The mortgage completion process explained
Getting a mortgage in Ireland can be a long and tedious process, but will be worth it when you finally have a home to call your own. Here we break down the mortgage completion process step by step, so you’re aware of what’s involved.
The mortgage completion process can take anywhere from three months to six months, or even more. Before even beginning your mortgage journey, you’ll want to know what lies ahead of you.
That’s why we’ve put together this guide, which outlines the mortgage process from beginning to end. From completing your application to finding your dream home to the conveyancing procedure, we cover all bases.
If you’re a mortgage switcher, not all of the below steps will apply to you as you don’t need to go house hunting. This means your mortgage process will likely be much faster.
1. Complete your mortgage application
First and foremost, to start your mortgage journey, you’ll need to complete a mortgage application.
It’s possible to go directly to your lender of choice or use a broker, such as bonkers.ie, for your application.
Under the Central Bank’s mortgage lending rules, borrowers must have a minimum deposit in place - 10% for first-time buyers - and typically can only borrow up to 3.5 times their salary.
To find the best mortgage rates available on the market, simply carry out a comparison using our free service.
Before submitting your application, we’d recommend organising all the necessary documentation you’ll need. You must be able to demonstrate that you can afford monthly mortgage repayments and show that you have created a habit of saving regularly.
2. Receiving Approval in Principle
After you submit your application, the lender will assess your application and look at a range of factors to determine whether you’re mortgage-ready.
Once they are satisfied that you meet the lending criteria, you’ll receive what’s known as Approval in Principle (AIP).
You will get a letter from the lender indicating the amount they could lend you, based on the information you provide. However, it should be noted that having AIP doesn’t mean that you have mortgage approval and it’s not legally binding.
Without AIP, you won’t be able to make an offer on a property, so it's best to try and secure this early. AIP usually is valid for 6 months but can be extended by the lender if needed.
3. Time to go house hunting
Now onto the fun part: finding your dream home.
If you’re switching mortgages: As this step won’t apply to you, you can skip down to step 6 (getting a solicitor).
Once the stress of completing your application is over and you have AIP in the bag, you can start looking for the house that best suits your needs and budget.
You can find available properties for sale through estate agents or property websites, such as Daft or My Home.
With Ireland in the midst of a housing crisis, demand is outweighing supply, so it’s best to contact the estate agent to arrange viewings as quickly as possible.
Then, once you find the property that ticks all your boxes, you can…
4. Make an offer
When you make an offer on a property, make sure you have a letter from your lender showing that you have mortgage AIP, and copies of bank statements indicating you have the funds available for the deposit.
Estate agents will be more inclined to accept your bid when you can demonstrate you are ready to purchase, so being prepared will make you a strong contender.
It’s best to do some research on the common prices of property in the area before putting your offer in. You can use the property register website to do this.
Sellers will accept the bid that best suits them, which may not always be the highest.
5. Go ‘sale agreed’
If your offer is accepted by the seller, it’s time to go sale agreed!
You’ll be asked for a booking deposit by the seller, which holds the property at the agreed price until you receive the full loan offer from your mortgage lender.
This deposit is refundable should either party wish to cancel the sale/purchase before the contracts are signed.
6. Get a solicitor
At this point, you’ll need to contact a solicitor to do the conveyancing, which is the legal work involved in buying or selling property.
If you‘re switching mortgages: Switchers will also need to appoint a solicitor to carry out conveyancing.
Your solicitor will begin to address the legal work on your behalf. They will check that the property has all the correct paperwork and make sure there are no existing mortgages against it.
Solicitors charge different rates, so we’d recommend contacting a few to compare prices. You can use the Law Society’s website to find a solicitor in your area.
7. Get a valuation
Your lender will require a property valuation to ensure that the property is safe to lend on. This also aids them in deciding how much the property is worth.
Usually, lenders will arrange for a valuation to be carried out by a valuer from their panel. This typically costs about €150 but can vary.
Central Bank regulations require that a valuation report must not be more than four months old at the time of the mortgage drawdown.
Getting a pre-purchase survey: We’d recommend having your own survey carried out on the property separately from the valuation. This is because a seller does not have to tell you about defects in a property. This is not the same as the lender’s valuation and is not a bank requirement.
A survey of the property will highlight any defects or issues you may not have been aware of when you made your offer.
For example, if your surveyor finds that the roof needs to be replaced, you could change your offer to account for this.
The valuation and pre-purchase survey can be carried out at the same time
If you‘re switching mortgages: Switchers will also need to get an up-to-date professional valuation of their home. This is so your new lender knows how big your mortgage is in relation to the value of your home, and therefore how much equity you have.
8. The loan offer and loan pack
Once the lender is happy with the valuation, they will approve your loan for the property and you will receive a formal letter of offer, outlining the details of your mortgage.
