Property Guide on How to Buy your First Home

Buying a home, is, for the vast majority, the biggest investment of a lifetime. It is therefore essential that the proper advice is sought before taking this task on board.

You will need to discuss your mortgage with your bank or a mortgage broker who will give you up to the minute advice on how much you can borrow and the repayment costs of same.

100% mortgages appear to be a thing of the past so you may qualify for 92% or possibly 95% of the cost of the property.  It stands to reason if you can borrow only 92% or 95% you must have the remaining 5 - 8% saved. Along with this you will need expenses such as legal fees, survey and valuation fees etc.

Stamp duty is exempt for first time buyers so the only expenses involved will relate to legal costs and charges and the above valuations/surveys.

METHODS OF BUYING A HOUSE
There are three methods - private treaty, public auction and tender.

Tender:
For sale by tender is rarely used in the sale of residential property. It is used mainly by public bodies and in commercial ventures.

Public Auction:
For public auction you must be prepared to enter into a binding contract on the actual day of the auction. This means you must have your finances in order - loan approved, structural survey carried out and pay 25% of the cost of the house on the signing of the contract which is done immediately after the property is sold at auction.

Private Treaty:
The most common method is by private treaty and in general this will be the method used by persons buying their first home. Private treaty is another way of saying by negotiation with the Selling agent for the property. You are invited to treat for a property.

BUYING AN EXISTING HOUSE
The selling price of existing houses is reached after negotiation with one or more interested parties. An existing house will have a guide or asking price.  In this current climate of buyers market most
asking or guide prices are open to offers.

PAYING A BOOKING DEPOSIT
Paying a booking deposit on a house is a very important step. Whilst some people prefer to pay a booking deposit through their solicitor it is not essential once the receipt for payment is clearly marked "subject to contract' . Delays with the payment of a booking deposit can result in an increase of the price - either by the builder in the case of a new house or another bidder in the case of a second hand house.

If the deposit is paid to the Auctioneer as Stakeholder he is bound to hold this money and cannot part with it until instructed by your solicitor when the time is right or refunded to you in the event of the sale being cancelled for one reason or other.

If the deposit is paid subject to Contract, title loan and survey then until such time as a contract has been signed the transaction is not binding on either party. If a survey reveals to you that a certain amount of money has to be spent on the property immediately and you do not have this money then your lending institute will not sanction your loan approval.

SURVEY AND VALUATION
Your lending institute will want a valuation of the property to make sure that the property is good security for the money they are lending. This usually costs around Euro 130 but it is important to remember that this is not a structural survey. A full structural survey should be carried out by a suitably qualified person and this is most important whether you are purchasing a new or existing house It costs more than the valuation report and is usually in the region of Euro 400.

In the case of a newly constructed house it is wise to have a surveyor to look over the construction in its various stages. On completion of the house the surveyor should prepare a snag list as it will be inevitable that small items will be forgotten . The final payment should not be paid over until your surveyor is satisfied the snag list has been complied with.

The choice between new and 2nd hand houses is not always there of course. If there is no current scheme of houses being constructed within your area or price range then your options are to purchase an existing house or build your own (if you can secure a site).

When you make an offer on a property be sure it is made subject to survey. It is advisable to have a structural report carried out on the property first so that you know how much you can afford to pay for the house as well as a costing on repairs if any. If you find yourself in a bidding situation feel free to ask the Agent if the other bidder is in a position to purchase as readily as you. For instance does he have another property to sell - has he obtained loan approval etc.

The Estate Agent should tell you if this is not the case. If you prefer you could always get your solicitor to do the bidding for you as he would be more au fait with such matters and in most cases he will charge you the same fee whether you see him on day 1 or day 10.

BUYING A NEW HOUSE
The price quoted for a new house is usually not negotiable. It is very important to have fixed price contract stated on a receipt obtained from the agent, which ensures that the price cannot be increased by the builder - within a certain time limit of course.

There is no longer a grant for first time buyers of new houses. It is advisable, if purchasing a new house, to make sure the builder is covered by Homebond - which gives a 10 year structural guarantee on the house, and ensures the builder is covered by a bond in the event of bankruptcy.

