"Living at home is driving me nuts"

Your step by step guide to moving into your first home

Buying your first home can seem like a big step. There's a lot of new information to take in and decisions to make. At Bank of Ireland Mortgages we aim to make your move as straightforward as possible. We've created a simple step by step guide which gives you all the know how to help you into your first home, and our glossary explains new terms that you may come across.

Step 1 : Calculate how much you can borrow

We have an online calculator to help you work out how much you can realistically afford to spend on a new home. Enter your monthly salary and outgoings and we'll be able to determine how much we could lend you.

Remember that the amount we could lend you, and the repayments you can realistically afford may be different. You therefore need to consider what other outgoings you need to budget for in your repayment calculations.

Step 2 : Choose the type of mortgage which suits your circumstances

We recognise that every first time buyer is different - you have varied earnings, savings and circumstances. So it's important to choose the right mortgage for you. Take a look at our Mortgage Finder which will take you through the key questions you need to ask yourself to help you choose a mortgage to suit your needs.

There are three main repayment methods available:

Repayment

In the early years of your mortgage term, the bulk of your monthly payment is interest and therefore the amount that you owe won't reduce very quickly. However, as the mortgage balance reduces so does the interest proportion of your payment meaning that the amount that you owe in the later years of the mortgage will reduce more quickly.

Interest Only

There are a variety of interest only mortgages, but the monthly payment you make is only covering the interest charged for the mortgage. So at the end of the agreed term, you need to ensure that you can repay the amount that you originally borrowed. As the debt is not reducing, it is important that you make provision to finance the final payment, for example through means of an Individual Savings Account (ISA), shares, or the sale of a property. We would recommend that you consult an Independent Financial Adviser (IFA) to discuss the right repayment method for you, which should be reviewed on a regular basis.

A combination of repayment and interest only

Part of your mortgage is repayment and the rest is interest only. This option could give you the benefit of reduced monthly payments, but you have to remember that the outstanding capital on the interest only part will need to be repaid in full at the end of your agreed mortgage term.

Once you've selected an option that's right for you, you'll need to request a Key Facts Illustration which details in full the mortgage options you've chosen. As part of our regulatory requirements we must provide you with a Key Facts Illustration, which you can get by clicking here and registering in our secure online application area. You can get a KFI for comparative purposes without going through a full application process.

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Step 3 : Get an Approval in Principle

If you're happy with the type of mortgage that you've chosen, you now need to ask us for an Approval in Principle. This means that you are asking us whether we would offer you a mortgage in principle, and we check whether you're eligible and how much we can lend you. The Approval in Principle shows estate agents that you have the financial arrangements in place to purchase a home.

When you're ready, you can apply for an Approval in Principle online.

You should note however that this is not a guarantee and the final application will be subject to underwriting.

Step 4 : Choose a property that's right up your street

This step is made a lot easier once you've gained an Approval in Principle, as you now know exactly how much you can borrow and the maximum price that you can pay.

Things to consider when house hunting:

Location, location, location!

Your budget will help you to determine the area which you can afford to live in, but do consider your property's location for work, schools, local transport links etc.

How to buy

The traditional method of buying your home is through an estate agent, who charges the seller of the home rather than the buyer. Other buying techniques include auctions, and private sales. But you may want to start by doing a little research on areas and properties on the internet.

Information is everything

Make sure that you find out plenty of information about the area. Visit your chosen property at different times of the day to see what traffic, noise and parking availability there is likely to be.

Step 5 : Make your offer

If you've found your dream place, you need to decide how much you'd like to offer and contact the seller's agent. Once the seller accepts your offer, the property is yours 'subject to contract' which means that both you and the seller have agreed to the deal in principle. However neither of you are legally bound. Please note: this process is different in Scotland. Call us for details if you are considering buying north of the border.

Step 6 : Find a solicitor and apply for your mortgage

Once the seller has accepted your offer, you need to apply for your mortgage in full. You also need to employ a solicitor/conveyancer who can check all your legal documentation and ensure that your interests are protected.

We will then arrange a valuation report (which you may have to pay for depending on the mortgage product that you choose) to ensure that the property is worth the amount that you need to borrow. However, you can arrange your own and may want to choose one of the following:

Lenders Valuation Report

The main purpose of this report is to ensure that the property is worth the amount that you are borrowing. We need to determine whether it's sufficient security for your mortgage. You need to be aware that this type of report does not go into great detail about the property's condition and in some cases we may instruct an automated valuation which will not include a site visit and you will not receive a written report. You may want to get a more detailed report so you are fully aware of any structural issues for your own purposes.

Homebuyers' Survey & Valuation

Also known as a Property Purchase Survey and approved by the Royal Institution of Chartered Surveyors (RICS), this report gives you information about the condition of your property. Although this is more detailed than a simple valuation report, it does not include inspection of parts of the property which are covered, unexposed or inaccessible.

