Buying a Home in Ireland.
Part 2 of 3
In part 3, we'll go through the schemes the Government offer to help you with the costs.
Some of the schemes can make a big difference in helping you get on the property ladder, especially if you have been living and working in Ireland for a few years. Anyway, more about that next time.
Let's look at the upfront costs.
They start to add up pretty quickly, so take a deep breath!!
(1) Deposit: Typically, you'll need a deposit of at least 10% of the purchase price for a home if you're a first-time buyer.
For second and subsequent buyers, the minimum deposit requirement is 20%.
This usually includes people who previously owned property overseas.
(2) Stamp Duty: This is a tax charged on the purchase price of the property at 1% for properties up to €1 million and 2% on the excess over €1 million.
(3) Legal Fees: These can vary depending on the property and the solicitor you choose, but budgeting 1% to 1.5% of the purchase price is a good rule of thumb.
Legal fees are made up of two parts - the professional fee the solicitor charges for doing the work and the 'legal outlays' which are the costs they incur (such as performing legal searches etc).
It's important when getting quotes from a solicitor to find out if the quote they are giving you includes or excludes the outlays and if the quote includes the VAT.
Legal fees vary A LOT from solicitor to solicitor, so please shop around.
(4a) Surveyor’s Fees: If you are buying a second hand property, it's really important to get a survey done on the property before purchase.
This can cost €500 or more, so sometimes people try to cut corners and don't bother to get one, but it really is essential.
There's no point saving €500 but ending up with a house that isn't structurally sound, or that needs €10,000's of essential repairs that you weren't budgeting for.
(4b) Snag List: If you are buying a brand new property, it's worth getting a snag list done to identify all the little items that need to be fixed up before you complete the purchase.
Snag lists tend to be a little cheaper than a full survey but will probably still cost you €300-€400.
(5) Valuation Fees: Your bank will require a property valuation before granting a mortgage, which can cost around €150 to €250.
(People often think this will suffice instead of a survey but the valuer's only job is to make sure the bank is covered).
(6) Furnishings & Decoration
What you'll spend on furnishing and decoration will depend on your personal tastes, so I won't even try to guess what it'll cost you.
Ongoing costs, month to month for the duration of your mortgage term:
(1) Mortgage Repayment:
Your monthly mortgage payment is obviously the biggest ongoing cost. I'd suggest budgeting for potential rate increases in the future to make sure you could still afford it.
(2) Home Insurance:
This is required by mortgage providers and the cost varies based on the property and coverage.
At a minimum, the bank will require you to cover the building but it usually makes sense to get contents cover too as part of the same policy.
The bank may try to sell you their home insurance, but you are free to shop the market to see if you can get a better policy or a cheaper price.
By law, the bank can't force you to buy home insurance from them, so see if you can get a better deal elsewhere.
(3) Mortgage Protection Insurance:
This insurance would pay off the mortgage in full if you or your partner died (and you can also add cover that would pay off the mortgage if you suffered a specified serious illness).
It is required by law when taking out a mortgage.
The cost depends on the loan amount, term, your age, health and smoking status and the insurance company you take cover from.
Like home insurance, by law, the bank can't force you to take out their insurance.
Please note: Typically, we can find more comprehensive cover, for a cheaper price than you'll get from your bank, so if you need mortgage protection cover, please talk to me. Banks have a habit of making people feel obligated to take out their Mortgage Protection through them. You are completely within your rights to obtain your own cover, Banks are happy so long as it is sufficient cover to protect the mortgage loan.
(4) Annual Property Management Fee:
Apartments (and SOME newer housing developments)
This one is a hidden cost that people rarely consider.
If you buy an old or new apartment, there is usually an annual management fee (which could be €1500 - €2000 or more).
But traditionally, for houses, you didn't have to worry about this fee.
However, in some newer housing estates, a management fee is charged on both houses and apartments, so when you are looking for a home, ask the estate agent if there is a management fee and if so, how much it is.
(5) Local Property Tax:
This is an annual tax for property owners and can range from €90 for properties valued under €200,000 to €495 for properties value at €500,000.
For a full list of rates, just search for 'LPT rates'.
Then of course, there's the usual bills you are used to paying as a tenant - utilities, broadband, bin collection, tv etc... and there's also the hidden costs that you are used to your landlord looking after - general repairs, replacing broken white goods, leaks etc.
I hope this has helped to shed some light on the costs of getting mortgage ready.
If you would like to arrange a consultation, please contact me on the details below or Private Message me on Facebook. Remember, there are zero consultation fees for SA2EIRE members!
I look forward to helping in any way possible going forward.
Kind Regards
Danny Coad QFA
Tel: 0862422441
Tel: 00353862422441 (If contacting from abroad)
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