When planning the purchase of a first property, homebuyers naturally tend to focus on the mortgage approval process, saving for a deposit and considering budget and location; but what about the additional costs when purchasing a home?
It’s easy to overlook these expenses with so many important elements to keep track of, but each additional outlay can quickly add up, catching even the most prepared buyers off guard.
In this article, we explore these supplementary costs in more detail, providing insight into the factors you need to consider when budgeting for your new home.
What are the main additional costs when purchasing a home?
Your mortgage approval is finally over the line and the deposit has been sitting in the bank account just waiting to be put into use. It appears to be all systems go for the big purchase, but all of a sudden the “hidden costs” associated with buying a home begin to come to light. So, what do these expenses look like?
1. Stamp duty
Stamp duty is a tax levied on the purchase of a property in Ireland, and it’s one of the largest expenses that can surprise first-time buyers.
In general, the rate is 1% for properties valued under €1 million and 2% on the excess for properties over that value. This means that the stamp duty on a home valued at €400,000 would amount to €4,000. While it may seem small compared to the purchase price, it’s an unavoidable cost that must be factored into your budget.
For those purchasing a new build, the stamp duty is calculated on the purchase price minus VAT (currently 13.5%). This small detail can provide some relief, but it’s important to have these costs ready when signing contracts.
2. Legal fees
Another substantial cost in the home-buying process is the solicitor’s fee and outlays for conveyancing.
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. In Ireland, solicitor fees can vary, but buyers can expect to pay anywhere between €1,000 and €3,000, depending on the complexity of the transaction. Some solicitors opt to charge a percentage fee for the property, so in such instances, costs could vary widely depending on the purchase price of the house.
Additionally, you will need to cover outlays such as property searches and land registry fees, which further increase legal costs.
3. Valuation fees
Before approving a mortgage, your lender will require a valuation to determine the market value of the property. The valuation ensures the loan amount aligns with the property’s worth and mitigates the lender’s risk.
A typical valuation fee in Ireland ranges from €100 to €250, though this can vary depending on the property’s size and location.
4. Home insurance and mortgage protection
Both home insurance and mortgage protection are mandatory in Ireland when purchasing a home.
Home insurance protects your property and its contents against risks like fire, theft and weather damage. The cost varies depending on the location, size and age of the home, but you should budget approximately €400 to €700 annually.
Mortgage protection, on the other hand, is a form of life insurance that ensures your mortgage is paid off if something happens to you. The monthly premiums for mortgage protection are typically affordable, averaging in and around €30 a month, but this depends on your age, health and the mortgage amount.
It’s essential to get both of these policies in place before the lender releases the funds for the mortgage.
5. Surveys and inspections
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. Depending on the type of survey you opt for and the size of the property, costs can range from €400 to €1500.
Additionally, for new builds, a snag list is often required 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.
6. Renovation and repair costs
Even if the property is in good condition, you may still want to make some cosmetic changes or upgrade features to suit your taste. These could range from repainting rooms to updating a kitchen or bathroom.
Budgeting for renovation costs is crucial, as these can easily escalate. Depending on the size and scope of the project, you should set aside at least 5-10% of the purchase price for any immediate repairs or renovations.
7. Utility connection fees
For self-builds, connecting essential utilities like electricity, gas and water may come with additional fees. While these costs are often overlooked, they can add up to several hundred euros. It’s a good idea to contact utility providers early in the process to understand the connection fees and the timeline for installation.
For new builds in general, setting up your broadband connection will also cost.
The importance of financial planning when buying a property
Buying a home in Ireland is a significant financial commitment, and the additional costs beyond the deposit can add up quickly. It’s therefore essential to prepare a comprehensive budget that accounts for stamp duty, legal fees, insurance, potential repairs and more.
Working with an expert mortgage broker can ensure you’re well-informed and financially prepared, making the transition to homeownership smooth and stress-free.
Plan for additional costs when purchasing a home with our help
At Symmetry Financial Management, we offer expert mortgage advice throughout the entire home-buying journey, helping first-time buyers navigate the often-overlooked hidden costs of purchasing a home. Through our network of trusted professionals, including solicitors, valuers, surveyors and BER assessors, we ensure you receive transparent, flat-rate fees for all the services you need to make your home-buying experience smooth and straightforward.
Our dedicated financial advisors are here to walk you through each step of the mortgage process, making sure that every potential cost is accounted for in your budget. Reach out to us today for tailored, professional advice on managing the hidden expenses of buying your new home.
