transferring the ownership of a residential property in Ireland. If a Deed of Transfer or Deed of Conveyance is required, then so too is payment of stamp duty. Stamp Duty is 1% of the sale price up to €1m and 2% thereafter. Your solicitor will normally calculate the bill before the sale closes.
- Surveyor/Engineers: On a new property, you may require a snags list or, if an older property, a structural engineer’s report, which typically range from €300 – €600.
- Other Associated Costs: These may include transporting/moving, repairs, decorating, and furnishing costs.
Preparing for a mortgage in Ireland can be overwhelming, but with careful planning and budgeting, it is possible to save for a deposit, apply for a mortgage, and buy a home. It is important to consider all the additional costs involved in buying a home and get mortgage Approval in Principle before looking at properties. At Ezfees Financial, we are here to help you every step of the way. Contact us today to find out more about our mortgage services.