Dear Heather,

I am looking to buy a house. Are there any additional costs I will have to pay on top of the purchase price?

First-time buyer

Dear first-time buyer

Whether you’re looking to buy your first home, or trading up to a larger one, there are many costs — on top of the purchase price — that you must figure into your calculation. These extra fees, such as taxes and other additional costs, could surprise you with unwanted financial stress on closing day if you’re not informed and prepared.

Some of these costs are one-time fixed payments, while others represent an ongoing monthly or yearly commitment. Not all of these costs will apply in every situation, however it’s better to know about them ahead of time so you can budget properly.

Read through the following checklist to make sure you’re budgeting properly for your move.

1. Appraisal fee: Your lending institution will request an appraisal of the property which would be your responsibility to pay for. Appraisals can vary in price from approximately $450 upwards.

2. Land taxes: These are payable semi-annually in advance. Therefore you may be responsible for payment of any remaining months in a six-month period, January to June or July to December.

3. Structural survey fee: If the home you purchase is a fixer-upper and clearly needs repairs, you may want to have a structural survey done to estimate what repairs are needed immediately and how much it will cost. Price of survey depends on the size of the property. Spend about 1/10 of one percent (0.1 percent) of the purchase price to have a trained eye do your due diligence.

4. Property insurance: Home insurance covers the replacement value of your home (structure). Your lending institution will request proof that you are insured as it protects their investment on the loan, should the property be damaged by weather or fire.

5. Service charges: Any new utility services that you hook up, such as telephone or cable TV or internet, may require an installation fee.

6. Legal fees: Even the simplest of home purchases must have a lawyer involved to review all paperwork and conduct all title searches and do the conveyance. Although the Bermuda Bar Association has a set rate for conveyancing, costs may be more if the transaction has additional complications or difficulties. This cost is usually shared by the seller and the buyer, however not always, if otherwise agreed between the parties.

7. Bank finder’s fee: The bank will charge you a fee in order to find the funds and organise the financing. This can vary from bank to bank, but is usually 1 percent of the total borrowed.

8. Moving costs: The cost for a professional mover can be quite hefty if you have a lot of belongings. If you are buying new furniture, factor in those costs as well as the delivery charges.

9. Maintenance fees: Condos charge monthly fees for maintenance of buildings and common areas plus grounds etc which will be prorated in the event of a sale.

10. New appliances: Most properties are sold with major appliances, but not all. Make sure that all the appliances are itemised as chattels included in the sale, most are sold ‘as is’, so don’t discount the possibility of having to purchase new ones down the road, particularly if they look as if they are coming to the end of their useful life. New properties offering new appliances are usually accompanied with a limited warranty. Don’t forget to check.

12. Stamp duties: There are stamp duties on the conveyance of the house payable at closing. These are on a sliding scale, so the more expensive the house the higher the stamp duty. However, if you are a first-time Bermudian buyer (ie have never held more than a 25 percent interest in any property previously) and the property you are buying is under $750,000 and has only one assessment number, you will not have to pay any stamp duty at the time of conveyance. But, there is stamp duty payable on the mortgage. Ask your agent, they will be able to calculate that for you.

13. Land survey: Any free-standing property, (typically not a condominium), will need staking prior to sale. This is for several reasons: a) In order to establish that the boundaries are where the deed description indicates they are; b) To establish there are no encroachments onto the land you are buying; c) The registrar now requires that all lot plans going forward be metric, in order to meet the criteria of the new Land Registry that Bermuda is putting in place. Typically the seller pays for this expense, but I have seen cases where this has fallen upon the purchaser’s shoulders.

As you can see there are quite a few additional expenses as well as the required 20 percent to 30 percent down payment. These can add up to in excess of $30,000 on a home valued at approximately $750,000. Remember, buying a home is a major milestone. Whether it’s your first, second or tenth home, there are many important details to address during the process. The last thing you need are unbudgeted financial obligations cropping up hours before you take possession of your new home.

Be sure to go through your numbers carefully, so that you don’t get caught short. If you are working with a knowledgeable agent they will help guide you through the process every step of the way.

Heather Chilvers is among Coldwell Banker Bermuda Realty’s leading sales representatives. She has been working in real estate for 25 years. If you have a question for Heather, please contact her at hchilvers@brcl.bm or 332-1793. All questions will be treated in confidence.