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The Real Cost of Buying a Home

Tuesday, November 01, 2022 | By Terra Caribbean Trinidad
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The Real Cost of Buying a Home

So you’re ready to buy a home. It’s a common misconception that to start the process, all is needed is the initial 10% down payment. While this is your personal investment, buying a home is an involved process which requires the assistance of many stakeholders within the Real Estate ecosystem. From valuing to financing the asset, and insuring the property to officially transferring the property and all the legal paperwork in between, the costs of buying a home add up quickly.

Hence, in addition to the 10% of the agreed price of the property, there are cash expenses just to finalize a house sale. What’s the real cost of buying a home?

  • Down payment: 10% of the agreed price of the property

Like when you buy a car, the down payment is variable and conditional. Some banks finance up to 95% of the agreed price of the property, which means a down payment of 5% from you. This can result in a higher premium or longer pay back period. Additionally, if there’s a discrepancy between the price you agreed to pay the seller of the asset and the valuation report, the bank will finance 90% or 95% of the lower amount. Hence, the buyer must then pay that difference out of pocket. Therefore, we advise potential buyers to budget for at least 10% of the agreed price of the home for the down payment.


  • Stamp Duty: 2.5% to 6% of the price of the property

This cost is charged by the Government and is a tax for changing ownership as well as registering the Deed of the property in the new owner’s name. However, properties sold in a company’s name are exempt from Stamp Duty but are subject to a share transfer fee of approximately 0.05% of the value of the shares/ value of the property.

Also, from January 2021, first time homeowners are exempt from Stamp Duty for homes up to TTD$2m.

But, if you’re not a first time homeowner and the property is not in a company’s name, budget for approximately 2.5% to 6% of the agreed price of the home. Due to how the tax calculation is structured, the higher the price of the property, the higher Stamp Duty tax payable. Click here for Stamp Duty calculations.


  • Legal fees: 1.25% of the price of the property

This cost varies depending on the law firm or attorney. The attorney conducts the conveyancing of the property (preparation of legal documents to change ownership from Vendor to Purchaser) as well as title searches to ensure that the property is not encumbered in any way and is rightfully owned by the Vendor. While there’s a fee structure, we advise buyers to put aside 1% to 1.25% in the event of any encumbrances or other legal tangles.


  • Bank charges: 1% of the mortgage amount or approximately 1% of the price of the property

The bank fees include Management Fees, Negotiation Fees and Service Charges which usually amount to 1% of the mortgage amount.


  • Valuation report: 0.25% of the determined value of the property

A Valuation is an independent assessment of a property that indicates the current market value and is used as a basis for the buyer, the seller and banks to guide pricing. The cost is usually 0.25% of the determined value of the property plus VAT. Click here to request a Terra Caribbean Valuation.


  • House Insurance: 0.25% to 1% of the price of the property

Financial institutions require that homes are fully insured in case of emergencies. This covers both you and your chosen bank from financial losses. Proof of insurance is necessary to close transactions. House insurance costs can vary depending on certain factors such as location, exposure to risk and the age of the property. The cost can range anywhere from 0.25% of the cost of the property to 1%.


  • Life Insurance: 0.2% or less

Some banks request life insurance as a form of collateral on the mortgage in case of death or accident. The cost of your premium can vary widely based on the coverage amount, pre-existing conditions, age and other factors. If you do not have a life insurance policy already, it is advisable to shop around for preferred rates that best suit your needs/requirements. An approximate amount for this expense is around than 0.2% of the property price.

The Real Cost of Buying a Home

  • Home improvement: 1% to 2% of the price of the property

Depending on the liveability of the property, you may have to budget for home improvement expenses. Painting, installing new air-condition units or any other cosmetic repairs to make your new home to your standard can eat into an already depleted budget. Before this happens, put aside 1% to 2% of the price of the property for home expenses.


The purpose of this list is to guide prospective homeowners on the initial cash outlay when buying a home. Consequently, it is a rough estimate and can change based on the price of the home. However, we strongly advise buyers to have at least 15% to 20% of the price of the asset as cash in hand to diminish the stress of such a large investment.

To start a chat about homeownership, connect with any of our Agents at Terra Caribbean.

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