It’s not easy to save up and buy your very first home. There are a number of other costs on top of the deposit that should be considered. We’ll go into detail on these extra costs to help you save up the real amount you need.
As a first-time buyer, you likely know you have to put together a deposit worth at least 10% of the purchase price for your desired house. If you were to buy a house at €300,000 for example, you would need at least €30,000 in savings.
There are also some other costs that need to be considered before banks will be willing to approve a mortgage application.
Stamp duty is likely the highest additional cost you will face. We’ll look at the different stamp duty rates and how those rates apply to first-and-second time buyers.
|Property Type||Value||Stamp Duty Rate|
|Residential||First €1 million||1%|
|Residential||Every extra €1 million||2%|
This means a house with a value of €300,000 comes with stamp duty worth €3,000.
Things are somewhat different when purchasing brand new homes though. The stamp duty will still be the same, but the rate will be applied to the value of the property minus VAT. The VAT for new houses in Ireland stands at 13.5%. That means that you would only be paying €2,595 in stamp duty for a brand new property worth €300,000 – which is 1% of €300,000 minus 13.5%.
A bank will require, at the very least, that you have enough money put together for both your deposit and the stamp duty on a property before approving you for a mortgage.
It is up to solicitors to handle conveyance, meaning that they undertake all legal tasks necessary to make you the legal owner of a property.
A solicitor may charge a flat fee for this, or they may charge a fixed percentage of the property value, commonly 1 or 2%.
Shopping around can help, but you should expect to be paying anywhere between €1,500 and €3,000 (as well as VAT). When you get a solicitor’s fee quote, be sure to ask if the price being quoted includes VAT or not.
Your lender wants to be sure that you’ll pay a fair price for the property, so they are also going to request a valuer’s report. The valuer is there to estimate the market value of the property to ensure that you aren’t overpaying for the property.
Lenders will often have their own valuers they will use for this, but you will still be required to pay for their report out of your own pocket. This can cost around €150 plus VAT.
Before purchasing a property, it’s worth having a professional surveyor put together a report. That report identifies potential structural problems or defects with the property including damp, dry rot, condensation, and pyrite.
Your lender may or may not require you to have a surveyor’s report, and a bad report doesn’t mean that you won’t get approved for the mortgage. It means you know just what you are buying before going ahead with the greatest financial decision you will ever make.
Put aside an extra €300 plus VAT for that report.
Insurance and Property Tax
There are some other costs associated with owning your own home that you might not be used to having to pay if you’re renting your home or living with your parents. This includes home insurance, mortgage protection, and property taxes. These need to be considered.
Many lenders ask you to claim mortgage protection. It is basically a life insurance policy that pays off the reminder of the mortgage balance should you die. The cost of this mortgage protection depends on factors like your health levels, age, and the mortgage value. You can expect to be paying around €20-€30 each month for the duration of the mortgage.
On a similar note, lenders require you to have home insurance to keep the property and the contents of it safe from fires, storm damage, and other problems. A home insurance policy costs around €300 per year.
Many banks will offer their own home insurance and mortgage protection deals, but keep in mind that there’s no obligation to take these offers. You can – and should – shop around for a good deal.
The last thing to consider is property tax. Property tax is a self-assessed tax paid to Revenue, based on the market value of the property. Houses with a value of €300,000 will cost around €500 per year in property taxes.
Shop Around Before Making Decisions
If you’re still starting out with buying a home, or are considering switching mortgage lenders, don’t forget that you can use a mortgage calculator to estimate mortgage repayments.