What a mortgage broker should tell you about mortgage fees

2021-07-29

As a mortgage broker, we take extra care to ensure that we educate our customers on everything that goes with a mortgage.

Your mortgage will come with extra fees and you need to factor these into your savings.

Most people understand that they need a deposit of (at a minimum) 10% of the price of the property they wish to purchase. In other words, if you’re going to buy a house or apartment worth €250,000, then you need a deposit of €25,000. (We share how to grow your savings in our “Saving a deposit for a mortgage in Ireland” blog post.)

Alongside your deposit, there are also some other costs you need to factor into your mortgage plans.

Stamp duty costs for first and second-time buyers

Stamp duty is a type of tax that you pay on the property you purchase. This tax applies to both first and second-time buyers.

Currently, stamp duty on residential property purchases stands at 1% of properties up to €1 million. And 2% for properties over €1 million.

Therefore, a property worth €300,000 will attract a stamp duty fee of €3,000.

Lenders will want to see that you have saved enough money to cover a deposit and stamp duty in your mortgage application.

Solicitor’s fees are part of the mortgage costs

You will need to work with a conveyancing solicitor when you purchase a property. At Which Mortgage, we advise our customers through this process and can recommend trustworthy solicitors we work with every day.

Your conveyancing solicitor is responsible for all of the legal aspects of your property transaction on your behalf. Their work will ensure that the ownership of the property is transferred to you.

Solicitors can choose how they want to price their services. Some solicitors charge a flat fee while others charge a percentage of the property price. Most often, the percentage is at a maximum 1%.

You should always shop around and, in general, expect to pay between €1,000 and €2,000 approx. + VAT for your solicitor’s services.

Search fees and getting registered

Among your solicitor’s tasks on your behalf is to ensure that your property is registered under your name in the Land Registry.

This attracts an additional fee which is paid to the Land Registry. Fees vary according to the price of your home but can cost from €200 to €1,000.

If your property has never been registered with the Land Registry, your solicitor will need to make a “first registration” application for you. This is a requirement by law.

If you’re purchasing your property with a mortgage, then there’s an additional fee to register that your lender has an interest in the property too. If you are a cash buyer this process is not required.

Part of the due diligence your solicitor will carry out for you is to run a number of searches on your property. These will make sure that the property is fine to buy. For example, a solicitor will carry out planning searches to make sure that there are no major developments planned near your property that could impact negatively.

A judgement search is another search that your solicitor will conduct. This search will reveal if the previous owner had any unpaid debt that was registered as a “judgement mortgage”. This would mean the debt is registered against the property and you’d become liable for it once you became the legal owner.

A bankruptcy search will also be run. If the person selling the property has been declared as bankrupt, then they do not have the legal right to sell the property meaning that you could buy a property that ends up not belonging to you.

These searches usually cost between €100 and €200.

A valuer’s report

Checks and balances are in place to make sure that you pay a fair price for your new property. One of these ways is via a valuer’s report and your lender will ask for one.

A valuer will come to the property you wish to buy to assess and estimate its market value.

Usually, your lender will have their own valuer that they work with and they will organise this process. The fee will be passed to you and that can be approximately €150.

The Building Survey Report

A Building Survey Report (Structural Report) is sometimes required by the lender, but is always recommended, as part of your property purchase.

This report will identify any problems of a structural nature the property might have. These could include damp problems, dry rot, pyrite or condensation.

Your lender will tell you if they require a Building Survey report. If you receive a negative report, it doesn’t mean that you can’t buy the property. But you will know what you are dealing with before you sign up to the property purchase.

Budget approximately €500 (+ VAT) for this report.

Insurance and property tax fees

Once you own the property, you’re also going to need to budget for additional costs over and above your mortgage payment.

Two of these are insurance costs and property taxes.

Just about every lender will insist that you get mortgage protection. This is an insurance that will pay the outstanding balance on your mortgage if you pass away. The cost for this will depend on your age, health and mortgage amount

Lenders will also ask that you take out home insurance. This insurance protects your home and its contents in the event of fire or storm damage. Costs can start at €300 per year for this type of insurance.

We’ll help you every step of the way

You should shop around for all of the providers we have mentioned here. We can help you find the best value suppliers for everything you need.