Your letter of offer will include information about:
- The value, length, cost and repayment schedule of the mortgage
- The address and description of the property to be bought
- Any terms and conditions which apply to the offer
- The expiry date of the mortgage offer
Along with a copy of this letter, your solicitor will also receive the solicitor’s pack. This is a set of documents which they must complete. You should arrange to meet with your solicitor as soon as possible once you have received your letter of offer.
9. Agree on a closing date and sign all contracts
Before signing contracts, you will need to agree on a closing date with the seller. After this, your solicitor will receive title documents, which transfer the property over.
When your solicitor reviews these, you’ll sign what’s known as the contract of sale.
The contract of sale is a legally binding document, which outlines the terms and conditions on which the vendor is selling the property and the purchaser (you) is buying the property.
This document will also contain any special conditions that your solicitor or the seller’s solicitor deem necessary.
10. Compile any remaining documents
You’ll need to provide final documents to your lender, including copies of your final payslips and proof you have mortgage protection insurance and home insurance in place.
Lenders are legally required to make sure that you have mortgage protection insurance before giving you a mortgage.
Mortgage protection insurance pays off your mortgage in full if you or another policyholder dies during the term of the mortgage. You can learn all about it in our guide here.
You can get mortgage protection right here on bonkers.ie. Simply head over to our comparison page, input a few details, and review a range of policies.
If you‘re switching mortgages: On your existing mortgage protection policy, you should change the interested party to your new lender. You can do this by getting in contact with your insurer.
Like mortgage protection, lenders will insist that you have home insurance in place before letting you draw down your mortgage.
You can easily get a quote today and purchase a discounted policy by using our home insurance service.
11. Drawing down the mortgage
The final step!
Once your lender is satisfied with the submitted documents, you will pay the balance of your deposit.
Your solicitor will send a cheque requisition form to your lender, indicating the closing date.
Once they have received the cheque from the lender, they will arrange to have these funds transferred to the seller.
At this stage, you’ll also have to pay stamp duty and registration fees. After this, all you have to do is collect your keys and move in!
Stamp duty is the tax you pay when you buy a property and it’s probably the biggest extra cost to factor in when saving for a mortgage.
The rate is 1% of the purchase price for properties valued up to €1 million, and 2% on any amount over that.
Your solicitor will arrange to pay the stamp duty for you, but keep in mind you’ll have to pay it when the sale is closing.
There is also a fee to have to register your property under your name in the Land Registry. Depending on the price of your home, this can cost from €400 to €800.
If your home has not yet been registered in the Land Registry, then your solicitor will be required to submit an application for “first registration” for you. The fee for this can be reduced to €130 in some cases.
You can view all of the extra costs associated with taking out a mortgage in this guide.
What can cause delays in the mortgage completion process?
- A shortfall in life insurance: This occurs when your mortgage protection is not enough to cover the balance of your mortgage. For example, if you want to take out a mortgage of €250,000, and you only have mortgage protection cover for €200,000, a shortfall will occur.
- Conveyancing delays: Possible delays may occur during the conveyancing process if you or the seller has not prepared fully.
- PPSN: If you’re a non-resident, you will need to apply for a PPSN to get a mortgage.
- Planning Permission: If any extensions have been carried out on the property, there must be evidence it complied with planning permission and building regulations. If this documentation is missing, the seller will need to get a Opinion of Compliance or apply for retention planning permission.
- BER: The seller of the house must have a valid Building Energy Rating certificate. If they don’t have this, it may cause delays.
- The house deeds: Another cause for delay is if the deeds for the house you want to purchase are with a lender. The process of retrieving the deeds can take some time.
- Potential boundary issues: The process of drawing up new title deeds may cause a delay if it’s found there is a boundary dispute. This may occur when a seller presumes a certain part of the garden is theirs, but the boundaries say different. That means the square footage of the site is less than it was advertised.
Discover more helpful mortgage content
If you found this article beneficial, make sure you check out some of our other mortgage-related guides:
- If you have yet to apply for a mortgage, discover how you can compare mortgage rates on our website here.
- Find out what documents you need to apply for a mortgage.
- During your mortgage journey, you’ll likely run into a lot of unfamiliar jargon. In this guide, we explain 25 common mortgage terms.
- Here we take a look at 13 of the most common questions we get asked about applying for a mortgage.
- If you’re switching mortgages you may be interested in learning about when the best time to switch your mortgage is, or which banks will pay switching legal fees for you.
Compare mortgage rates on bonkers.ie
You can compare both fixed rates and variable mortgage rates on bonkers.ie. Our service allows you to review interest rates, cashback offers and incentives from Ireland’s main lenders.
When it’s time to apply for your mortgage, you can submit an online enquiry through our mortgage broker service. Our broker service is free and fully digital from start to finish.