If you are planning to take the leap into home ownership in Ireland, make sure you avoid being stung by the hidden add-on costs like conveyancing fees and stamp duty.
There is a common misconception amongst first time buyers that once you have handed over the asking price for your home, that that's that and you are now free to use your remaining hard-earned cash to furnish your new abode. While picking out your dream couch may seem like the next step, there are a multitude of 'hidden' costs which can derail any future plans if not accounted for.
Buying a house in Ireland doesn't just include the final offer in the house, there are legal fees, stamp duty and conveyancing fees which can seem daunting if the buyer is unaware of them. Fear not, for we have compiled a short list of all those costs hiding in the long grass waiting to catch you out.
Deposit
First things first, a deposit of a minimum of 10 per cent of the value of a new home for a first-time buyer is a minimum requirement for getting you that first step on the housing ladder.
For smart saving, reach out to your bank and see what kind of savings account they recommend, for example Bank of Ireland have a Mortgagesaver Account which allows a minimum of €200 to a maximum of €2,500 per month to be saved via direct debit or up to €20,000 in one lump lodgements. You can open one account per customer in sole or joint names.
Direct debit savings can be an excellent form of passive saving.
Stamp Duty
Stamp Duty is a Government charge on home transactions in Ireland, with the figure dependent on the price of your house.
It is not something to fear as the threshold for stamp duty within house prices is set at 1 per cent of the value of your home for a house below €1 million, only rising to 2 per cent when of the value of the house is between €1 million and €1.5 million. It is however, a 6 per cent rate for houses above the €1.5 million mark.
Stamp Duty is not included as part of your mortgage loan by the lender so you will need to save it up additionally to your deposit. For example, if a new house costs €340,500 (including VAT ), this amount is made up of the base price of €300,000 plus 13.5 per cent VAT which is €40,500, so a house with the base price of €300,000 will see a stamp duty of €3,000.
For new builds, stamp duty is calculated differently as VAT is charged on new builds and not previously lived in homes so you will only have to fork up stamp duty for the house price and not the VAT.
Solicitors' conveyancing fees
Solicitors' conveyancing fees/legal fees can vary across the country from region to region, there is no set price for the cost of solicitors' conveyancing fees it's important to account for a variable when saving.
Most solicitors will charge a flat fee of around €950 plus VAT, with an additional cost equivalent to the price of the house as well as a flat rate conveyancing fees, but the legal fees can vary from €1,200 to €2,500 plus VAT. Conveyancing and legal fees can occasionally be cheaper for a newly built home, but this is not always the case.
Valuation fees
As part of the bargain when borrowing to buy a house, the lender will look for a valuation report to verify that the price you are paying actually matches the value of the home.
Often the lender will have their own valuer, but the cost of their work is still your responsibility. Valuation fees can vary in cost from €150 to €250. For a drive-by valuation, it may cost up to €100.
Mortgage protection
Mortgage protection, like valuation fees are a requirement of borrowing, however you are not required to take out mortgage protection with your lender even though they will offer it to you. Be sure to shop around for the best price and deal that works best for you.
Home insurance
Home insurance premiums can differ depending on the value of the home and what you have in it. You can use the house rebuild calculator from the Society of Chartered Surveyors to calculate the cost and to give an indication for how much you should be insuring your house for.
Surveyor fees
While it is not a legal requirement and is optional, a surveyor's report can be a fantastic way of preventing buyer's remorse.
A seller is not obligated to inform you of any defects the property may have, but a surveyor's report will find any hidden problems, damp, pyrite, structural issues as well as planning breaches which would become your responsibility once you sign for the property.
Moving fees
You've done it, you've saved your deposit, paid your solicitor, stamp duty, gotten mortgage protection, home insurance and paid both surveyors and valuation fees. You're now all ready to move into your new home, or are you?
While roping in family members to pitch in and help you move your furniture can be a low-cost option, it is also unreliable and not advised for people who will be bringing a significant number of acquired possessions into their new home. Instead ensure your peace of mind and hire movers, cut out the faffing of finding boxes and vehicles big enough to fit a couch in and leave it to the professional or at the very least, hire a big van.
