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The Hidden, the Upfront and the Ongoing Costs of Buying A Home


What are the upfront and ongoing costs of buying a property?

You have spent most of your free time on Saturdays since Christmas dashing from one home inspection to the next at a breakneck speed, braving the throng in the hopes that the next inspection will be for the home of your dreams. You do not want to discover that you have under-budgeted when you have finally found a location that you can call home. When you buy a house, in addition to the price that the hammer is dropped at, what other costs might you anticipate incurring?

Your pre-purchase expenditures can vary depending on the amount of time you have available to look for the ideal home as well as the kind of sale transaction you choose, which could be an auction, a blind auction, or a private treaty.

Homeownership comes with a variety of costs, some of which include taxes paid to the government, interest charges, insurance premiums, fees paid to the stratum and fees paid to the council. Continue reading for a comprehensive rundown of the charges that are likely to be incurred by you.

Would you like to speak to a specialist? Book a complimentary discovery session by calling: (03)999 81940 or emailing

Mastery of one's home deposit

We humans have an innate propensity to want things in the here and now, which can be frustrating at times. "Instant gratification" is the term that's used to describe this phenomena. Despite the fact that it could be gratifying to buy a house as soon as the concept occurs to us, the fact of the matter is that those who are patient are rewarded with favourable outcomes. Before making your first attempt to purchase a piece of real estate, it is recommended that you have a lump sum savings account that is equal to at least 5 percent of the value of the residence. In addition, it is a good idea to have additional savings accessible in case you need them for stamp duty, conveyancing fees, mortgage registration fees, or transfer fees. Having these additional resources available is a smart idea.

There is no "magic number" that must be saved for a home loan deposit; however, the majority of lenders in Australia want you to have saved ten percent of the value of the property before applying for a home loan. Although there is no "magic number" that must be saved for a home loan deposit, there is no "magic number" that must be saved for a home loan (a couple of lenders may only require 5 percent ). If you are interested in acquiring a home with an asking price of $800,000, you will need a deposit that ranges anywhere from $40,000 to $80,000. This is because the down payment required for such a purchase.

Cost of acquisition

This is the amount that will be required to purchase the property; but, unless you are paying for it in whole, it is likely that this amount will comprise both money that you have saved and money that you have borrowed.

In most cases, lenders will require a minimum deposit of ten to twenty percent of the purchase price of the property; however, some financial institutions may be willing to lend to you if a member of your family pays the deposit, serves as a guarantor, or purchases the property with you as a co-owner.

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Stamp Duty

Stamp duty is, without a doubt, the cost that will have the greatest impact on your wallet. Stamp duty is calculated in a variety of unique ways in each state, and the First-Time Homebuyers Grant can help alleviate part of the financial burden, depending on how much your home is worth. To give you an idea, the stamp duty on a home that costs $300,000 in New South Wales will be approximately $10,000.

All of Australia's state and territory governments levy a tax known as stamp duty on any transaction involving the transfer of land or property. It is one of the major expenditures that you will have to pay upfront, and the amount that you will have to pay might vary quite a little depending on the location of your property.

It is important that you conduct your study in order to determine whether or not you are exempt from paying stamp duty because this will depend on the specifics of your situation, the value of the property, and the type of property. Stamp duty, often known as transfer tax: Stamp duty, which is often referred to as transfer duty, is a tax that the Australian government applies to the purchase of the property. Depending on the state the property is located in, there are a variety of different rates that can be applied. Some buyers may be eligible for concessions, but in general, stamp duty is regarded as one of the most expensive single fees associated with purchasing a home. The date by which stamp duty payments are required to be made varies from one state to the next.

To purchase a home, the vast majority of us will need to take out a loan, which will subject us to an entirely new set of expenses. Simply making the application will typically result in a payment being required from your lender to cover the costs of checking contracts, property titles, and credit.

Buyer agent fees

Buyer agents are real estate professionals who search for and acquire property on a buyer's behalf in exchange for a fee. When a buyer does not have the time to hunt for a house or when they do not feel comfortable managing the purchasing process on their own, they may frequently enlist the services of a buying agent.

A standard real estate agent will charge you a commission equal to around 2.8 percent of the purchase price of your property. This will cost you approximately $16,800, which is comparable to the price of a modest automobile or an enjoyable trip abroad with the family. In addition to this, some real estate brokers tack on an additional marketing cost for photography and advertising on the most prominent web portals. If you add on top of that the costs associated with hiring a conveyancer or a lawyer, you won't have much change left over from approximately $20,000 in your pocket.

In addition to your deposit, you will have additional expenses to take into account, such as the fees charged by solicitors and the taxes levied by the government. In many instances, stamp duty is also required. This page is a complete guide to stamp duty written by UNO that you can read.

According to the Australian Securities and Investments Commission, a decent target to shoot for is to have a deposit that is at least equal to twenty percent of the total purchase price, in addition to an amount that is sufficient to cover any additional charges. Also, get in touch with the revenue office in your state to inquire about assistance for first-time homeowners.

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Fees for Pest & Building Inspections

Other potential costs associated with the property include those related to pest control and building inspections (a bothersome expense, but well worth it if you discover that the walls are about to collapse). These costs typically range from $600 to $800, depending on the size of the home.

Asbestos, termites, electrical, ventilation, and plumbing failures are just some of the structural issues that could be uncovered by these assessments.

If you are interested in purchasing a townhouse or apartment, you should get strata report to see whether or not the building is effectively managed, well kept, and adequately funded.