Building Survey (previously known as a Structural Survey)

This professional survey offers you a comprehensive inspection and assessment of the condition of your property, after which you will receive a technical report describing any defects or issues discovered. The extent and cost of this survey will depend on the agreement you make with your surveyor. This survey is arranged and paid for by you as the information it provides is for your benefit. You may use its contents to renegotiate the price, for instance if problems with the fabric of the building are found. This survey does not include a valuation, so you will still require one of these to be carried out.

What can I do if the survey highlights any issues?

Imagine the worse case scenario where your survey concludes that extensive work is required. There's no need to panic as your offer has not been finalised, so you can try and negotiate with the seller to reduce the price of the property or decide not to go ahead with the purchase.

Sealing the deal

Once the details of your survey are known, you've made your final mortgage application and we've underwritten the mortgage and checked that you will be able to make the repayments, you'll receive an Offer of Loan, also know as a mortgage offer.

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Step 7 : Exchange contracts and complete

When the property's surveys have been completed and checked, you have a mortgage offer and your solicitor has completed all of the relevant checks, both you and the seller can exchange contracts. Once this happens, you are both legally bound to proceed with the transaction, and you'll pay the deposit through your solicitor. If you do pull out at this point, the seller is entitled to keep your deposit. But before you can complete, you'll need to sign the mortgage deed and the document which transfers the mortgage to you. You will also have to ensure that you have buildings insurance as a condition of your loan. We also recommend you take contents insurance for your own peace of mind.

On some of our mortgages, a Higher Lending Charge may apply. This is usually where the loan required exceeds 85% Loan to Value of either the purchase price or the valuation (whichever is lower) and where the rate is not described as 'Higher Lending Charge paid by Bank of Ireland Mortgages'.

Step 8 : Open the door to your first home

Congratulations! Getting the keys to your first home is an exciting experience, but there's still more to do!

On the date of completion the money for the purchase will be transferred from your Solicitor to the seller. Once this has been done you will be the owner of your new home.

It's important to get in contact with all the utility and service companies to ensure that you have heat and light when you move in, and that previous bills have been settled.

Please remember that your home may be repossessed if you do not keep up repayments on your mortgage. You may therefore wish to consider Mortgage Payment Protection or Life Assurance which can cover the cost of repayments should anything unexpected happen.

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Costs you need to be aware of

There are a number of costs that you will need to be aware of when buying your first home, which includes:

Deposit
Usually a minimum 10% deposit of the purchase price
Legal and Conveyance Fees
To cover your solicitor/conveyancer to carry out the necessary searches, land registry and contracts.
Lenders' Valuation
Our own basic survey to assess whether your property provides adequate security. This is for our own mortgage lending purposes. You may want a homebuyers report or structural survey if you want a detailed report on the condition of the property.
Fund Transfers
Any money electronically transfered may incur charges, for example, sending the mortgage advance to you
Stamp Duty Land Tax
You will pay the Government tax on most purchases valued above £175,000
Moving costs
Budget for the packing, removal and potential storage of your belongings.
Higher Lending Charge
At Bank of Ireland Mortgages, we pay the Higher Lending Charge (HLC) on certain first time buyer mortgages - so you will have no extra to pay.
A Higher Lending Charge is usually applicable where the loan required exceeds 85% loan to value of the lower of either the purchase price or the valuation (and where a mortgage is not described as Higher Lending Charge paid by Bank of Ireland Mortgages).

Buying in Scotland?

Buying property is different in Scotland. Here's how it works:

  1. Appoint a solicitor before you start looking as the process can move quickly. Once you've identified a property, instruct your solicitor to 'note interest' - this is informing the seller's solicitor that you're interested in buying it.
  2. You'll be advised of the asking price and invited to make a secret bid in writing above this amount - a verbal offer isn't enough. This is called the 'offers over' system. The highest bidder is legally obliged to buy the property.
  3. You must apply for a mortgage before making a bid so that you know exactly how much you can afford. You should also have a survey carried out before you make the bid, as the result of the survey may affect the amount you offer.
  4. A closing date for bids will be announced once the selling agent has been notified of all interested parties. Your solicitor will submit your offer and a proposed 'date of entry' (the date by which the money will be transferred and the keys received).
  5. If your bid is successful, you 'conclude the missives'. This is when both parties' solicitors exchange letters agreeing the date of entry and so on. Once the seller's solicitor sends you a letter of acceptance, you should insure the property.
  6. You then sign the title deed and receive the 'disposition document' and keys, once your funds have been transferred to the seller's solicitor.

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A helpful First Time Buyer case study

Read how first time buyers Catherine and Neil are now enjoying their new home thanks to Bank of Ireland Mortgages

First Time Buyer case study