MORTGAGE
You should seek out the most suitable mortgage for you. The rates can vary quite a lot between fixed and variable rates. Pay attention to currency details on t.v and in the local papers. You can of course opt for a fixed rate mortgage but do remember there will be a penalty to be paid should you want to sell your house before the fixed period has expired.

An annuity mortgage is probably the best especially if you are starting off. It is important to note you can change from annuity to endowment very easily but the change from endowment to annuity can be expensive. The encashment value of an endowment mortgage after 3 or 4 years may be quite small - this would depend on performances of investment made by assurance company, Get advice from your local bank or building society manager - shop around for the keenest rate you can find.

It is a good idea to attend any seminar in your area on buying your own home. All the relevant professionals will attend so all your queries can be answered free of charge. Don't be afraid to ask questions - we all have to start somewhere.

STAMP DUTY
New houses and apartments with a floor area greater than 125 square metres and a Floor Area Compliance Certificate

Rates of stamp duty for second-hand houses and apartments for owner-occupiers (and investors buying new or second-hand houses and apartments)

RULES

STAMP DUTY ON NEW HOUSES AND APARTMENTS LESS THAN 125 SQ METERS
Owner-occupiers of new houses/apartments are exempt from stamp duty, provided that the area of the house or apartment does not exceed 125 sq. metres (1,346 sq. feet) and a Floor Area Compliance Certificate has been issued. The house or apartment must not have been occupied prior to its purchase. It must be occupied as the owner's main place of residence for a period of 5 years from the date of the purchase deed. However if you sell the house during this period you do not have to repay stamp duty.

STAMP DUTY ON NEW HOUSES AND APARTMENTS IN EXCESS OF 125 SQ METERS
If the area of the house/apartment is greater than 125 sq. metres (1,346 sq. feet), stamp duty is payable if the Chargeable Consideration is above the relevant exemption threshold. The stamp duty is assessed on either the cost of the site or 25% of the cost of the site plus the building costs (less VAT), whichever is the greater figure.

STAMP DUTY RATES FOR FIRST-TIME BUYERS OF RESIDENTIAL PROPERTY
First-time buyers who are owner-occupiers of new and second-hand residential property do not pay stamp duty.

CLAWBACK OF STAMP DUTY RELIEF
A stamp duty clawback arises where rent, other than under the 'Rent a Room scheme' is obtained within the 5 year period (or up to the date of a sale during this period) from the date of the purchase deed. The amount of the clawback is the difference between (a) the stamp duty payable at the higher rates which would have applied at the date of the purchase deed and (b) the lower duty (if any) paid as a result of obtaining the benefit of the reduced rates.

Reduction of claw-back period: for purchase deeds dated on or after 5 December 2007 the clawback period is reduced to 2 years. Where a property was purchased before 5 December 2007 but was rented on or after that date, there will be no claw back of stamp duty relief if it is rented in the 3rd, 4th or 5th year of ownership.

Under the 'Rent a Room scheme', there is no stamp duty clawback where rent is received by the person in occupation of the house or apartment on or after 6th April, 2001 for letting of furnished accommodation in part of the house.

STAMP DUTY RATES FOR NON-OWNER-OCCUPIERS
Non-owner-occupiers are liable for stamp duty on both new and secondhand houses or apartments. The same rates of stamp duty apply to investors as to non-first time owner-occupiers.

TRANSFER OF PROPERTY BETWEEN RELATIVES
Stamp duty is payable at half the normal rate applicable if there is a transfer of property (other than shares) to certain relatives (for example, a parent, grandparent, step-parent, child, brother, sister, half-brother, half-sister, aunt, uncle, niece or nephew). This relief is not available on leases or on transactions involving cousins and/or in-laws.

SITE TRANSFERS FROM PARENT TO CHILD
Stamp duty and Capital Gains Tax do not apply where a parent transfers a site to a child. The site must be for the construction of the child's principal private residence and the market value of the site must not be greater than €500,000 for disposals made on or after 5 December 2007. The exemption threshold is €253,947.62 for disposals made before 5 December 2007. A parent can only transfer one site to each child to take advantage of this exemption. If the child then sells the site without the principal private residence being built and lived in for 3 years, there will be a clawback of the capital gains tax relief permitted. There will be no clawback if the child dies.