A first home buyers guide to the extra costs of buying a home

Savvy Finance
2 min read

When you’re sweating about making one of the biggest financial decisions of your life, lenders and vendors throw big scary words at you. ‘Hidden costs’, ‘stamp duty’, ‘taxes’ and other fees and charges that add on to home ownership. However, catastrophizing about your finances is a hindrance more than a help. So here is a tally of all the extra costs you must consider and factor into your budget when buying your first home.

For sale: 121 Beattie Street, Balmain, NSW

The size of the deposit can determine costs.

Let’s say you’re looking at a home worth $500,000. You’ve saved up a 10 per cent deposit of $50,000. So that seems straightforward. However – if you’re buying and you have less than a 20 per cent deposit, you’re going to have to take out a Lenders Mortgage Insurance (LMI) premium. That doesn’t protect you, more so the bank or lender. Lenders’ mortgage insurance in this example would cost $7,920. Lenders won’t lend to borrowers without at least a 5 per cent deposit, so always factor in the LMI if you don’t have a 20 per cent deposit.

The unavoidables – stamp duty and statutory charges.

When you’re buying a house, you’ll have to pay stamp duty to your state government. In the example we have of a house price of $500,000 we would have a stamp duty cost of $23,346 in Victoria (though only $10,156 in Queensland). Not only that, but you’ll also have to pay to register the title (about $75). You’ll also have to pay the remainder of that year’s local Council and water rates, which can vary per area. This can run up around $500 to even $1,000. If this home is not your only home, you may have to pay an additional land tax.

Inspections, valuations and bank fees

Before you set foot into the house, you should get a pest and building inspection done to make sure the structure is sound. You also need to pay the bank a loan application or establishment fee, which can cost about $500-600. At this stage you should also take out title insurance to protect against any undue claims against your property by other people.

The lawyer’s cut

With big purchases come lawyers. What do lawyers mean? Legal fees, of course! They may charge a document preparation fee of about $200-300 and another $100 or so for legal searches and inquiries, to make sure your home has no other claims to the property or assets. Then there are legal fees depending on the complexity of the dwelling, if it’s an investment property, part of a trust or any other ownership arrangement. This can add about $1,000 to $3,000 depending on the how tricky the process may be. Since this is an owner-occupier scenario, the legal fees sit at the bottom end of the scale.

So, what’s the total cost?

Looking at the deposit, stamp duty and all the other fees added up, you’re probably looking at an extra $28,820 if we take the mid-point on all those fees as a reasonable estimate. So be wary before buying, because buying a house before you even move in…can cost a lot!

Savvy Finance

Founded in 2010, Savvy started out as an online asset finance broker. Over the years, though, as customer demand has grown for a more comprehensive assessment of different financial products, they’ve expanded to become not only one of Australia’s leading asset finance brokers, but also a highly respected comparison service. This rapid development saw them named in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in Australia.

They help thousands of Australians each year save on financial products, whether that be by guiding them through the finance process or giving them the tools to effectively compare the best deals on the market.

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Aside from the costs you might like to mention the pluses for first time buyers. As I understand it, there is no stamp duty in Queensland and even a government subsidy for first time buyers that could make quite a bit of difference.


Why does everyone persist with calculating anything to do with housing in Sydney or Australia on a home loan or house price of $500k? Where are these houses? Average house price in Sydney is over $1Million and in Australia is nearly $700k. The photo of the home at the top has a price guide of $1.7M…

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