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9 Hidden Costs of Buying a Home

Hidden costs of buying a home

25 Aug 2015

Posted in:  First Time Buyer and Mortgages

If you’re a First Time Buyer you already know this is the most expensive purchase you’ll ever make. Sharp intake of breath! You may have budgeted carefully for that Victorian terrace you’ve had your eyes on for months. But what about the hidden costs? Yes, unfortunately there’s a list of them that First Time Buyers can sometimes overlook.

If you haven’t factored these costs in from the beginning, it can be tricky to rework your house buying budget without stretching your finances.

To make sure you know just how much money you need, read on for 9 hidden costs that come with buying your first home.

1. The legal fees

Before you consider making an offer, it’s a good idea to shop around and check the price of solicitors. After you have made an offer to the seller of your new home, your solicitor will step in to help you with the legal paperwork.

Your solicitor is responsible for ‘conveyancing’, which means they will conduct all the legal tasks to transfer ownership of the property to you. Your legal costs will vary depending on the price of the solicitor and the price of your home so shop around to get the best deal and make sure they quote you for all costs inclusive of VAT.

How much to budget? Between €1,500 and €3,000+

2. Property tax and other home buyer costs

Don’t forget the other compulsory charges that come with the joy of home-ownership: these include waste charges, water costs and property tax. These can all add up, and many people pay up to €1,000 a year for these collective costs.

How much to budget? Up to €1,000

3. Mortgage Assurance (Mortgage Life Insurance)

Why do home-buyers need Life insurance? This payment (sometimes known as mortgage protection) is essentially life assurance for your house. That’s because it assures your lender that if you die before you’ve finished your repayments, your mortgage loan will be repaid.

Again it’s a good idea to shop around for the best deal – and while you’re on the lookout, why not call a personal financial advisor to chat about AIB’s competitive mortgage assurance rates?

How much to budget? From €40 per month depending on your policy and the size of your mortgage

4. Your mortgage deposit

Most people know they must pay a deposit when buying a house – but some First Time Buyers may not be up-to-date with the Central Bank deposit rules which were introduced in January 2015.

These rules state that First Time Buyers can apply for a 90% loan to value mortgage up to a threshold of €220,000. This means you need to pay a 10% deposit on the first €220,000 of your home and 20% deposit on the balance over €220,000.

If you’re buying in a couple, both of you need to be buying for the first time to qualify for this deposit. Higher deposits may be required for one bedroom apartments so check with your lender.

How much to budget? Depends on the price of your house. See above and if in doubt ask your mortgage advisor for help

5. Home Insurance

You won’t want to be thinking of fires or floods when you’re just about to buy your first home. But home insurance is an essential add-on. The monthly cost of your insurance will (of course) depend on the cost of your home. However, at AIB we offer pretty competitive insurance for First Time Buyers.

How much to budget? From €200 depending on your home and location

6. The valuer’s report

Lenders will look for a guarantee that you’re paying a fair price to the seller, and that this price matches the value of the home. (It is in both you and your lender’s interests to ensure you’re getting the best deal).

This guarantee will come in the form of a valuer’s report. Usually your lender will have their own valuer which they rely on for this purpose but you will have to pay for the report.

How much to budget? From €150

7. Utility costs

If you already have utility accounts, you’ll probably know the costs associated with electricity and gas. However if you’re setting up these accounts for the first time, you may need to factor in the price of a deposit.

How much to budget? Can be up to €300 deposit for electricity

8. Stamp Duty

Stamp Duty is a government charge on your home transaction. And how much will it cost you? This will depend on the price of your house. But if you’re the average home buyer purchasing a house under €1 million (like the rest of us) your Stamp Duty will be 1% of the value of your home. However if you are lucky enough to be purchasing a home over €1million, your stamp duty will be 2% of the value of your home.

How much to budget? 1% of the price of your home up to €1m (or 2% if it’s over €1m)

9. The surveyor’s fees (optional)

Last but not least, it’s a really good idea to get a professional surveyor to check your new home. They will provide a written report on any structural damage or other issues, such as condensation – or worse –damp and dry rot! This is not a legal requirement but it is definitely recommended, especially if you’re buying second hand homes.

Your surveyor can usually give you a good idea of the cost of fixing any problems that are uncovered in the survey. This information may give you room to negotiate with the seller on price.

How much to budget? From €300

Home Buyer’s Costs: Summary

The legal Fees: Allow for €1500-€3000

Property Tax and other home buyer costs: Up to €1000

Mortgage Assurance: From €40 per month depending on budget and house price

Your mortgage deposit: Depends on the price of your house and Central Bank rules

Home Insurance: From €200 depending on your home and location

The valuer’s report: From €150

Utility costs: €300

Stamp Duty: 1% of the price of your home up to €1m (2% if it’s over €1m)

The Next Steps to buying my home

Are you in the process of buying your first home? No matter what stage you’re at, we can give you all the information and help you need, click here for more information about you First Time Buyer Mortgage or why not try our handy mortgage calculator or make an appointment with an AIB mortgage advisor today?

Allied Irish Banks, p.l.c. is an authorised agent and servicer of AIB Mortgage Bank in relation to origination and servicing of mortgage loans and mortgages. AIB Mortgage Bank and Allied Irish Banks, p.l.c. are regulated by the Central Bank of Ireland.

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