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Costs of buying a home

(courtesy of consumeraffairs.ie)

As well as paying the mortgage, there are other costs involved in buying a home in Ireland. These can be significant so it is important to add them up before going any further with house purchase.

• Deposit: Buyers will normally need to pay at least 10% of the purchase price and perhaps more as a deposit. The exceptions to this are where the mortgage is from a local authority Local authority mortgages in which case the deposit may be as low as 5% of the purchase price or where the mortgage is under the Shared Ownership Scheme where the minimum deposit is €1,270.
• Lending agency fees. These may include the following: an application fee; the lender's survey; searches; mortgage loan costs and an indemnity bond to ensure that if the lender has to repossess the property it won't make a loss.
• Legal fees. There is no fixed rate of charges for legal fees in Ireland. (Under Section 4 of the Competition Act, 2002, there is no industry wide scales of fees, i.e. there is no fixed percentage or level of fees). Rather, solicitors can offer competitive rates for conveyancing work (legal fees associated with buying a home) and you are advised to obtain some quotes before deciding on a legal firm. Solicitors may charge you a flat fee or a percentage of the purchase price. In the past, fees were of the order of 1.5% of the purchase price but again, shop around to get the lowest possible percentage fee or the lowest possible fixed fee. There may be other costs associated with the legal process including land registry fees and legal searches. VAT (at 21.5%) is also payable on the legal fees (VAT will be 21% from 1 January 2010).
• Buyer's survey fee. This is different from the survey carried out by the lending agency. You will need one if you are thinking of buying a second-hand house. The cost can vary considerably.
• Stamp duty. The buyer normally pays Stamp Duty, so you should check with your Solicitor for the exact amount. The rate of duty will depend on several factors - size and value of the home, whether you are a first time buyer, etc. For detail on this please go to http://www.citizensinformation.ie/categories/housing/owning-a-home/buying-a-home/stamp_duty
• Mortgage protection. Mortgage Protection insurance is designed to pay the balance of your mortgage if you die before the loan is fully repaid. Lenders are legally obliged to make sure that you have adequate mortgage protection cover when you take out a home loan, although you do not have to arrange this insurance through them. Premiums vary but always reduce over the life of the loan as the amount of the loan reduces. Local authorities run their own plan (The Local Authorities Mortgage Protection Plan) and people borrowing under the Local Authorities House Purchase Loan scheme must take out insurance through this scheme.
• Home Insurance. Most lenders will also insist that you take out adequate home insurance to protect your home in the event of fire or other damage. You are not obliged to purchase home insurance from your lender.