Beginning the Process
The first step is to begin saving to show the bank that you can afford to pay a mortgage. You should save as much as you can after all your living expenses for at least six months. You should also ensure that any debts are cleared or are being serviced, and your financial footprint is healthy.
Approval in Principle
This approval from your bank or lender will last for 6 – 12 months depending on the lender and it will be a formal approval in principle – confirmation that the bank will extend the loan – with very few conditions attached. This approval will typically include a full credit check carried out on you, the mortgage applicant, and it is also signed off by a credit manager.
At this stage, you will have a much more concrete understanding of what your mortgage will entail. And now that you are approved, you know that between the loan amount and the savings/deposit that you have, what your precise purchasing power is.
When you find the property that you wish to buy you will be asked for a booking deposit by the estate agent. This deposit holds the property at the agreed price until you receive the Full Loan Offer from the mortgage lender. The deposit is refundable should either party wish to cancel the sale/purchase before contracts are signed. You should employ your solicitor at this stage to begin to address the legal work on your behalf. You will need to give the estate agent and the bank the name and contact details for your solicitor.
As a purchaser, your next step entails instructing a solicitor to act on your behalf in the sale of the property. This can be as simple as sending an email to us, setting out your own details and the details of the house on which your offer has been accepted. For many people, the purchase of a new home will be their first real experience of engaging with a solicitor and as such can seem to be rather daunting at first.
However, it is important to know that a solicitor’s role in conveyancing is to conduct and oversee the transaction in a way which best serves the interests of their client, and they will work to ensure that the process is carried out as efficiently as possible for their client. The solicitor will give you the best possible advice so as to ensure the adequate protection of your legal interests during the entire transaction.
If the property in question is a new build, the solicitor will proceed to arrange the closing date once a Completion Notice is issued by the builders. It is advisable to instruct an architect or surveyor to draw up a snag list at this juncture, detailing an unfinished works in the house to be completed by the builders prior to close of sale. It is also always recommended to buyers that they themselves carry out a final inspection on the house so as to ensure all items on the snag list have been taken care of.
The maxim ‘caveat emptor’ i.e. ‘Buyer Beware’ still operates as the law today. Once contracts are signed, the purchaser agrees to take the property as it was at the time of the sale. Therefore, a planning and structural survey is an essential pre-requisite if the property you are buying is second hand.
The bank will send the formal loan offer to your solicitor. A loan offer is a legal document detailing the amount you can borrow from the lender subject to specific conditions. It is also important to arrange the Mortgage Protection and Home Insurance required as these will need to be organised at this stage.
Exchange of contracts through to close
Once the contracts have been signed and exchanged, a binding agreement exists between all parties. This is the point when you will pay the balance of your deposit to the seller’s solicitor. This is subject to the terms and conditions set out within the contract.
The close of sale is the formal completion of your house purchase. This will occur when all the elements of the contract are in place, and when the bank allows you to draw down the mortgage monies. The bank transfers the monies to your solicitor, and your solicitor will transfer the monies to the seller’s solicitor on the closing date. The keys are handed over by the estate agent or the builder, and in most cases, to you personally. You are now a home owner!
As you move in and begin this exciting new chapter in your life, your solicitor will then tidy up all the outstanding matters such as paying the Stamp Duty on your behalf, and registering both your ownership and the bank’s interest in the property with the Land Registry.
The above is provided for information purposes and is not intended as legal advice. If you have any questions about buying a home, we, at Fitzsimons Redmond, would be happy to advise you on your next steps. Please contact us on 01-676 3257.
By Andrew Young
Legal Executive at Fitzsimons Redmond