Buying a home during a pandemic: What is different?
If you've managed to boost your savings throughout the pandemic, you may be thinking about buying a home sooner than you had expected.
While many things have shut down due to Level 5 restrictions, you can rest assured that house sales are continuing.
Some elements of the process will be a little different though and potential buyers should be prepared to jump through some additional hoops.
From securing a house viewing, to dealing with brokers and banks - we’ve asked the experts to break things down for us.
The pandemic has quickly separated the serious house buyer, from the casual house viewer.
If you have proof of funds - and are genuinely looking to buy a property, you should have no problem securing a viewing.
On the other hand, if you’re just interested in spending your Saturday mornings looking around the new houses in your area, you can forget about it until Covid-19 restrictions have eased.
What to expect from Level 5 viewings
Estate agents and all property service providers must adhere to new industry protocols issued by the Property Service Regulatory Authority.
This means agents will now need you to provide some paperwork before they can schedule a house viewing, as Rena O’Kelly, Director at Sherry FitzGerald explained.
"All viewers must provide proof of funds in advance. We will also need to take full contact details, including an email address and phone number," she said.
Once this is done, the agent will send you a digital brochure of the property and an advance copy of their viewing protocol ahead of your visit.
Sherry Fitzgerald has a strict viewing protocol in place, according to Ms O'Kelly.
"Viewers cannot enter a property until the agent indicates it is safe to do so and they are asked not to touch surfaces.
"We have PPE, hand sanitisers and wipes should they wish to open a door," she said.
The Sherry Fitzgerald protocol states that "strict time limits" will apply to the viewings of between 15-30 minutes.
The viewings will be limited to one viewing party at a time, with a maximum of two people per party.
If you are planning on bringing your young children to a viewing, Ms O’Kelly said that is no longer allowed under the current restrictions.
"The hardest part of the viewings is turning children away at the door, as children under 16 are not permitted.
"This is fine when both parents are present, as they can divide and conquer but it proves difficult otherwise," she said.
Virtual viewings growing in popularity
Travelling beyond 5km to view a home is not considered 'essential travel’ under the current Level 5 restrictions.
So, if the property you want to view is outside of your area, virtual viewings and video tours are the best option.
At Sherry Fitzgerald, virtual viewings are proving popular where an in-person viewing is not possible.
"We can schedule a virtual viewing with a purchaser at a time that suits. This can be a one-on-one viewing, which means we can forge a relationship with the viewer and get to know them," said Ms O’Kelly.
If someone is between two minds as to whether a house is suitable, a video tour will be offered.
"We learnt from the first lockdown that having a professional video of a property was hugely important."
Finding the right property
Over the past eight months, people have been spending more time than ever at home, which has allowed many to reassess their needs.
In the past, quite a few house sales would fall through.
However, during the pandemic, Sherry Fitzgerald has noticed their 'fall through rate’ has dropped considerably due to high-demand.
Ms O’Kelly said buyers are more focused than ever before, and have their priorities clear in their head.
"The lockdown has given everyone a chance to slow down, recalibrate and to reconsider what their priorities are in life.
"For many, the house they are living in is very much at the top of the list and it has made them seriously consider whether or not it is fit for purpose.
"The option of working from home means we have seen a growing trend in buyers looking for that extra bedroom, but essentially what they are looking for is a home office.
"Outdoor space has also become high on the list of priorities for buyers," she added.
Will Level 5 slow down the process of completing a sale?
While you may encounter some delays throughout the process due to increased levels of documentation required, the process shouldn't take too much longer as a result of the pandemic.
Valuers, surveyors and other professionals required to progress the sale of a property are all allowed to carry out their work under Level 5 restrictions, subject to conditions set out in the industry protocols.
The document issued by the Property Service Regulatory Authority states that properties must be ‘sale agreed’ and the contract for the sale must be signed subject to conditions, before such professionals can access the site or property.
It also states that properties must be unoccupied at the time of the appointment and professionals must follow all sectoral, HSE and Government guidelines.
When you do approach your estate agent to start the search for your dream property, Rena O’Kelly, Director at Sherry FitzGerald offers one final piece of advice – be prepared.
"Get professional advice for your mortgage and be ready to produce your proof of funds when contacting estate agents for a viewing.
"Include it with the viewing request to speed up the process," she said.
How to get mortgage approval during a pandemic
Getting mortgage approval during a pandemic isn't hugely different to the pre-pandemic process, provided your circumstances haven't changed.
