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The hidden costs of buying a home

Thinking of buying a home? If so, you probably already have a budget to help you keep track of the costs around your purchase, particularly if you plan to make changes to your new home, such as repainting or remodelling.

Buying a home however can involve a number of hidden costs that are not always top-of-mind with the purchaser.

The recent announcement of the European Central Bank raising interest rates by 0.5 per cent to address inflation, mortgage holders may be impacted depending on how banks react to the announcement.

With interest rates on the rise and property sale prices reaching Celtic Tiger levels, it is vital home buyers are aware of what extra costs may apply to them when buying a home.

The recent announcement of the European Central Bank raising interest rates by 0.5 per cent to address inflation, mortgage holders may be impacted depending on how banks react to the announcement.

In this blog post, we break down the hidden costs of buying a home to help you prepare for what lies ahead.

STAMP DUTY

Stamp Duty is payable to Irish Revenue when you transfer ownership of a property, or if you buy a new-build home. The rate of stamp duty payable on residential properties is 1% on the first million, and 2% for every million after that. Stamp Duty on new-build homes are calculated differently; it is charged at 1% of the difference between the value of the new home and the 13.5% VAT.

PROPERTY TAX

In addition to Stamp Duty, Local Property Tax (LPT) is also payable on residential property. Unlike Stamp Duty, LPT is self-assessed, meaning you can determine the value of your property and therefore the amount of LPT you pay each year.

SOLICITORS FEES

A good solicitor will make the legal aspect of your purchase stress-free, from lodging the correct paperwork and ensuring your interests are looked after. Fees can vary wildly though, from €1000 to several thousand. It always pays to obtain a quote upfront so you are prepared.

SURVEYORS FEES

You may have heard the phrase, Buyer Beware, which refers to the need for a buyer to do their homework prior to making a purchase. Hiring a surveyor to inspect the property is a good example. A surveyor’s report will uncover any structural or other issues that need remediation, and their approximate costs, all of which can be used to negotiate a sale price, or give you the opportunity to walk away if the issues are more than you are prepared to deal with. Surveyors’ fees are typically between €300 and €500.

VALUATION FEES

If you are taking a mortgage for your property, your lender will require a valuation report for your new home. The report makes sure the price you are planning to pay is close to the valuation on the home. The cost of a valuation is typically between €200 and €300, plus VAT.

Mortgage protection

Mortgage Protection is a type of insurance that pays out your mortgage in the event you, or another policy holder dies. Your lender will require you to have mortgage protection, but that doesn’t mean you have to select your lender’s mortgage protection product; in fact, shopping around can save you considerably on the life of your loan. Talk to us about mortgage protection and how to get the best deal.

HOME INSURANCE

Home insurance really is an absolute necessity to ensure you are covered in case your home is destroyed in a flood or fire, or experiences damage from another event.  The most accurate way to determine your home insurance premium is to use the house rebuild calculator from the Society of Chartered Surveyors, which keeps track of build costs and is of particular importance given the rise in building material costs.

Keen to keep all your costs in check?

Talk to us about getting a mortgage. There are a number of mortgage options available to borrowers with new providers entering the market in the last number of years.

Focus will now move to lenders and how they react to the ECB announcement

A rate increase will have a knock-on impact for hundreds of thousands of mortgage holders over the short-to-medium term.

Switching activity has been busy this year to date as people move to try to lock in fixed rates and somewhat shield themselves from further increase rate rises.

Fixed rates are dominating the mortgage market, and it’s easy to see why – by choosing a long-term fixed rate, a borrower can fix at a rate of 2.5 per cent for 25 years, so they never have to worry about rate increases for the full duration of their mortgage. This is based on a loan to value of under 60 per cent.

Avant Money offers some of the most competitive rates on the market right now, with rates starting at 1.95% APRC (Annual Percentage Rate of Charge) for a three-year fixed term rate.

Avant Money’s long-term fixed rate product starts at just 2.25% and can be fixed for a term between 15 and 30 years, giving you peace-of-mind for your entire mortgage term.

With access to the best rates in the market, we could save you thousands. Get in touch with us today to talk about a mortgage for your new home.

 

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