If you're planning to make the leap into home ownership in Ireland, make sure you won't be stung by 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'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 involve the final offer; there are legal fees, stamp duty, and conveyancing fees, which can seem daunting if the buyer is unaware of them. Fret not, we have compiled a short list of all 'hidden' costs in purchasing a home.
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 to see which savings account they recommend. For example, Bank of Ireland has a Mortgagesaver Account, which allows a minimum of €200 and a maximum of €2,500 per month to be saved via direct debit, or up to €20,000 in one lump sum. Direct debit savings can be an excellent form of passive saving.
Stamp Duty
Stamp Duty is a Government charge on home transactions in Ireland, the amount depending on the price of your house. Fear not, 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 purchasing a home over €1 million. Stamp Duty is not included in your mortgage loan by the lender, so you will need to save it in addition 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: VAT is charged on new builds, not previously lived-in homes, so you will only have to fork up stamp duty on the house price, not the VAT.
Solicitors' conveyancing fees
Solicitors' conveyancing/legal fees can vary from region to region. There is no set price for solicitors' conveyancing fees so it's important to account for the variable when saving. Most solicitors will charge a flat fee with an additional cost equivalent to the price of the house, as well as 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 require a valuation report to verify that the price you are paying matches the home's value. Often, the lender will have their own valuer, but the cost of their work is still your responsibility. Valuation fees can range from €150 to €500, depending on the property and the experience of the valuer.
Mortgage protection
Mortgage protection, like valuation fees, is a requirement of borrowing; you do not need to take out mortgage protection with your lender, which allows you to shop around for a deal that works for you.
Home insurance
So, you're finally in your new home, when disaster strikes - a pipe has burst in the attic, resulting in flooding throughout the house, but worry not, your insurance will cover everything. 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 of how much you should be insuring your house for.
Surveyor fees
While not a legal requirement, 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. A surveyor's report for a two- or three-bed apartment or small house averages around €500 plus VAT.
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 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 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.