However, some banks will require further information, as Trevor Grant, Chairperson of the Association of Independent Mortgage Advisors explained.
"If your finances have not been directly impacted by Covid-19, then you will need the same documentation as you would have needed this time last year.
"However, some lenders are looking for upfront employer confirmation that you have not been affected by Covid-19 from an income perspective.
"This is because the payslips no longer state if you are in receipt of the Covid support," he said.
Can I get approval if I am in receipt of Covid support payments?
According to Mr Grant, you can still apply for a mortgage if you are in receipt of Covid support payments.
However, he said any lender that will consider these applications would look at them more stringently than those who are not availing of these payments.
"While it may still be possible to get mortgage approval, ultimately funds are highly unlikely to be released for closing unless applicants are able to demonstrate that they are no longer in receipt of any subsidy at that time," he said.
Will I be able to get an exemption?
In certain cases, a bank can lend more than 3.5 times gross income to first time buyers or second and subsequent buyers, or more than 80% loan to value to second and subsequent buyers.
However, because 2020 has been such a challenging year, lenders essentially withdrew exemptions for a period of time.
Mr Grant said some lenders are now beginning to offer them again in limited circumstances.
"If you are looking for an exemption, your best option is to speak to a mortgage broker who can offer market-based advice to see if you qualify, and for confirmation as to which lender is offering these exemptions," he said.
Four banks are currently offering exemptions, according to Joey Sheahan, Head of Credit, MyMortgages.ie
"We are expecting more banks to open for exemptions in the short-term," he said.
While exemptions can be difficult to come by, there are other supports available as Mr Grant pointed out.
"For example, the Help-to-Buy Scheme is a support potentially available to first time buyers who are buying a new build property or building a property. The maximum amount available is up to €30,000.
"The scheme was designed to cater for people who find themselves in a situation where they are paying high rent and unable to save a 10% deposit.
"Those who qualify are able to meet the deposit criteria in a much shorter timeframe than they would have if they had to go it alone," he said.
Is now a good time to apply for a mortgage?
The mortgage market is competitive and this competition is likely to heat up over the coming months.
According to Joey Sheahan, Head of Credit, MyMortgages.ie, now is a good time to apply - if you have a housing need.
"In most cases, mortgage repayments are less than the cost of market rent for similar properties.
"Interest rates are starting at below 2% and some banks are offering cashback incentives," he said.
If you are 'mortage ready', Trevor Grant, of the Association of Independent Mortgage Advisors, agreed that now is a good time to apply.
"This means that you should have your deposit in place, with six months of clean banking history, you should be in secure employment with regular income, and have shown an ability to pay rent and/or save consistently.
"Banks are definitely lending, and they are competing for business. Indeed, a new lender, Avant Money, has recently entered the mortgage market.
Mr Grant said that lenders are offering increasingly competitive fixed rate deals, various incentives like cashback and special rates for green mortgages.
He also said lenders are showing willingness to view civil servant applicants based on salary scales.
What are the biggest challenges facing house buyers?
Finding a property can be tricky because demand is exceeding supply, according to Mr Sheahan.
"Within reason, applicants are not having difficulty securing mortgage approval, but the house hunt is actually slowing down the process.
"A recent report revealed that property supply is currently at its lowest level in 14 years. We are extending approvals in many cases to give people more time to find their home," he said.
For those starting their mortgage application process now, Mr Grant advised that it may take longer to receive mortgage approval at the moment, due of delays and backlogs caused by the pandemic and remote working.
"Requests for additional documentation can also slow things down a bit, so it is important for applicants to ensure they have their most up-to-date paperwork ready for submission, as banks can request additional documentation at any point," he said.
Look at all your options
With so many market options available, it is more important than ever to get market-based advice regarding your mortgage options.
According to Mr Grant, Chairperson of the Association of Independent Mortgage Advisors, your own bank may ultimately offer you the best terms, but they are not obliged to tell you if better terms exist for you elsewhere.
"It is too big of a financial commitment for you to enter into a mortgage contract without understanding all of your options," he said.
If your first application isn’t successful, Mr Sheahan, Head of Credit at MyMortgages.ie said to remember there is always another option.
"There are ten banks in the market, and each has a different credit policy.
"Just because one back won’t approve you for the mortgage you are seeking, it doesn’t mean another bank won’t."