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Our Guide To The Hidden Costs For First-Time Buyers
While stepping onto the property ladder is an exciting journey, it’s important to be aware of the hidden costs for first-time buyers that can often be overlooked. From solicitor’s fees to stamp duty, these extra expenses quickly add up, necessitating an additional savings pot beyond the funds for a deposit.
In this article, we explore these hidden costs, ensuring you have a seamless transition from property hunter to homeowner.
The importance of financial planning
In the fluctuating Irish property market, with rising costs and interest rates, forward financial planning is key. Creating a financial plan helps cover all costs comfortably, without undue stress. By tracking monthly income and expenditures, you gain insight into your disposable income for savings and future mortgage repayments. Compiling a list of both upfront and hidden costs, which we’ll detail below, is crucial in this planning process.
Upfront costs vs. hidden costs
While upfront costs like deposits and refurbishments are often considered, hidden costs are equally important but less visible. These include various fees and insurance necessary in the property-buying process – which we’ll discuss in more detail in the next section!
Common hidden costs for first-time buyers
First-time buyers need to be aware of several hidden costs, including:
Stamp duty
Stamp duty is a tax imposed on a property transaction, which is calculated as a percentage of the purchase price. In Ireland, stamp duty is 1% of the property value for homes valued at under €1 million, and 2% for homes valued at over this price. So, if a buyer purchases a home worth €300,000, their stamp duty will come in at €3,000.
This rate of 1% is also applicable to new builds, but it is applied to the purchase value minus VAT, which is 13.5% of the overall price.
Legal fees
A solicitor plays a crucial role in the home-buying process by handling the legal aspects. They review contracts, ensure legal compliance, handle the transfer of funds and oversee conveyancing, which is the legal exchange of a home from seller to buyer. While the cost of a solicitor’s services will vary, first-time buyers could be looking at forking out between €1,000 and €3,000 to cover this vital cost.
Valuation fees
Property valuation is essential for mortgage approval in Ireland because it determines the property’s market value, ensuring the loan amount aligns with the property’s worth. Factors that affect valuation costs include the type of property in question, its size and its location. Those seeking a valuation can expect to pay between €100 to €150 for a thorough job, though it greatly depends on the size of the home.
Home insurance
Securing home insurance is a necessity before the sale can be closed on a property, but the cost of this coverage will vary depending on many factors, such as the location, size and age of the house, along with the value of the assets that will be stored within.
Mortgage protection
Mortgage protection is another type of compulsory insurance that is required when buying a property. It is designed to pay off the remainder of a mortgage if the homeowner dies during the term of the loan. Like home insurance, mortgage protection must be in place before a mortgage can be drawn down. The average monthly cost for a policy comes in at less than €30.
Surveys and inspections
Certain surveys and inspections will be required when purchasing a home, particularly in the case of older houses and those that may have pre-existing issues, such as subsidence. From structural surveys and an engineer’s report to the creation of a snag list, these are hidden costs that are hugely necessary to ensure that a property is safe and suitable to live in.
Renovation and repairs
Should anything pressing crop up following a survey or inspection, certain issues may need to be addressed immediately. Aside from this, a buyer may also have cosmetic changes they wish to make to a property to align it to their taste. It is important to have funds set aside to cover these potential costs.
Land registration
Land Registry registration is another key expense, ranging from €400 to €1,000, depending on the house price. Mortgage registration and various searches conducted by your solicitor, such as planning, judgment, and bankruptcy searches, are also vital. These searches protect against issues like undisclosed debts or the seller’s bankruptcy.
Prepare for the hidden costs of buying your first home with our mortgage advice
With so much at stake when purchasing your first home and so much money on the line, ensuring adequate financial planning in advance of the process is vital. If you’re not quite sure where to begin, seeking the advice of an experienced mortgage broker will set you on the right track.
At Symmetry Financial Management, we provide comprehensive guidance through the mortgage process, including understanding hidden costs for first-time buyers. We have a trusted panel of service providers, including solicitors, valuers, surveyors, and BER assessors, offering flat-rate fees for transparent, all-inclusive support in home purchasing.
Our team of financial advisors is on hand to talk you through every aspect of the mortgage process, ensuring no hidden cost goes unchecked during the budgeting phase. Contact us today for personalised, professional advice to navigate the hidden costs of buying a home.
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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