A step-by-step guide to buying your own home
If you want to buy your own home but you’re not sure what to do next, this handy guide will tell you everything you need to know.
We spoke to Conor McGowan, Head of Mortgages at KBC Bank Ireland, to get the lowdown on how to go from applicant to homeowner.
Step one: Book your appointment
If you’re serious about buying a house, the first thing you need to do is book a mortgage appointment to discuss your finances and find out what you need to do to get mortgage approval.
“The first thing people want to know is ‘How much can I borrow?’” says Conor. “The second thing is ‘How much will it cost me every month?’. Our online calculators are a great starting point to answer both of those questions.”
Step two: The paperwork
Typically, you will need the following documentation:
● A completed mortgage application form
● Proof of identity - Photographic ID
● Proof of address - One utility bill/bank statement from the past six months
● Proof of employment – Completed and stamped by your employer within the last six months, and accompanied by two recent payslips and an original P60
● Bank statements - Six months of continuous current account bank statements, six months of continuous savings account statements, most recent personal loan statements, two months of continuous original credit card statements or e-statements (the latest dated within the last three months)
Self-employed applicants must also provide:
● Financial/audited accounts - Two most recent financial years signed by your accountant
● Tax returns - Two most recent years’ tax returns (P21 or Notice of Assessment or Chapter 4 Revenue Certificate with full completed Form 11) along with a Tax Clearance Certificate
(If the mortgage is a joint application, you will both need to submit the above documents)
Step three: Assessment
The bank’s credit department will then assess your documentation and personal circumstances. Affordability is the most important thing when assessing a customer for mortgage approval.
“It’s important that you have a life as well as paying your mortgage, so we look at employment status and income, savings and borrowings and outgoings like rent or childcare when assessing an application. So, if you are saving €500 per month and paying €1,000 per month in rent, you are already showing you can afford €1,500 a month in a mortgage repayment.”
KBC offer mortgage terms up to 35 years depending on your age, so there’s something to suit everyone.
If your assessment is successful, you will then be given an Approval in Principle (AIP).
Step four: The approval you always wanted
Once you have your AIP, you can start shopping for the home of your dreams. KBC’s AIP lasts six months, and it tells you how much money you can borrow at that time.
This gives you a major advantage over interested parties who have yet to arrange a mortgage assessment.
Once you find your dream home, the next steps are easy.
“At KBC, we will arrange a valuation on the property through one of our valuers to show that it’s worth what you’re paying for it and the mortgage is appropriate for that property,” Conor says.
“We can then progress to a formal loan offer. This is the contract between you and the bank, so you and your solicitor will be required to review this before you draw down the funds.”
Step five: What type of rate do you want?
There are two different types of mortgage rates available to choose from – variable or fixed. It’s important to consider what best suits you when choosing a rate.
Variable rate mortgages mean that the rates can change at any time and so can your monthly repayments. A fixed rate mortgage means your monthly repayments will remain the same for a period of time of your choosing.
“Variable rate mortgages are good if rates are going down, but obviously if rates go up, so does your monthly repayments. A major thing to take into consideration is your employment status. Lots of people are working in industries where they receive a regular bonus or commission payments.
“A variable rate allows you to make additional lump sum payments and so reduce the length of time to repay your mortgage.
“A fixed rate gives you the comfort of having the same rate to pay day-in and day-out. Mortgage rates are quite low at the moment and as a result, fixed rate products are proving very popular with first-time buyers, giving that certainty of repayment for anything from one to 10 years depending on your preference.
“If you like both options, it is also possible to split your mortgage between variable and fixed rates, giving you the best of both worlds.”
Step six: All the other stuff
So you have your mortgage and your house – but there’s still a bit of housekeeping to do before you’re ready to move in.
You’ll also need mortgage protection insurance, which means that your mortgage will be paid should either party to the mortgage die before the term was complete. Home insurance is also required before drawdown.
Conor advises anyone who wants to buy a house to arrange a mortgage meeting sooner rather than later.
“Get prepared early. If you are considering a house purchase, make sure you are managing your finances well. Show you can keep your current account in order and remember to show some savings history.
“Also, stay in touch with your mortgage specialist. He or she will help you through each stage and point out any additional requirements and next steps along the way. It’s an exciting time but can seem daunting, so let the experts do the work.”
For more information on mortgages, visit the KBC website.
Lending criteria, terms and conditions apply. The property is mortgaged to secure the loan. Life and home insurance are required. The maximum mortgage is 90pc of the property value. KBC Bank Ireland plc is regulated by the Central Bank of Ireland.