Advice - Buying\Mortgage\savings

Hi -

Girlfriend and I have happily rented for the last 8 years or so.
We received a considerable cash gift recently and are now in a position to buy. And we’ve had a look around on daft and like the look of what we see in our range of requisites: House\2or3bed\semi-D\ large garden(for nipper to run around)

So I was hoping you could help me to help myself:
Where is a good place to research mortgages?
Who do I approach first? Estate agent or bank?
How best to use savings (we have a 6 figure sum available)? Other than using it as a deposit\ lump sum payment for house or renovations?
For a 300K house we’d hope to pay off ~50% up front. so the mortgage would be ~€150K. Does this gies us any additional bargaining power with bank\estate agent\builder??

I hope to have more precise questions later but I am uncertain where to begin so I thought I would post something.

Thanks

Best thing to do is actually go through the process of applying for a mortgage.
That will give you an exact figure of what you can afford. The figure they give you at the initial chat may not be the figure that they give you when you have submitted all documentation.
I found it easier to apply at my local Bank of Ireland as I was forever dropping in documents, so you could start at a local branch of your bank.
The savings may give you a better LTV (loan to value) interest rate. The fact that you have a mortgage approval already will help you when you go to look at houses. It is easy to underestimate much it would cost to do a place up. If a house needs work get a builder to give you an estimate. Never reveal how much you have to spend to an estate agent, always evade the answer to that one. If they ask you your price range, talk about the sort of house, location, etc you want, not about how much you have to spend.

To add to bookworms good advice, make sure to work out your own affordability independent from the banks estimates. Ie do an excel spreadsheet on your budget - initial costs of house plus all the fees & renovation and how you hope to fund this, cash plus loan. Then working from that, work out what your monthly expenses would be after the main purchase is done with, including the mortgage. There is a rough PMT calculation in excel that will help with this. Using this, you can flex the interest rates and loan amount and see what you are comfortable with.

Also, look at the loan documentation to see if you can take out a large mortgage, holding back some of your deposit for fees etc, and then we you can always pay off a chunk of the mortgage after all your major bills are paid. If you are disciplined enough that is.

Good luck

There is better value in a doer upper as many are put off by the hassle.
Make sure you get accurate estimates of costs if this is your choice and avoid any house that needs structural work
Some mortgage advisors are good to guide you through the process
300k should get you a very decent house, best of luck

Unless you want to live in a pleasant part of SE Dublin. In such areas €300,000 won’t buy you a 3 bed semi.

Has anyone recently used a broker?

Are they able to negotiate better terms?

No they can’t get better terms however they may be useful if you are busy as they will aplly for approval for you to multiple sources and you just provide your documents once.

Hi Kant,

I went through a broker last autumn and then when my approval lapsed, I have applied directly to the banks. I applied to KBC, UB and BOI. I found the easiest (forms, meetings required etc) and best rates (at the minute) was to apply direct with BOI.

You don’t get additional bargaining power by being a part cash purchaser. You are either a cash purchaser (happy days for the seller as he knows your sale will go through) or not.

My tip for you is as a first step start looking at different houses in different areas. Look at the small houses in the good areas, the doer-uppers in the good areas, the bigger houses, better conditioned house in the less good areas. Look at bungalows, detached everything. You have chosen to rent in areas for the last 8 years so perhaps you roughly know WHERE you want to buy but what my husband and I discovered was we didn’t like the perfect house that you could do nothing with. We wanted a project. Some people will discover the opposite.

Then second tip is on the mortgage amount that you want. Think of your mortgage repayment as the rent you are currently paying out now. Is this too much, could you pay a bit more in rent if you wanted a bigger home. The plan is to ask for the amount (or less) that you want to pay in “rent”. Play with these:
aib.ie/personal/mortgages/Ow … r-Mortgage
drcalculator.com/mortgage/ie/
So if you want to pay “rent” of 1220, that according to AIB is roughly a 230k mortgage. Add your lump sum (e.g. 150) and 380k is your affordability when shopping for a house.
If you want to pay “rent” of 1600, that according to AIB is roughly a 276k mortgage. Add your lump sum (e.g.150) and 426k is your affordability when shopping for a house.

This is a dangerous game to play. As an owner you also have to pay for insurance and repairs which are generally covered in a rental. Figures show that (over the long term), maintenance costs 1-3% the value of the home.

1% would be very low ball I’d have thought.

I think maintenance is one of the most overlooked costs to buying.

Okay, taking ryaner’s advice … rent less €100/€200* per month for owner’s costs.

*Ryaner any thoughts on these numbers?

Exact numbers will never work with everyone. Something like an unexpected roof repair will easily blow most peoples savings. And I’ve yet to see anyone actually take one of the percentage figures and save the money.

Also you have to stress test your mortgage figures in case/when rates go up. If you can only afford 1200pm in rent, the mortgage figure would need to be around 1k just to break even, maybe 800 for when the rates go up.
That said, these are some really strange times, and if things keep going as they are, being prudent may not actually be prudent.

Well yeah… i guess you can never prepare for the one off unexpected large expenditure.
I guess what I was trying to say to Kant was to think of a mortgage payment relative to your current outgoings (rent) rather than taking a mortgage out for what the bank will offer you. Our bank will offer us much more than I want as a monthly outgoing.