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Hidden costs of buying a home

As a first home buyer, the main cost you’re probably focusing on is the price of the property.

However, there are many different expenses associated with purchasing a home and it is important that you factor these into your budget.


Here is a breakdown of some these costs.

Government costs
  • Stamp Duty – this is a state levy imposed on all property transactions and is one of the biggest costs you will face when buying a home. The amount you have to pay in stamp duty will depend on where you buy and how much you pay for your property. Some states offer stamp duty concessions to first home buyers. Click here to use our stamp duty calculator.
  • Property transfer fee – this is a state government charge to register your name on the title of the property. Some states and territories may charge a set fee, while others are on a sliding scale.
  • Mortgage registration fee – this is a state government charge for registering your mortgage on the title of your property.
Loan application costs
  • Lenders Mortgage Insurance – if you need to borrow more than 80% of the property’s purchase price, you will be required to pay Lenders Mortgage Insurance (LMI). LMI protects the lenders in the event that you are unable to meet the mortgage repayments. The fee can be paid as a one-off sum or added onto your loan.
  • Loan Application Fee – depending on the lender and investment product you want, you may be required to pay a loan application fee. This fee could set you back a couple of hundred dollars.
  • Ongoing fees – also known as service or administrative fees, these are charged monthly or yearly for the administration of your home loan. Fees will vary according to the lender and the type of product you have.
  • Lender’s property valuation – when you are buying a home, a lender will likely require a valuation in order to make sure they are not lending you more than the value of the property. They may require this to be conducted through them but some may let you use a third party. Either way, you will have to cover the cost.
Pest and Building Inspections

When buying a property, it is vital to conduct pest and building inspections. A pest and building inspection can cost anywhere up to $1000 depending on the company you go with and where you are buying. While this may seem like a significant expense, it is a small amount to pay for peace of mind and it can help you to avoid buying a property with structural faults or insect infestations.

Solicitors/Conveyancers

When you are buying a property, it is important to have a reliable, trustworthy solicitor on your team. Your solicitor or conveyancer will play an integral part in the purchasing journey as they complete all of the legal work involved in purchasing real estate. Shop around and partner with a solicitor or conveyancer you have a good rapport with. Be sure to ask about the costs of searches, settlements and disbursements.

 

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