Costs associated with a Mortgage
Mortgage Advice Store charges an arrangement fee of 399 Euro which is payable ‘only’ if the mortgage application is successful. (This fee can be waived). There are several costs associated with the mortgage process as follows ….
Deposits
Banks will require evidence of your deposit as part of the loan underwriting process.
Savings also reduce the necessity for short term borrowing which may have a strong impact on cash flow following a house purchase. Demonstrating regular saving over a 6 month period or longer is a key part of the mortgage process.
Therefore you need to have saved 10% of the purchase cost in addition to funds you require for your legal fees plus 1% stamp duty ( for properties less than 1M )..Part of the 10% can be gifted funds from parents or family …
Lenders will require evidence of your deposit when submitting your application for approval. Gifts from parents very often form a part of the deposit. Having a significant level of savings reduces the necessity for any further short-term borrowing which may have a negative impact on cash flow,.
Stamp Duty Rates
For
residential house purchase Stamp Duty is 1% on the first 1M and 2% on the
excess over 1M.
Legal Fee
Solicitors may charge 1% of property value plus 23% vat. In addition, outlays and stamp duty on the mortgage document together with other miscellaneous costs such as land registry fees and searches will add additional costs . If you require a solicitor, contact us and we would be happy to make a recommendation to a number of solicitors offering competitive fees for your property purchase.
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 €5,000 must be valued separately and listed on the policy. All mortgage lenders in Ireland require that properties on which they are lending mortgage loan funds are insured comprehensively for fire and perils risk (earthquake, storms, flooding etc) and require the insurance company to note their interest as the lender on the policy. Referred to as a ‘letter of indemnity’.
Whereas contents insurance is not compulsory it is advisable to cover potential losses to all personal items in the event of fire , theft or ‘all risks cover’ for items lost or stolen away from the property ..
Your home insurance annual premium depends upon:
- Location of property
- Full re-instatement sum assured for full re-building cost
- Level of contents cover required
- Any additional all risks cover for high value items
Discounts may be applicable depending on:
- Age
- Smoke detectors & alarm
- Security & type of locking systems on doors and windows
- Are you a member of the Neighbourhood watch scheme
- If your home is occupied during the day
- Further discounts may be allowable if you have existing motor insurance with the same insurer
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. It is recommended that you employ the services of a qualified surveyor, engineer or architect 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 not usually a condition of the mortgage loan offer and is a completely different matter to the mortgage valuation, which is carried out on the lender’s behalf.
Use a reliable firm that has Professional Indemnity Insurance, agree their fee at the outset and insist on a written report. Budget €450 approx.
Valuation Fees
Before a lender will issue a formal loan offer letter in respect of a property, they require an independent valuation from a qualified valuer. The mortgage provider will arrange this once the loan is approved. Budget €150 approx.
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. All home loans require mandatory life cover. This means if you are a joint mortgage account holder and one of you deceases during mortgage term then an insurance policy covering death is payable to the lender; this repays your mortgage in full and ensures the loan balance is totally redeemed .
Premiums depend on age, health status, occupation, smoking habits and can vary from one insurance company to another.
Options for life and health cover are as follows:
- Mortgage protection - is simply a life insurance policy that pays off your remaining mortgage balance if you deceased before the loan is repaid. Cover is taken out for sum of the mortgage over the loan term. The cover decreases in line with your mortgage loan balance. The premium is fixed for the term of the policy. This is the cheapest of the type of life cover available and is a minimum requirement for closing the purchase.
- Level Term Life Cover - may be a better choice in that your life cover never reduces. If you decease during the mortgage term it will provide additional benefit payable to your estate/dependents. The amount of life cover and monthly premiums remain fixed. The cover is ‘Dual’ meaning that you are both separately insured for the full loan amount; it is effectively a double cover for both purchasers.
- Life & Serious Illness Cover - if you are diagnosed with a serious illness( for example cancer , heart attack ,stroke (as specified on the policy conditions )then part of ,or the total mortgage balance is repaid to the lender to ‘totally redeem’ any outstanding loan balance.
- Permanent Health Cover - if you are incapacitated and unable to continue in your normal occupation as a result of ‘any’ accident or sickness then this policy provides a replacement income payable up to your normal retirement age and to a maximum of 75% of your gross annual salary (less the state benefit). The income continuance benefit is payable until you are well enough to return to your normal office of employment. Revenue allow generous tax relief on the monthly premiums of either 20% or 40% ,depending on your tax band.
