5 things for first time buyers to be aware of - and how to plan for them

A man playing jenga depicting investment risk and uncertainty in the real estate housing market.

So you’ve decided it’s time to take the next big step in your life. Congratulations, you’re on your path to becoming a first time buyer! It’s an exciting journey with an even better destination, though the road can be paved with detours.

Truth is, first time buyers can sometimes smack right into pitfalls—which is why we’re taking a look at five of the most common first time buyer pitfalls and how you can avoid them.

1. Don’t forget to track your savings

A lot of first time buyers don’t know how important it is to properly track your savings. Multiple transfers between many accounts or odd spending habits means it can be hard for your mortgage advisor to figure out your saving habits.

They need to know that they can trust you to meet your repayments, and messy outgoing and incoming funds can raise questions.

Solution: Save consistently and regularly each month by direct debit and keep a simple paper trail for one saving account so you can prove you’re on top of it.

2. Have all your documents organised for your mortgage application

If you’re slow about getting your various documents together, you’ll set the mortgage process back by weeks and maybe even miss out on a property you were eyeing up.

Instead of designing your future bedroom on Pinterest, your time could be better spent organising your documents. The documents you’ll need to supply for your mortgage application include proof of identity, proof of address, proof of income, and any current account and loan statements.

Solution: Keep track of your documents as you go along. Dig them out from the bottom of that cupboard and organise them in a folder for when the time is right.

3. Set a realistic budget

One of the biggest pitfalls for first time buyers is not setting a realistic budget to buy their first home. You might do the maths on our mortgage calculator to find out how much you can borrow and see a nice number that falls right in line with the type of house you want. You may even have a wish list.

But can you really afford those top of the range appliances and that big garden?

Some first time buyers forget to budget for the extra expenses they’ll have after they move into their first home. Things like property tax, home insurance, repairs and also for having a life!

Solution: Draw up a detailed budget and fill in all your expenses so you know what you really spend in a year. You might be surprised by how much you spend on things like coffee or meals out and discover it’s a choice between those and that fancy fridge.

4. Account for extra costs

Stamp duty, legal fees, valuation reports, and home insurance and life assurance are the big ones. Buying a house comes with a handful of extra costs that need to be budgeted for too.

  • Stamp duty is a tax on the processing of documents involved in buying or selling a property, and tips in at 1% to 2% of the price of the house.

  • Legal fees vary. A good rule-of-thumb is to set aside 1% of the cost of the house to cover any costs. But make sure to get a written quotation from your solicitor detailing in full the various charges.

  • Every mortgage provider will ask you to provide a valuation on the property that states how much the property is really worth. This can cost from €150.

  • Most mortgage providers expect you to take out mortgage protection insurance. As long as you keep up your repayments, if something happens to you the mortgage will be paid off.

Solution: Do your research and make sure you’ve included these extra costs in your budget.

5. Be conscious about the ‘little’ things

You don’t want to be lax about buying your home and two weeks down the line realise that there’s a structural fault in the hall and a whole wall needs to be torn down. Nightmare!

Before signing on the dotted line, it’s always good to hire a surveyor, engineer, or architect to carry out structural checks—even on new houses. If there are any issues with the house, you need to know before you put an offer on the table.

If you’re buying a new home, pop in and work on a snag list of any problems you see. Tip: keep an eye on the BER. You don’t want to buy a great house with a terrible BER and end up spending a small fortune heating an ice-box.

Solution: Hire a professional to survey the house and give it a detailed going-over. This may cost up to €300 but it could save you a fortune in the long run.

Phew! What’s next?

Buying your first home is a big commitment, so you want to do it right. AIB can help you with that. To get started on your journey, check out our First Time Buyers page and our Mortgage FAQs, or give us a call on 0818 244 425 to find out more.

Allied Irish Banks, p.l.c. is an authorised agent and servicer of AIB Mortgage Bank in relation to origination and servicing of mortgage loans and mortgages. AIB Mortgage Bank and Allied Irish Banks, p.l.c. are regulated by the Central Bank of Ireland.