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7 Hidden Costs Of Buying A Home That Might Surprise First-Time Buyers!
As a first-time buyer, are you aware of the hidden costs of buying a home? If the answer is no, you’re not alone!
Many aspiring homeowners delving into the mortgage process for the first time are well-versed in the “big ticket” requirements for obtaining a mortgage, such as the deposit conditions and current mortgage measures. However, there are certain costs associated with buying a home that are not often discussed in great detail, and unfortunately, these can quickly add up for novice property hunters.
Read on to discover more about these elusive hidden costs and how to financially prepare for them.
The 7 most common hidden costs of buying a home
Buying a home is an expensive business, so the last thing a first-time buyer needs is any unwelcome and costly surprises to crop up! To avoid this and to help you get prepared, we’ve compiled the seven most common hidden costs to expect on your journey towards homeownership.
1. Stamp duty
Stamp duty is often one of the more substantial costs first-time buyers encounter. It is a government tax and a non-negotiable expense that must be included in your financial planning.
The rate currently stands at 1% on homes priced up to €1 million, with 2% charged on the excess for homes that are priced between €1-1.5 million. As of 2nd October 2024, a new change on stamp duty charges was introduced, which now sees 6% stamp duty charged on homes valued at more than €1.5 million. However, this higher rate is only applicable to the amount that exceeds this threshold; the lower rates remain unchanged.
It’s also important to note that stamp duty rules are slightly different when applied to new builds. In this instance, stamp duty will be applied to the purchase price of the home, excluding VAT at 13.5%.
2. Legal fees
A solicitor plays a prominent role in assisting homebuyers to secure their dream home. Therefore, legal fees account for one of the largest “hidden” expenses that first-time buyers, in particular, may not be aware of.
The expensive price tag is due to the variety of work carried out by a solicitor throughout the mortgage process.
Most importantly, your solicitor will handle the conveyancing process, which includes legal checks, preparing contracts and transferring the ownership of the property from the seller to you. Land Registry registration is another crucial task carried out by a solicitor and will make up a significant chunk of your overall legal fees. The cost for this element will be dependent on the price of the property.
Other tasks include mortgage registration and further vital searches that help to protect you from any undisclosed financial issues on the seller’s side.
3. Home insurance
While often overlooked during the budgeting phase, home insurance is a mandatory step in finalising a mortgage in Ireland. Why? Because your lender will need proof that the property is sufficiently insured to protect their investment.
The cost of home insurance will vary widely as it is dependent on factors like the size and location of the property, how old the house is, the value of your belongings, and what security measures are in place. With home insurance rates now increasing in line with the rising cost of living, buyers need to shop around in the interest of securing the best value.
4. Mortgage protection
Mortgage protection insurance is another essential cost for first-time buyers in Ireland to be aware of. Since it is a legal requirement for most buyers (unless you meet certain exemptions), it should be included early in your financial planning to avoid last-minute delays.
This type of life insurance ensures that your mortgage will be paid off in full if you (or the co-owner of the home, in the case of a joint application) were to pass away during the term of the loan.
While costs vary based on factors like age, health and the mortgage amount, premiums typically start at a modest rate but can add up over the life of the mortgage, so considering a switch over time is advisable.
5. Valuation fees
Lenders require a professional valuation of the property to confirm that it’s worth the agreed purchase price before they will proceed to approve your mortgage. Although this is a standard part of the process, many first-time buyers are surprised to learn that they must cover the cost themselves.
Valuation fees are typically affordable (usually priced between €100 and €150), but it is yet another hidden cost that must be budgeted for in the interest of achieving a smooth and hassle-free transaction.
6. Surveyor fees
Before signing on the dotted line, carrying out a thorough professional inspection of the property is crucial, and this is achieved through a survey or snag list.
A structural survey or engineer’s report is carried out in the case of older homes and can identify issues such as dampness, subsidence or faulty wiring that may require costly repairs. The price for this will vary widely depending on the type of survey you opt for and the size of the property.
Additionally, for new builds, a snag list is often necessary to identify any defects that need to be fixed before completion.
Although not always mandatory, these surveys are highly recommended to avoid unexpected repair bills down the line.
7. Utility connection fees
For self-build projects, connecting essential services such as electricity, gas, and water often involves additional charges that can quickly add up. These connection fees can often run into several hundred euros, a significant sum for first-time buyers working within a tight budget.
To avoid delays or surprises, it’s wise to reach out to utility providers early in the process to get clear estimates and understand the installation timelines.
Another common expense and one not to be forgotten, both from a financial and practical point of view, is the cost of setting up broadband and other digital services that are now so vital for our daily lives at home.
Navigate the hidden costs of buying a home with the help of the experts
Buying your first home is a significant achievement and a significant investment. To ease the initial financial burden, it’s crucial to be aware of all associated costs from the outset.
Seeking expert assistance from a reputable mortgage advisor will empower you to understand these hidden expenses and plan accordingly, so that you can make informed decisions and enjoy your new home with peace of mind.
Let us help you prepare for the hidden costs of buying a home
At Symmetry Financial Management, our team of expert mortgage advisors specialises in assisting first-time buyers across Ireland. We offer personalised advice to help you understand all potential costs, secure the best mortgage rates, and plan your budget effectively.
Our first-time buyer mortgage service is designed to guide you through every step, ensuring you’re well-informed and financially prepared. From initial consultations to finalising your mortgage, we’re here to support you.
For expert guidance tailored to your unique situation, contact us today.
If you’d like a free, no-obligation consultation for your mortgage, pension or financial needs, get in touch here, call us on 01 6831673 or email us directly on info@symmetryfinancial.ie.
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