The costs of buying your first home

There are more costs to buying or building a home than loan repayments.

From Stamp Duty to moving costs, find out more about some of the hidden costs that come with homeownership.

Most first time buyers focus on repayments when estimating the costs of buying a home; however, this is just the beginning. There are several other costs you need to keep in mind when determining your buying budget. 

Keep in mind that all costs and fees vary from state to state, and you should ask your lender or do some research to fully understand the costs that apply to you. 

Legal fees

The legal aspects of buying a home can be quite complex, with exacting details and contracts to consider. Generally speaking, it’s recommended that first time buyers seek the help of a conveyancer or solicitor to provide guidance and prepare all of the paperwork for you. 

These costs are estimated at approximately $1800, but will vary depending on how complex your ownership structure is. 

Government taxes and fees

Aside from your loan, stamp duty is one of the largest costs of buying a new home. These exact costs are determined by the value of the home you’re looking to buy — the more expensive the house, the more stamp duty you’ll pay. 

Luckily there are several grants and programs available to first home buyers that may wave or minimise stamp duty costs. These programs and their eligibility requirements are different in each state, so you’ll need to do a bit of research to find out what you can take advantage of.   

Other government taxes and fees that you should keep in mind include:

  • GST on inspections and valuations
  • land title registration
  • council and utility rates. 

Mortgage costs

Mortgage costs don’t end with repayments. Other one-off fees may apply when you’re securing your loan. This includes application fees — you’ll have to pay to set up the loan. This can range from $500 to $600, but it really depends on your loan and your lender. Keep in mind that some lenders may wave this fee, so make sure you double check with them. 

You’ll also have to pay a mortgage registration fee, which is the process of registering the physical property as a security on the home loan. It also allows you to check if there are any claims on the property. This fee is different in each state, running from approximately $120 to $200. 

You may need to cover transfer fees when buying your new home. This is the cost of transferring the property into your ownership. Some states charge a flat fee for this, while others use value brackets to determine how much you need to pay. 

Inspections

Building and pest inspections are an important part of the buying process. They help determine the condition of the property, and make sure you’re not buying a home with extensive hidden damage or pest infestation. 

While it may seem like an unnecessary expense, you shouldn’t skip this step. It costs approximately $600, which isn’t much to pay to ensure your new home is structurally sound. 

Insurance

Insurance costs will depend on your individual circumstances. If you’re not able to put down a 20% deposit on your home loan, you may be required to buy Lender’s Mortgage Insurance. This is insurance that protects your lender from any financial loss should you default on your home loan. 

The cost of Lender’s Mortgage Insurance will depend on several factors, including the amount of your deposit and the value of your new home. 

New homeowners will also need to take out home and contents insurance. This monthly charge offers financial protection in case of fire, floods, theft and more. The cost of this insurance will depend on the amount of coverage you want and the value of your home and contents. 

Moving costs

Finally, don’t forget to factor in your moving costs. This is likely the last thing on your mind when you’re finalising the purchase of your new home, but it’s important to keep them in mind. Preparing for your move will help ensure a seamless transition into your new life as a homeowner.  

These costs can start to wrack up, especially if you’re moving a considerable distance. Depending on your circumstances, you may need to plan for:

  • removalists
  • bond cleaning
  • carpet cleaning
  • utility connections
  • internet and phone hook-ups
  • council rates and strata fees.

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