Information
As well as paying the mortgage, there are other costs involved in buying a
home. 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. Exceptions to this are
where the mortgage
is from a local authority (in which case the deposit may be as low as
3% of the purchase price) or where the mortgage is under the Shared
Ownership Scheme, which has a minimum deposit of €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 scale 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%
is also payable on the legal fees.
- 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.
- 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.
- Stamp duty on house price. Stamp duty is a tax payable based on the value
of the transaction.
