07 Mar 2017
When you first saw your house, you thought ‘This is cosy’. But the charm has faded – now your home is bursting at the seams, and no amount of trips to IKEA is going to solve your storage problems.
But you’re not too worried, because you’ve spotted a much bigger gaff, and you think you’ve got your sums worked out. You’ve even got mortgage approval to trade up. Whoopee!
If it’s been a while since you’ve been in the property market, you’ll also want to make sure you’ve accounted for any sneaky hidden costs of buying a home.
Let’s take a look at 7 home buying costs that you may have left out of your cost calculation.
1. Legal fees for buying a home
Once you’ve bought the house, the transaction is processed legally – which means legalities, paperwork, and therefore, solicitors’ fees.
This can be a flat fee or a percentage of the house sale (usually 1-2% of the purchase price). These fees could add up to a few grand depending on the price of your home.
It’s a good idea to shop around when sourcing a solicitor for the most competitive fees. Bear in mind additional costs may be incurred such as Land Registry and search fees, and remember that VAT is added on, currently at 23%*.
2. Surveyor’s fee: how much should you budget?
When you’re planning to buy a house, it’s a good idea to call in a surveyor who’ll supply you with a written report.
This report will identify any hidden defects in the house, and you don’t want structural skeletons coming out of the closet after you’ve bought it!
A negative surveyor’s report doesn’t mean you can’t buy the house. It just means that you purchase your new home knowing all the facts, which is very important when you’re making the biggest investment of your life!
Calling in a surveyor may or may not be a required by your lender. If the house needs any extra repairs, you’ve a whole other set of costs to consider – so your surveyors’ report could give you some room to bargain on the price. Expect to budget from €300 plus VAT for your surveyor’s report.
3. Stamp Duty on house purchase in Ireland
Stamp Duty is a government tax that you pay when you’re buying a home in Ireland. It applies to all residential property transactions for all first time and next time buyers.
The amount of Stamp Duty you pay depends on the price paid for the property (or the market value where the price paid is less than market value).
So what are the current rates? If you’re like the rest of us and buying a property under €1million, you can expect to pay 1% up to the value of €1,000,000 and 2% on anything in excess of €1,000,000. **
Let’s look at a couple of examples. A property priced at €400,000 will incur stamp duty of €4,000 (not too bad), whereas a property costing €1,850,000 will be 1% on the first €1m and 2% on the €850,000, giving a total stamp duty bill of €27,000 (a bit more painful).
4. Property tax in Ireland
Ah, the Local Property Tax (LPT). No doubt you’ve heard about it since it came into effect in 2013.
Much protested by the people of Ireland, the property tax is self-assessed and charged on the market value of all residential properties.
Paid annually, you register your house for the LPT on Revenue’s website and estimate the market value. Your LPT is calculated based on your valuation.
Once you’ve got all that figured out, you log onto Revenue’s site again and choose the method and date of payment from the options given. Has to be done!
5. Mortgage protection insurance
Mortgage protection is a life insurance policy you take out on the off-chance that something terrible happens and you pass away before the mortgage is paid off.
In that case, the mortgage will be paid in full using the mortgage protection insurance. Your mortgage protection payment runs for the same length of time as your mortgage and is obligatory. Another one for the ‘has to be done’ list. EBS or your mortgage lender can usually help you with this at the right time in the home buying process.
6. Valuer’s report
Even though you love your new house you need to hold your horses for this cost. Your lender will request that a valuer view your home to make sure that you’re paying a fair price.
The property market in Ireland can (at times) be as stable as a chocolate fireguard, so it’s in your own and your lender’s interests to make sure you’re not getting sold down the river when it comes to the value of the property and its market price.
Usually your lender will have their own valuer but you will have to pay for the report – though it won’t be steep (approx. €150).
Why not check the Property Price Register to make sure your house price aligns to similar houses recently sold in the area?
7. Home insurance
Now that you’ve decided to move house and you’ve considered all those other charges, it’s time to add in home insurance too. It’s a requirement that you insure your house and its contents. This can be arranged via EBS, or you may purchase this through another insurance company.
Home insurance can cost anything from €280 upwards. It’s always good to shop around for the best rates.
Quick tip: be sure you pay insurance for the cost of rebuilding your home, and not the market value. Here’s a handy home rebuilding cost calculator from the Society of Chartered Surveyors Ireland.
Got all that? Don’t worry, we’re done.
So now you’ve totted up the figures and accounted for all those extra costs, things will be looking good. Then all you need to do is you sell your current house – good luck.
* VAT rate correct as at 26/02/2016
** Stamp duty correct as at 26/02/2016
Thinking of trading up or down?
EBS d.a.c. is regulated by the Central Bank of Ireland. EBS Home Insurance is brought to you by EBS d.a.c. and is solely underwritten by Allianz plc.
Life Mortgage Cover is provided by Irish Life Assurance plc. Acceptance terms and conditions apply. EBS d.a.c. is a tied insurance agent of Irish Life Assurance plc. Irish Life Assurance plc is regulated by the Central Bank of Ireland.
Some of the links above bring you to external websites. Your use of an external website is subject to the terms of that site. The content of this blog is expressed in broad terms and is limited to general information purposes only. Readers should always seek professional advice to address issues arising in specific contexts and not seek to rely on the information in this blog which does not constitute any form of advice or recommendation by EBS d.a.c.
EBS d.a.c. neither accepts nor assumes any responsibility in relation to the contents of this blog and excludes all warranties, undertakings and representations (either express or implied) to the fullest extent permitted under applicable law.