When you are trying to save up to purchase your home as a first-time buyer it will be important to bear in mind the extra costs that will be involved. It isn’t just about the deposit! Our aim is to make you more aware of the costs involved so that you will know how much you need to save.

As you may already know, a first-time buyer will need to save enough money to pay for 10% deposit which is worth 10% of the cost of a house. This means that a house worth €200,000 will require one to hold savings of at least €20,000.

It has to be said that there will be several other sizeable costs which need to be taken into account before a bank will even consider your application for a mortgage.

Stamp duty

Stamp Duty will probably account for the largest cost to you.

Stamp Duty rates apply to all buyers and are as shown below:
• A residential property of less than €1 million attracts a rate of 1% stamp duty
• A residential property in excess of €1 million attracts a rate of 2% stamp duty

Therefore, a house for a €300,000 house you will be charged a stamp duty of €3,000.

When you plan to purchase a new home then things do differ a little. You will still be required to pay stamp duty but it is the price of the house excluding VAT that determines the rate.

In Ireland VAT is levied at 13.5% on new houses meaning that the stamp duty on a new house worth €300,000 would be only €2,595 . This is equal to 1% of the total cost less 13.5%.

Your bank will be looking to see that you can afford to pay the deposit and the stamp duty before they will agree to provide you with a mortgage.

 

1. Report by a Valuer

In order to make sure that you are prospective home is being sold to you at the correct price the lender will ask for a report from a valuer. The valuer will provide the market value of the property in order that you don’t pay an unfair price. You will not have to find the valuer but you will have to fund the report and you will probably need to pay around €150 plus VAT.

2. The cost of a solicitor

A solicitor will provide you with conveyancing; this means that they will take care of all of the legal paperwork that you will need prepared in order to transfer the ownership of a property to you.
Costs will vary; some solicitors charge a flat fee while others charge a percentage of the house price; this can be anything from 1% to 2%.
When you ask for a quotation, make sure to ask if the total includes or excludes VAT. It is important to shop around but you can expect charges of anything from €1,500 to €3,000 plus VAT.

3. Report by a Surveyor

It is advisable to organise or a professional surveyor to look at the house. The lender may not say that this is compulsory and no matter what is in the report you are still free to buy the house. However, the surveyor’s report will pick up any problems with the property which could require work or affect the value of the property. These could be structural or conditions like damp, condensation or dry rot.
A surveyor’s report will cost around €300 plus.

4. Property tax and insurance

When you own a home there are costs that you wouldn’t have to think about if you previously rented a property or lived with your parents. Now property tax, home insurance and mortgage protection will need to be taken into consideration.
Firstly, property tax, which is paid to the inland revenue, will need to be paid. The cost of this will depend on the value of your house at market; a house that is valued at €300,000 would mean paying around €500 annually.

It is a requirement for most lenders that mortgage protection is taken out. In the event of your death, this sort of protection would mean that the balance of the mortgage would be settled. The cost of this type of insurance will vary depending on your personal circumstances and how big or small your mortgage is; you will probably need to pay a monthly fee of around €20-30 for your mortgage’s lifetime.
You will also be required to insure your home and its contents.

This could cost around €300 annually and would cover any damage to the house or contents which is caused by storms or fire.

Both of these policies can probably be arranged by your own bank but you are free to look around for better deals and choose another provider should you wish.

Shop around before you make up your mind

Before you make any decisions about the property you hope to buy, understand that you can work out the cost of a mortgage for houses with different values and with different lenders.