You’ve researched neighbourhoods carefully, browsed property listings extensively and attended open houses guided by an expert real estate agent. Before you make an offer, be sure that you’ve budgeted accordingly too. In addition to the listing price, there are a number of hidden costs involved with buying a house. Here's our breakdown:
A basic property appraisal is one of the first factors that could increase the overall cost of buying a house. While some lenders will provide this valuation at no cost to the borrower, others will charge a fee in the ballpark of €150 - €300. This quick appraisal ensures that there are no major issues with the house in question.
A more detailed structural report is highly recommended for older properties or in areas prone to flooding or subsidence. The inspection and report go into great detail in appraising the property, uncovering potential defects that may not be immediately apparent during routine inspection. This will cost approximately three times more than a basic survey, but it could save you a great deal of money in the long run should major structural flaws be present.
You may be charged for bank paperwork. Some lenders will waive the fee, but many will tack on a small percentage to the overall price for administrative costs or to establish a loan application.
There is a great deal of legal work involved with real estate transactions, handled by a professional conveyancer. This involves carrying out local authority and Land Registry searches, examining lease terms and handling bank transfers. A good rule of thumb is to add 1.5 percent of the purchase price to pay for your notary fees. You can expect solicitor fees of buying a house to be higher if you’re purchasing property through a trust ownership or company, as the legal situation will be more complex.
Purchasing building and contents insurance is another cost of buying a house that is important to take into account. Mortgage payment protection insurance is also a hidden cost for those borrowing money from a lender, though this may be waived if you put down a deposit greater than 20 percent.
Most countries will charge tax for land or property purchase, though the amount can vary regionally. In Germany you would pay the Treasury between 3.5 to 4.5 percent of the purchase price, while in the UK buyers pay between 0 and 4 percent depending on the purchase price.
Newly constructed homes may not include fixtures and fittings in the initial cost of buying a house, but these will be added on later depending on the quality and value you select. Carrara marble tiling and custom-dyed woollen carpets will add a significant sum.
From the solicitor's fees to the land tax, there are many hidden costs that can add up when buying a house. Be sure to factor these into your final purchase amount so that you can budget accordingly and make a sound financial decision. We can offer financing advice to help.