The Hidden Costs of Buying a Home
Buying a home is a huge milestone, congratulations if you’re taking that step! It’s an exciting time with inspections, open homes, and planning your life in your new space. But amid the excitement, many buyers are caught off guard by the extra costs that come with purchasing a home.
These are the hidden costs, the ones that don’t appear on the property listing or mortgage calculator. If you’re not prepared these expenses can add up fast and put pressure on your finances just when you’re trying to settle in.
This guide breaks down the common extra costs of buying a home in Australia, with simple examples and a case study to help you understand the process.
The Hidden Costs of Buying a Home
It’s easy to focus on the deposit and loan approval when buying a home. But what often gets missed are the other upfront costs like government fees, legal charges, inspections costs and connection fees.
If you’re not prepared, you may find yourself dipping into your emergency savings or having to borrow more just to move in and settle the property.
Case Study: Example Home Purchase in Victoria
In this example, we will explain how the numbers might look for a home purchase in Victoria. Note: all amounts below are for illustration purposes only and will vary depending on your location, lender, the property you are buying and if you are first home buyer.
The Property:
Price: $800,000
Deposit: 10% = $80,000
Home Loan: $720,000
Upfront & Hidden Costs Explained
Now we will look at the other costs that can come with buying a home, and how much they could add to your overall purchase cost. Please note, these figures should be used as a guide only and will vary depending on the lender, company and professional you engage with as part of the buying process.
1. Government Fees
These are charges from the government that apply when you buy a property.
Stamp Duty – $43,070
Stamp duty is a government tax based on the property’s price and location. It’s often the largest upfront cost after your deposit.
Each state and territory in Australia has its own stamp duty rates. Some first home buyers may qualify for concessions or exemptions, which is important to check.
Transfer Fee – $1,971
This is a government charge to officially transfer the ownership of the property into your name. The cost is usually based on the property’s value.
Mortgage Registration Fee – $122
This fee is paid to register your lender’s interest in the property. It ensures the lender is listed on the property title until the mortgage is paid off.
2. Lender & Loan Fees
These are costs charged by your lender or bank when you apply for and set up a home loan.
Lenders Mortgage Insurance (LMI)
If your deposit is less than 20% of the property price, most lenders require you to pay Lenders Mortgage Insurance (LMI). This protects the lender not you if you're unable to repay the loan.
It can be paid upfront or added to your loan (which increases your repayments).
Loan Application or Establishment Fee – $600 - $800
This is a one-time fee when you apply for a home loan. Some lenders waive this, and the cost will vary depending on the lender and product.
Valuation Fee – $300–$600
Some lenders charge a fee to have the property professionally valued before approving your loan. Some lenders may waive this fee, again it will vary depending on the lender.
3. Legal & Professional Fees
Generally professionals will manage the transfer process.
Conveyancing Fees – $800 - $2,500
A conveyancer or solicitor helps handle the legal side of buying a property. They prepare and lodge the documents needed to transfer ownership and ensure the process is legally sound. This price will vary depending on the business you engage with.
Legal Review/Contract Advice
It may be worth getting a legal professional to review your contract to make sure your interests are protected which will be an additional cost.
4. Inspection Costs
Buying a home is a big investment, so it’s important to consider a few inspections as part of the process.
Building Inspection
A licensed inspector checks for structural damage, leaks, cracks, and other issues that may not be visible at first glance.
Pest Inspection
This checks for termites and other infestations that could cause costly damage. Some inspectors offer combined building and pest reports.
5. Moving & Set-Up Costs
You’re nearly in your new home but there are a few final costs before you're settled.
Moving Costs
Hiring a removalist or renting a moving truck adds to your moving budget. The price varies depending on how far you're moving and how much you have to transport.
Utility Connection Fees
This includes connecting your electricity, gas, water, internet, and phone. Some utility providers waive these fees as part of sign-up deals, but it’s worth budgeting for them anyway.
Home & Contents Insurance
Most lenders require you to have building insurance in place before settlement. You might also want contents insurance to protect your belongings once you move in.
Council & Water Rates (Pro-Rata)
You may need to pay a portion of the current quarter’s council and water rates at settlement. The seller is usually responsible up until the settlement date, and you’ll cover the rest.
Tips to Prepare for Hidden Costs
Here are a few simple tips to help you prepare:
Create a Buffer: Try to save more than just your deposit and stamp duty. Having an extra $10,000–$15,000 set aside can reduce stress if unexpected costs arise.
Do Your Research: Check stamp duty calculators and lender fees specific to your state or territory. Every purchase is different.
Ask for Full Estimates: Your conveyancer, lender, and inspector can give you detailed quotes upfront.
Check First Home Buyer Grants: Some states offer grants, concessions, or reduced stamp duty for eligible first home buyers.
Review Your Loan Options: Some lenders may waive application fees or allow you to capitalise LMI. Compare your options carefully and consider working with professionals
Buying a home is exciting, but it comes with more costs than just the price of the property. From government fees to legal services, inspections to moving trucks it all adds up.
The good news is, with the right preparation, these costs don’t have to be a surprise. By knowing what to expect and setting aside a realistic budget, you can approach your home purchase with confidence and peace of mind.
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After working as an advisor for a decade, Joel founded Unified Wealth.
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