Buying Real Estate — What Are the Additional Costs Associated with Property Purchase?

When purchasing real estate, costs are not limited to the final price of the property. There are also one-time costs and some recurring expenses. Let's review what one-time and recurring costs are associated with purchasing real estate.

One-time costs

• Loan agreement execution fee depends on the choice of bank. The borrower bears the costs associated with processing, and the fee must be paid either upon signing the loan agreement or upon loan disbursement. You can get exact information from your loan manager.
• Mortgage registration fee is added in cases where the property is purchased with a loan and a mortgage is placed to secure the loan. These costs are borne by the buyer.
• Mortgage cancellation/transfer fee is relevant when the property being purchased has encumbrances or certain rights that need to be terminated or transferred to the new owner – these costs are typically borne by the seller.
• Appraisal fee depends on the property being appraised, and keep in mind that the appraisal must be ordered from a company acceptable to the bank. There is no legal regulation regarding payment – it depends on the agreement and is purely based on need, whether one party or the other pays for it. You can find appraisers here.
• Notary fee is calculated based on the table provided in the notary fee act, where a specific transaction value corresponds to a fixed full fee. It must be kept in mind that for certifying two-party and multi-party transactions, a double full fee is usually calculated, to which VAT is added. It is good practice for the parties to the transaction to share these costs equally. Detailed information on how the notary fee is determined can be found here.
• Notary escrow account usage ensures a safe transaction for both parties. When a bank is involved, the notary escrow account must be paid for the equity portion before the transaction. If the property is purchased entirely with equity financing, then the full amount should be paid to the escrow account in advance.

The notary fee for using the deposit depends on the transaction value. For example, if the deposited amount is 10,000 euros, then the notary fee for depositing is 8.31 euros including VAT, if 30,000 euros is deposited, then the notary fee for depositing is 15.9 euros including VAT. (http://www.notarlaidvee.ee/notari-deposiit)

• State fee results from changes to the land register associated with the transaction, and this fee is paid by the party interested in the transaction. In the case of purchasing real estate, the buyer's interest is to be registered in the register as the owner.

Recurring costs

If the property is acquired with a loan, then in addition to loan payments, you must also account for:

• Collateral insurance cost depends on the asset being acquired and the selected insurance coverage. In addition to mandatory insurance coverage (vandalism, natural disaster, fire and water), the scope of remaining insurance coverage is a personal choice.
• Loan protection insurance helps ensure that in case of job loss, health damage, loss of earning capacity or death, the loan does not remain unpaid. Taking out this insurance is voluntary.

Source: Domus Real Estate