How much can I afford? A ten-point Checklist.

Before you go looking at properties it’s a good idea to decide how much you can afford to spend. You will have to take many factors into account here such as:-

Mortgage repayments

This is the most costly part of buying a property and one that warrants scrutiny. Do not be blinded by the banks’ advertising and about great introductory deals. Banks carry out what is called “stress testing” on mortgage applicants and assess their income to see if the mortgage will still be payable by them if there is an increase in mortgage interest rates. Your bank has an obligation to show you what repayments would increase by were there a 1% increase in interest rates. Carry out your own stress testing and see if you can afford this. What if you or your partner has a baby? Remember that the term of the mortgage can be as long as thirty-five years. Of course you are planning for your income to increase and hoping for interest rates to fall but you must plan for some unexpected eventualities.

Tax Relief at Source will reduce your interest repayments each month if you are eligible for it but it is best to check with your local Revenue office as to how much TRS you will receive. An international report recently advised the Government to scrap TRS so take into account what your repayments would be if you were not receiving this benefit.

Furniture and Fit out.

You may have great plans to have all the best furniture in your new home but calculate exactly what you need to get moved in first. If you’re trading up you will probably have less to buy.  If you are a first time buyer, it’s a good idea to draw up a list to give you a ballpark figure for how much you will have to spend to move in.

Insurances

Your bank will require that you have life assurance to cover the mortgage in the event of your death during the life of your mortgage. It ensures that the mortgage is paid from the proceeds of the life assurance policy. Any remainder is paid into your estate. You can shop around for a life assurance product to suit your circumstances and don’t forget that you can always get in touch with a qualified financial adviser through privateseller.ie who will decide on the best product for you.

House and Contents insurance. This will vary depending on the value of your property and the value of your contents. Again, here at privateseller.ie we can put you in touch with a financial adviser who will choose the best product for your needs.

Management Company Payments

If you are buying an apartment or a house in a “managed estate” you are likely to have Management Company Fees. In some cases this fee will also cover the cost of the home insurance but you will still need contents insurance. The Management Company fees can be as much as €1,500 per year and take care of maintenance of the communal areas, security and gardens, if there are any. Some Management Companies will allow the payment of the fees over the space of the year but there may be an administrative charge for this service. In many cases, also, you might not be able to ascertain the management company fees until you have signed the contracts. Ask your solicitor to ascertain them as soon as possible.

Solicitor fees

Privateseller.ie have a network of solicitors throughout the country where we have negotiated discounts of up to 80% on professional fees. Remember though to shop around as fees can vary. In addition to the solicitor’s professional fee there will be VAT and Land Registry charges together with search fees. Your solicitor will give you an estimate of the fees and outlays involved before you embark on the purchase.

Valuation

The bank will require a valuation on the property which you will be liable for the costs of. The fee is usually €125 and is payable directly to the valuer that the bank nominates.

Stamp Duty

Stamp Duty is dependent on the property you are purchasing and your own personal circumstances. You should refer to the Stamp Duty guide at the back of this guide for more information. If there is anything you are unsure about get your solicitor to clarify.

Indemnity bond

In some instances your bank will require an indemnity bond to cover them in the case of them making a loss on embarking on a mortgage with you. Say, for example, you defaulted on the payments and the bank had to repossess the property and made a loss on the sale; the indemnity bond would cover them against this loss.

Structural Survey

When buying a second-hand property you are strongly advised to have an engineer or architect give the place “the once over” to ascertain the state of the property. When buying property the principle of ‘Caveat Emptor’ or ‘Let the Buyer Beware’ applies so anything you do not discover before you purchase the property is your responsibility after the deal has closed. You have no comeback against the vendor after the sale. Ensure your architect or engineer has adequate professional indemnity insurance for the preparation of such a report. Study the report carefully and if there are any repairs to be carried out find out how much they will cost.

Champagne

Don’t forget the bubbly to celebrate your new home with a glass of bubbly, you deserve it!