Costs of buying a home

There are many costs involved in buying a home. Your mortgage will usually be the main expense. But there can be other significant costs you’ll need to cover. For example, you’ll need to pay a deposit, legal fees, mortgage insurance protection, stamp duty and more.

The Central Bank sets limits on how much you can borrow for your mortgage. You need to pay a percentage of the purchase price as a deposit.

In general, you need a deposit of at least 10% of the purchase price. However, you may need more, depending on your situation. For example, if the mortgage is for a second home or an investment property, you need a bigger deposit. See Taking out a mortgage for details of these rules.

If your mortgage is from a local authority, you also normally need to have a deposit of 10% of the purchase price.

If you are a first-time buyer buying a newly built home or building your own home, you may qualify for the Help to Buy (HTB) Scheme, which can be used to help you with the deposit.

Lender fees

Your lender may charge you fees for:

• Arranging your loan and processing your mortgage application. This is known as an application or arrangement fee.
• A survey. This is where your lender values the property you want to buy.
• Searches to check your credit history
• Mortgage loan costs
• An indemnity bond to ensure that the lender won’t make a loss, if they have to repossess your property

Fees for a mortgage broker

If you use a mortgage broker, they may charge you for mortgage advice, or to arrange your mortgage. Some mortgage brokers do not charge customers a fee for their services, instead the lender may pay the fees.

Legal fees

If you’re buying a home, you need a solicitor to handle the legal transfer of property ownership to you. This legal work is called conveyancing.

There is no fixed rate charge for legal fees. Some solicitors charge a flat fee and some charge a percentage of the purchase price of the home. You can shop around to find a solicitor who will charge the lowest possible fee.

There may be other costs associated with the legal process, including:

• Land Registry fees to register that the property has transferred to a new owner
• Fees for legal searches to make sure that there are no unresolved financial or legal issues with the property that could affect the transfer of ownership

You need to pay Value Added Tax on the legal fees. Check that VAT is included in the quotes you get from solicitors, so you are comparing like with like.

You can find more information about legal costs and the information your solicitor must give you about these charges in the Legal Services Regulatory Authority’s Guide to Legal Charges.

Estate agent fees

When you have agreed to buy a property, you may need to pay a booking deposit to the estate agent, if there is one involved in the sale. Booking deposits vary depending on the estate agent. They can be a specific amount, such as €5,000, or a small percentage of the offer you have made on the home. This booking deposit can be refunded up until you sign the contracts.

Buyer's survey fee

If you want, you can get your own independent survey of the property to identify any defects. This survey is separate to the survey carried out by your lender. The cost of a survey can vary considerably.

If you want to arrange an independent survey, you can find a surveyor on the website of the Society of Chartered Surveyors Ireland (SCSI). The SCSI is the professional body for chartered surveyors.

Management fees

If you are buying an apartment or a house in a multi-unit development, you will have to pay management fees each year.

When you buy a property in a multi-unit development, you automatically become a member of the management company. The management company is responsible for looking after the common areas in the development, such as the grounds, entrances, hallways, lifts and stairs. Each owner pays annual management fees to cover the cost to upkeep these areas.

Mortgage protection insurance pays the balance of your mortgage to your lender, if you die before your loan is fully repaid. Lenders must make sure that you have enough mortgage protection cover when you take out a home loan. Though you do not have to arrange this insurance directly through them. The cost of mortgage protection insurance varies.

Local authorities run their own collective Mortgage Protection Insurance (MPI) scheme (pdf) and people borrowing under the Local Authority Home Loan must take out insurance through this scheme. For more information on this see the FAQ’s on the Local Authority Home Loan website.

You do not have to insure your home. But if you have a mortgage, most lenders will insist that your house is appropriately insured.

In general, your home insurance should cover the contents as well as the structure of your home. You do not have to buy home insurance from your mortgage lender. You are free to shop around. The Competition and Consumer Protection Commission (CCPC) has detailed information on home insurance.

Stamp duty is a tax you pay when you transfer property. You must pay it when you buy a home. It is based on the final sale price of the property.

Your solicitor will calculate how much stamp duty you owe on the property and ask you for this amount. The stamp duty is paid to Revenue, who put a stamp on your property deeds.

When you buy a home you may have to pay some or all of the Local Property Tax (LPT) owed on it for the year, depending on when you buy.

LPT is charged on all residential properties in Ireland and is due on 1 November each year. The LPT charge for your home depends on the value of your property.

Your solicitor should check the LPT information for your new home before completing the sale, including checking if there are any outstanding payments or charges due on the property.