Buying a house isn’t as easy as saving your deposit and waiting to hear whether your offer has been accepted. In fact, that’s the easy part!
The more challenging part is making sure you have enough cash to pay for all the extra costs that crop up.
If you’re a first home buyer, these are eased by the First Home Owner Grant, but costs such as lenders mortgage insurance and legal fees will still weigh on your finances.
We’ve outlined a list of the fees and costs you need to prepare yourself for before even starting to look for your dream home.
The Hidden Costs of Buying a House
A property buying scenario to consider
Let’s assume the following:
Property is worth $850,000
Owner-occupied (you will live in it for the first year at least)
An established property (not off the plan)
Mortgage rate of between 4 – 5%
Deposit: 10% ($85,000)
Based on this, here are some estimated costs.
Costs vary depending on the provider and the state you’re buying the property in.
Legal fees: Approx. $750 to $1,500, depending on the complexity of the structure.
As a rule of thumb, conveyancers often charge a flat service fee, while solicitors generally charge by the hour. So if your property purchase is relatively straightforward (not buying through a company or trust ownership), you could probably save money by going with a conveyancer.
Stamp duty: This varies from state to state. You can get an idea of how much stamp duty is by using online calculators.
Based on the example above, the estimated stamp duty is approximately $46,070 if you’re buying in Victoria.
Pest and building inspection: $300–$400
Although there is a fee associated with both pest and building inspections, you could inevitably save thousands in potential repair costs.
Loan application or establishment fee: $600
A one-off application fee is often charged by lenders or if a lender doesn’t charge an application fee, they may charge an annual or a monthy loan maintenance fee of approximately $500 per annum.
Lenders mortgage insurance: $15,300
Lenders mortgage insurance is the premium you pay to insure the lender for lending you more than 80% of the value of the property in the case of a loan default. This insurance is approximately 2% of the loan amount.
Document preparation fee/legal charges: $200–$300
Your lender may charge a fee to prepare your home loan documents before the contract is approved.
Bank valuation fee: $300–$400
The bank may charge you for arranging an independent valuer to assess the value of the property you’re planning to buy. Some banks waive this, but some include it in the cost.
Title insurance: $360
This is insurance to protect you from any claims against the title of your property.
Registration of title: $75
This is the cost of registering the title with your state government.
Council and water rates: $500–$700
When you buy a property, you’re required to pay the vendor the remaining yearly or quarterly rates, such as water and land. These will begin from the date of settlement and will be individual to the property and area.
Legal searches and enquiries: $285
A number of searches are required to ensure there are no encumbrances on the property.
Other miscellaneous fees:
Mortgage registration fee: approx. $115
Transfer fee: approx. $2,084
Moving costs: $500 – $2,000
Another important set of costs to consider are moving expenses, especially if you’re moving a long distance. These can be quite significant and vary considerably from company to company, so it’s worth doing your research and shopping around.
Estimated cost: $67,439 – $70,189
Plus deposit: $85,000
Total estimated cost of buying: $152,439 – $155,189
As you can see, there are more costs involved than meets the eye. Make sure you factor these into your budget before you get underway.
If you enjoyed this article, you may be interested in our FAQs for Buyers.
