Mortgage fees and charges
When buying a property, or switching your mortgage, it is not just your regular mortgage repayments you need to think about. There are a number of others costs involved which you should be aware of and ask your lender about. Some of these can be reduced or avoided by shopping around. They include:
- Arrangement fee – some lenders charge a fee to arrange the loan. This may be a percentage of the loan amount, such as 0.5%. Some lenders only charge this for buy-to-let and investment properties.
- Brokers’ fees – some brokers charge a fee to arrange your mortgage or for mortgage advice. This might be a percentage of the mortgage amount or a flat fee. Not all brokers charge a fee so if you are planning to use a broker it is important to ask about this and to shop around.
- Estate agent fees – if you are selling a property and using an estate agent you will have to pay a fee for this service. It is usually between 1% and 2.5% but can also be a flat rate.
- Solicitor’s fees – to look after the legal aspects of your mortgage (conveyancing) a solicitor will charge a flat fee or a percentage of the mortgage amount, typically 1% to 2%.
- Indemnity bond – this is a type of insurance policy that a lender can take out when they give you a mortgage. It insures the lender against making a loss if they repossess your property and it is worth less than the outstanding balance of the mortgage. It is usually charged as a percentage of the mortgage but many lenders waive this charge.
- Valuation fee – this is paid to a professional valuer to estimate a property’s market value and is required by the lender as part of your mortgage application. A valuation is valid for a short period of time, typically four months. You will need to get an up-to-date valuation of your property if you want to switch mortgage.
- Structural survey fee – a structural survey is done to find out the condition of a property. If any issues arose during the valuation of the property or it is very old, your lender may insist on a structural survey. Even if your lender does not require it, you may want to get a survey anyway to be sure there are no problems with the building. The amount you will pay can be dependent on the type, age and location of the property.
- Stamp duty – this is a tax payable on documents when you transfer ownership of a property. For residential property it is charged at 1% of the property value up to €1 million and 2% for anything above that.
- Local Property Tax – this tax, collected by Revenue, is charged on all residential properties and came into effect in 2013. It is a self-assessment tax and you calculate what is due based on your own assessment of the market value of your property. It can be paid in a lump sum or spread out over the year.
You should take the above into account when you are working out how much you will be able to borrow.