Before you place a bid at an auction, you are required to have a pre-purchase pest and building inspection done. If you are purchasing a property through a private treaty, you are allowed a cooling-off time after the seller has accepted your offer to complete the inspection. Because not all individual treaty purchases come with a right to back out of the deal within a certain amount of time, you will need to complete all of your pre-purchase inspections before signing the contract of sale.

Costs associated with mortgage registration and transfers

There are other fees associated with mortgage registration and transfers, and these fees vary from state to state.

There is also a fee for the registration of the ownership transfer, legal fees (you need a solicitor to handle the transfer of ownership), costs associated with the connection of utilities, council rates, and ongoing maintenance expenses (don't forget that when you buy your own house, you can't just "call the landlord to come and fix the leaking toilet"). These typically comprise a fee for the establishment of the mortgage, as well as costs associated with the appraisal of the property, the registration of the mortgage, and lenders' mortgage insurance if the amount borrowed is greater than 80 percent of the price of the property.

During the cooling-off period, negotiations take place if the purchase was agreed upon through a private treaty. While some conveyancers offer a set price, most solicitors bill clients by the hour for their services. The amount that you have to pay is going to be determined by how complicated the transaction is.

Lender's mortgage insurance

A lender's mortgage insurance is a sort of insurance that protects the lender from borrowers who are unable to repay the loan. If you apply for a loan, you may also be required to pay for this type of insurance before the loan is approved. In most cases, you won't be required to pay for this insurance if the amount of your deposit on a home is equal to or greater than twenty percent of the total price of the property.

Lenders Mortgage Insurance, also known as LMI, is a form of insurance that lending institutions purchase for the purpose of protecting themselves in the event that the borrower fails to repay the loan. If the amount borrowed is greater than 80 percent of the value of the property being mortgaged, lenders will often charge the borrower a one-time fee to cover the cost of this insurance. But this can be capitalized, which means it can be added to the total amount of the loan, and the additional amount can be added to the payment you make each month.

Fees for legal services and property transfers

To do title searches, create a strata report (if buying a townhouse or unit), evaluate a contract of sale, check encumbrances, covenants, and easements, and negotiate settlement terms, you will be required to hire a licensed professional or conveyancer. Before you may put a bid at an auction, you are required to complete the aforementioned steps first.

Expenses associated with the purchase of property

You are well on your way to settling and becoming a homeowner once the auctioneer has lowered the hammer or once you have signed the contract on a private treaty transaction and the cooling-off period has begun.

Prospective buyers of real estate should factor into their financial planning that they will spend between 5 and 7 percent of the total purchase price on various fees associated with the property. This would be between $15,000 and $21,000 on a property that costs $300,000. With just a 10% down payment, you might suddenly be looking at spending as much as $51,000 on the vehicle.

Ongoing expenses associated with property ownership

You've located and purchased your dream home, but what other expenses should you anticipate?

  • Repayments on a mortgage include the principal amount, together with interest and any fees charged by the lender.
  • Expenses related to moving homes
  • Insurance for the dwelling and its contents: There are smart moves you can do to lower the premiums you pay for your homeowner's insurance.

couple sitting on floor during house renovation

Expenses for moving

The price of moving into the property rather than renting it out might vary widely based on factors such as the distance travelled, whether or not you rent a van, whether or not you ask your friends for assistance, or whether or not you engage a professional removalist.

Loan repayments

You are responsible for repaying what you have borrowed, and certain loan providers may have options available to assist you in minimizing fees or gaining access to repaid funds in the event that you require them.

  • Council rates and strata fees: Here are some unexpected pointers on how to effectively manage council rates and strata costs.
  • It is feasible to save money on your utility rates, including your water, gas, and electric bills.
  • Improvements that are required: Doing the work yourself is one approach to saving money on the renovations!

A guarantor is typically a member of the borrower's family who agrees to take full financial responsibility for the repayment of the house loan in the event that the borrower is unable to or refuses to do so. Additionally, the guarantor is responsible for paying any and all interest, fees, and charges. There is a possibility that you could qualify for a guarantor loan if you have a close relative who is willing to serve as a guarantor and offer their own property as collateral for the loan.

You could also want to think about making use of an offset account if it's an option that's provided by your lender. It is a transaction account that is tied to a house loan, and the purpose of the account is to help minimize the interest that is payable on the outstanding loan balance.

The length of time it takes to pay off your house loan is directly proportional to both the amount that you pay back and the frequency with which you do so. You can do the math easily with the assistance of our Loan Repayments Calculator.

The general rule is that the more stringent the requirements are on your deposit, the smaller your initial deposit. If you only have 5%, then it has to come from "real savings," which means it can't come from your brother selling his car or from a loan from a friend. These are the factors that cause financial institutions to experience anxiety. The amount of money that your lender will let you borrow will be impacted by the deposit that you make. Gift money, whether it comes from a parent or another person, is not considered real savings because it is not earned.

Would you like to speak to a specialist? Book a complimentary discovery session by calling: (03)999 81940 or emailing

The costs of interest

Since you will have to pay interest on the money that you borrow, it is in your best interest to compare the terms that other lenders can provide and to examine the rate of comparison.

In most cases, you will have the option of selecting either a fixed or variable rate, or a combination of the two. You should look into this further because it has the potential to make a significant impact on your repayments, particularly in the event that interest rates go up or down.

If you have a down payment of at least 10 percent, you can include a gift (from a parent, for example) as part of it. The larger the amount, the more alternatives you'll have for your home loan; the lower it is, the fewer choices you'll have.

Therefore, if you want your Saturdays back, you need to ensure that you are aware of your true budget. The price that you pay for the home is only the beginning of what you will be responsible for.

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