BUYING a house involves so much more than just having your deposit and applying for a mortgage. There are many steps in-between and most of them will cost you money.

The Jamaica Observer turned to National Housing Trust (NHT) Assistant General Manager for Corporate Communication and Public Affairs Dwayne Berbick for a list of items that have the potential to delay or even derail your dream of owning your home.

“You have to do research, because it’s not like buying groceries. You don’t get up one day and point and say, ‘I want a house,’ snap your finger and it happens. Even where there is financing in place — either through NHT or through the NHT and another partner institution — there are these fees you have to bear in mind,” he cautioned. Berbick also provided advice on how NHT can help buffer some of these costs.

Legal fee: one to three per cent of the selling price.

Get a lawyer who has experience in conveyancing, which is the legal process of transferring ownership of a property from seller to buyer. He can help you negotiate, for example, the deposit.

Berbick’s advice: Start with an attorney. Purchasing property is one of the greatest investments you’ll ever make. It’s a big financial decision, but it’s a big legal decision as well. You don’t want to miss anything that’s going to end up being a costly headache for you down the road to try and correct.

Deposit: up to 10 per cent of selling price

Even though five per cent is the typical deposit requested if you have a good lawyer, in some cases it can be more; so plan for that contingency.

Valuation report and surveyor’s ID report: fees vary

These fees are linked to getting yourself ready for the purchase. These reports are needed for the mortgage application and/or loan interview. These are competitive fields so be sure to shop around. If the building is more than 40 years old or has obvious structural cracks, you may also be required to get a structural engineer’s report.

Berbick’s advice: Some companies can do both your valuation and surveyor’s ID report. Negotiate so you get that as a package deal, rather than having to buy those costs independently. See what kind of discount you can factor in. Plus, you also have the benefit of getting both reports done at the same time.

Loan processing fees:

As with any loan, there is a service charge to cover the paperwork. NHT charges five per cent and this is rolled into the amount being borrowed. It applies whether or not the loan is being directly accessed through the NHT or through one of the financial institutions that participates in the NHT’s external finance mortgage programme.

Stamp duty: $2,500

The fee is $5,000 but it is evenly shared between vendor and purchaser.

Mortgage registration:

The fee is one per cent of the selling price but it is evenly split between vendor and purchaser.

Sale agreement fee: varies

This legal document outlines the terms of the sale. It is prepared by the vendor’s attorney and the purchaser’s attorney reviews it to ensure the terms are favourable to his client as well. Those costs are shared 50/50. Half is paid by the vendor and half is paid by the purchaser. Lawyers set their fees, and they vary.

Miscellaneous fees:

You will need letters of possession to facilitate the connection of utilities. Your attorney can provide those at a cost.

Escalation: varies, a percentage of the selling price

For new builds being sold on the open market, there may be an increase in the price, especially if the time of purchase is well before the actual completion of the project. Some vendors outline, at the outset, that there may be an escalation in price and give you an idea of a range to expect. Others do not.

Berbick’s advice: I would encourage anybody buying a new build to find out what is the ballpark of that escalation, then make some preparation. For us at NHT, we don’t do escalation. We build and then we give you one cost at the end of the day.

The NHT exec also stressed the importance of hiring qualified professionals — lawyer, valuer, surveyor, etc — at every stage of the process.

“Ensure you use reputable people who are duly registered and have a track record. Talk to others who have gone through the process, see who they use, see what their experiences were, and make an informed decision as to who you can use to assist you.

“When in doubt, there are always professional bodies that oversee these services so you can always reach out to them to find out who is on the list of qualified professionals for these kinds of services so you can choose wisely when you’re going through the mortgage process,” he said.

The list of “hidden fees” can be daunting but the good news is that NHT has a few ways to help defray some of these costs.

Early refund

You can tap into future NHT refunds — it’s called contribution refunds towards deposit (CRTD). NHT is now providing refunds on contributions made up to 2017 but if you are buying a property this year, you could apply for your refunds that are due in 2018 and even later years. You will need to apply for the CRTD but you can get the forms online and submit the application by email (loanprocessing@nht.gov.jm).

It is best to apply for your CRTD at the same time you’re doing your loan application, so both of them can be processed simultaneously. You have to do it before your sale is completed, and you have to indicate which of these services it is going towards: deposit for the house, legal fees, valuation report, surveyor’s ID report, etc. Funds are disbursed through the borrower’s attorney and must be returned to the NHT if a sale falls through.

Micro financing loan

In addition to the usual $7.5 million, the NHT makes added financing available through a long list of credit unions. Individuals who earn $86,000 per week or less can access a loan of $1.95 million to help cover costs they did not expect when purchasing their first property. The interest rate on unsecured loans is nine per cent while the rate for secured loans is six per cent.