Buying a property, in addition to being, for the vast majority of people, the investment of a lifetime, can be a true financial game. Looking for the ideal house – which alone is quite complex – is only part of the process, which also involves getting the best housing credit and a number of other bureaucratic processes.
That is why, in most situations, buyers choose to rely on the support of a real estate professional. These professionals, in addition to being specialists in a given geographical area and facilitating the search for a home, have a wide network of contacts with other professionals such as credit intermediaries, solicitors or notaries.
With or without the support of a professional, the truth is that often buyers are taken by surprise at the costs associated with the purchase of a home, which they were not counting on.
That is why, in this article, we will talk about all the costs associated with a purchase of a property, so you know exactly what to expect.
Deposit
Not being an additional cost because, in fact, it is already part of the total amount you will pay for the property, it is important to keep in mind that in order to proceed with the purchase you already need to have at least 10% deposit. So if you consider buying a house, for example, in the value of 150,000€, remember that you will have to invest at least 15,000€ as na initial investment. The deposit represents a large slice of the initial investment, which is always important to mention.
IMT - Municipal Tax on onerous real estate transfers
You must have with you, on the day of the deed of the property, the funds available to make the payment of this tax. Simply put, the IMT is a tax that is calculated based on the tax asset value or the amount declared in the deed – it depends on the amount that is higher. In determining the amount of this tax, account is taken of the rate to be applied and the portion to be reduced, which may vary by area. The values of the fee to be applied can be found on the Portal das Finanças.
In some cases, and according to specific requirements, it is possible to apply for exemption from this tax, so do not hesitate to question the real estate agent who is accompanying you.
Stamp duty on purchase
Stamp duty is paid on the acquisition of a property. In the case of those who want to buy a house, stamp duty – whose flat rate is now at 0.8% – will have to be paid at the time of the celebration of the deed of the property. This fee is applied, as with the IMT, on the tax asset value or on the value declared in the deed – depending on the higher amount.
Deed
The cost of celebrating the deeds should also be included in your plans. This cost is not fixed, so it varies depending on where you are having the deeds done. If you are looking for places you can save, this is it. Know the prices of the various notaries or conservatories.
Mortgage
If you are going to resort to getting a mortgage which is usually what happens to most buyers, there are some additional costs you'll have to consider.
Bank Fees
If you decide to use credit, you will need to start by paying your bank the valuation fees for the property. This is because, in the bank, in the company's credit, it is necessary that you know in advance the actual value of the property. Mortgage analysis costs will also have to be covered in what is commonly called dossier committees or study or opening committees.
Finally, it will also have to cover the commissions for formalizing the contract, which succinctly serve to cover the administrative and bureaucratic costs that the bank has had throughout the process.
Stamp duty on financing
We know that the list is long but, in addition to stamp duty on the purchase, if you resort to a mortgage, you will still have to pay stamp duty on the financing. This tax is translated into the payment of a flat rate of 0.6% on the amount financed for contracts with a payment term of more than 5 years.
Life Insurance
To obtain approval of the housing credit, you will also have to bear the costs of a life insurance, which serves as a guarantee in the event of the death of the holder (or one of the holders) of the mutual agreement. This value is variable and largely depends on the service provider to which it decides to turn, as well as on the health and clinical history of insured persons, among others. Now, this being a variable cost, here is another window of opportunity to try the best possible conditions and save money by buying home.
Multirisk Insurance
In fact, the only insurance required by law is fire insurance for buildings on a horizontal property regime. However, many banks and insurance companies end up selling multi-risk insurance that, in addition to including fire cover, is more comprehensive and covers other risks, such as floods, theft or storms, etc.
Other costs
After the initial stage of home purchase, do not forget that there will be other costs that you should consider, on a monthly and/or annual basis. Some examples are:
Insurance premiums;
Monthly condominium costs;
Other expenses that arise in the meantime regarding, for example, the maintenance of the property;
Municipal Property Tax - IMI (annual payment)
Effectively, the costs to buy a property are significant. However, given the existence of few options for renting, the purchase of a house remains in the plan of many families.
If this is your case, we invite you to have a look at our property portfolio, who knows, you might just find your dream home.