Costs
associated with a Mortgage
The
Mortgage Advice Store do not charge arrangement or acceptance
fees. There are several costs associated with the mortgage process,
these are:
Deposits
Savings are a key part of the mortgage process. Whereas banks
currently place less reliance on savings than in the past, the
discipline of saving cannot be underestimated. With the exception
of special 100% mortgages available for some professionals, the
normal maximum facility is 92% of the purchase price
Accordingly you will need to source the remaining 8% in addition
to any funds you require for legal fees, furniture etc.
A steady savings record helps an application. Banks will require
evidence of your deposit in the as part of the loan underwriting
process. Loans from parents very often form a part of the deposit.
Savings also reduce the necessity for short term borrowing which
may have a strong impact on cash flow following a house purchase.
Once again we would emphasise the need to avoid other forms of
borrowing wherever possible if you are contemplating buying a
new home. The level of any existing loans will effect the amount
you will qualify for in respect of your mortgage.
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Stamp
Duty Rates
In general, first time buyers and owner occupiers do not pay stamp
duty on new houses, there are exceptions for larger houses. Set
out below are current stamp duty rates.
| Property |
FTB's |
Owner
Occupiers |
Investors
in Property |
| Up
to 127,000 |
- |
- |
- |
| 127,001
- 190,500 |
- |
3% |
3% |
| 190,501
- 254,000 |
- |
4% |
4% |
| 254,001
- 317,500 |
- |
5% |
5% |
| 317,501
- 381,000 |
3% |
6% |
6% |
| 381,001
- 635,000 |
6% |
7.5% |
7.5% |
| Over
635,000 |
9% |
9% |
9% |
There
is relief for first time buyers as per above table. Stamp Duty
on property transfer is expensive in Ireland. For larger properties,
the rate is as high as 9% of the value of the property. Funds
need to be set aside by the borrower to cover stamp duty, which
is payable on closing. Lenders do not advance funds to pay stamp
duty.
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Legal
Fees
Many solicitors charge 1% of property value plus vat at 21%. In
addition outlay for stamp duty on the mortgage document and other
miscellaneous costs might add in the region of €400 for a
standard mortgage. Should you require a solicitor, contact
us and we would be happy to make a recommendation.
The
Mortgage Advice Store have special arangements with a number of
solicitors offering significantly lower legal fees than the rate
quoted above.
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Home
Insurance
All
mortgage lenders in ireland require that properties they are lending
against be insured for fire and perils risk (earthquake, storms,
flooding etc) and they have their interest in that property noted
by the insurance company.
Virtually
all borrowers require that their personal possessions, furniture,
clothes and other belongings are insured against the same risks.
Whereas this is not compulsory from the lender's viewpoint, it
is advisable to cover potential personal losses in the event of
fire for example, items over €5000 must be valued separately
and listed on the policy.
Your
home insurance depends upon:
| - |
Location |
 |
|
| - |
Required
insurance amount |
|
|
| - |
Contents
cover |
|
|
| - |
Extra
all risks cover |
Discounts
may be applicable depending on:
| - |
Age |
|
|
| - |
Smoke
detectors |
|
|
| - |
Alarm |
|
|
| - |
Security |
|
|
| - |
Occupation |
|
|
| - |
If
your home is occupied during the day. |
|
|
| - |
Neighbourhood
watch |
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Surveyors
Fees
It is recommended that you employ the services of a qualified
surveyor to check the property for any structural problems or
to advise you on any matters that may involve significant outlay
e.g. dry-rot, subsidence, dampness etc.
The
structural survey is usually not a condition of the loan offer
and is a completely different matter to the valuation, which is
carried out on the lenders behalf.
Use
a reliable firm, agree their fees at the outset and insist on
a written report. Budget €200 approx.
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Valuation
Fees
Before
a lender will issue a formal offer letter in respect of a property,
they require an independent valuation from a qualified valuer.
We will arrange this for you. Budget €125 approx.
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Life
Assurance
All home loans require mandatory life cover. This means if you
or a joint applicant dies during the term of the mortgage, an
insurance policy covering death, is payable and repays your mortgage
ensuring you need not worry about the repayments.
Premiums
depend on age, health status, occupation, smoking habits and can
vary from one insurance company to another. The Mortgage Advice
Store will be pleased to provide quotations.
The options for life and health cover are as follows:
| 1. |
Decreasing
life cover (mortgage protection) - as the name implies, your
mortgage balance is covered and as it decreases through capital
being repaid, so does the life cover. This is the cheapest
of the types of life cover available. |
|
|
| 2. |
Level
term assurance - this means whatever the original sum borrowed
is covered for the entire term irrespective of what the balance
is when the life assured dies. This is therefore more expensive
than decreasing cover. |
|
|
| 3. |
Total
care cover - this is top of range and you are covered both
on a level term basis against death but also on a level term
basis for serious illness cover. Effectively, should you receive
a serious illness during the term of the loan, the full original
sum borrowed is payable. In this case, you do not have to
die to receive the benefit. However, this is the most expensive
of the types but it is also the most reassuring ! |
|
|
| 4. |
Serious
illness cover - covers the assured against most of the serious
illnesses for the specified period. Illnesses include heart
attack, stroke, cancer and a list of others. Separate and
stand alone cover can be obtained. |
|
|
| 5. |
Permanent
Health Cover - if you are incapacitated and unable to work,
this cover will pay up to two thirds of your income until
either you can resume employment or you retire and your pension
kicks in. This is also expensive, but again reassuring. |
|
|
| 6. |
Mortgage repayment protector - this covers your repayments
for up to one year in the event of accident, illness or redundancy.
|
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Indemnity
Bond
In
general lenders do not charge an indemnity bond fee to First time
buyers.
Indemnity Bonds are insurance policies taken out by the lender
to insure against a potential loss in the event of a forced disposal
of the property. Lenders only take out such bonds when the loans
exceed 75% of the value of the property (which is highly likely
for first time buyers). Many lenders waive indemnity bond charges.
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