Case Study 5 – Homeloan young couple new home purchase

Client: Young couple, two children, had been renting property for €800 per month. Combined incomes from two permanent employment positions of €45,000. Had death and serious illness protection in place. No loans or credit card debt. Had good savings track record and suitable level of savings built up. First time buyer in Ireland.

Requirement: Home loan approval in principle to gauge affordability before they signed contracts to purchase new home. Life/Mortgage protection condition of loan.

Planning / Advice

We assessed thoroughly the clients affordability for a home purchase and prepared a comprehensive budget for the investment in their new home. There were some variables including what amount would have to be spent on the home when purchased and what contingency was needed. Until the offer from the bank came through, only then could we fine tune the clients buying power for their new home.

We investigated the market and identified lenders who were willing to lend. We evaluated lenders based on Loan to value, variable rate, maximum term and loan approval amount.

We identified the best bank for our client and prepared the application and supporting documentation which forms a comprehensive pack for the bank.

Approval in principle was achieved in 3 weeks. Once our clients identified the property, there was a period of negotiation for client where we assisted them before making their final offer based on their individual affordability circumstances. Once sale was agreed we advised them on need for legal advice before signing contracts, and we provided the bank with confirmation details to enable bank issue full home loan offer letter. The offer letter was reviewed in detail paying particular attention to conditions of offer and we liaised with client’s solicitor and valuer.

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We assisted clients address all the conditions of offer including arranging suitable mortgage protection policy and advising on getting the following:

Choice of variable or fixed rate

Engineers report

Independent valuer report

Home insurance cover policy

The rent versus buy argument was highlighted very much in this case as it was a good deal less monthly expenditure on the home mortgage, insurance and protection combined compared to the rent they had been paying. The couple can now afford to save almost €150 per month based on the differential.

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