What are the hidden costs of buying a home in Australia?

Most buyers budget carefully for the deposit and then get surprised by everything else. The costs beyond the deposit are not really hidden, they are just easy to overlook, and together they can add up to a meaningful sum. Here is the full picture so you can plan the real total you need.

Stamp duty

For many buyers stamp duty is the largest cost after the deposit. It is a state tax based on the property value, and while first home buyers often pay reduced or no duty, especially on new homes or vacant land, it still needs to be checked and budgeted for using your state revenue office calculator. It is payable around settlement.

Conveyancing and legal fees

You generally need a conveyancer or solicitor to handle the legal transfer of the property, review the contract, and manage settlement. This is a necessary cost and is separate from the deposit and the loan. It is worth engaging one early so they can review the contract before you are committed.

Building and pest inspections

Before buying an established home it is wise to pay for a building and pest inspection to check for structural issues and pests such as termites. It is a relatively small cost that can save you from a very expensive problem, so most buyers treat it as essential rather than optional.

Loan fees

Lenders may charge fees to set up the loan, which can include an application or establishment fee and a valuation fee. These vary by lender, and some waive them as part of a package or promotion. They are part of the cost of the loan, so it is worth knowing them when comparing lenders.

Lenders Mortgage Insurance

If your deposit is below 20 per cent and you are not using a government guarantee or guarantor, you generally pay Lenders Mortgage Insurance. The premium can be sizeable and is usually added to the loan, so you pay interest on it over time. This is one of the larger avoidable costs, depending on your deposit and eligibility.

Moving and setup costs

The costs of actually moving in are easy to forget: removalists, connecting utilities, possibly new appliances or furniture, and any immediate repairs. Individually they are small, but together they can add up at exactly the time your savings are stretched, so it helps to set aside a buffer.

Rates, strata and insurance

At settlement you usually reimburse the seller for council rates, water rates and, for an apartment, strata or body corporate fees they have already paid for the period after settlement. You will also need building insurance in place, often from the day you exchange or settle. These ongoing costs continue after you move in.

Build in a buffer

The sensible approach is to add up the deposit and all of these costs, then keep a buffer on top for the unexpected. A broker can help you map the full funds you need to complete the purchase, not just the deposit, so you are not caught short, usually at no cost to you. Confirm duty and rate figures with the relevant authorities.