When budgeting for your first home, it’s easy to focus on one number: the purchase price.
But buying a home involves more than just saving a deposit.
There are several additional costs that can add thousands of dollars to your budget, and understanding them early can help you avoid unexpected financial pressure when it’s time to settle.
While some costs only apply in certain situations, it’s worth planning for them before you start house hunting.
1. Stamp Duty
Stamp duty is one of the largest upfront costs when purchasing a property.
The amount payable depends on:
- The purchase price
- The state or territory where you’re buying
- Whether you’re buying your first home
- Whether you’re eligible for concessions or exemptions
Many first home buyers may qualify for reduced stamp duty or even a full exemption, depending on their circumstances.
You can check the latest rates and concessions through your state or territory revenue office.
2. Conveyancing and Legal Fees
A conveyancer or solicitor manages the legal process of transferring ownership of the property.
They will generally:
- Review the contract
- Conduct property searches
- Liaise with your lender
- Arrange settlement
- Ensure legal ownership is transferred correctly
While costs vary, this is an essential part of purchasing a property.
3. Building and Pest Inspections
Before committing to a purchase, it’s often worthwhile arranging professional building and pest inspections.
These inspections may identify structural issues, termite damage or maintenance concerns that aren’t obvious during an open home.
Although they’re an additional upfront expense, they can potentially save thousands of dollars in future repairs.
4. Lenders Mortgage Insurance (LMI)
If you’re borrowing more than 80% of the property’s value, you may need to pay Lenders Mortgage Insurance (LMI).
LMI protects the lender, not the borrower.
The cost varies depending on the size of your loan and your deposit. For more about LMI click here.
5. Loan Fees
Some lenders charge fees associated with establishing your home loan.
These may include:
- application fees
- settlement fees
- valuation fees
- ongoing account or package fees
Not every lender charges the same fees, so it’s worth comparing the total cost of borrowing rather than focusing solely on the interest rate.
6. Government Registration and Transfer Fees
In addition to stamp duty, state governments charge registration and transfer fees when ownership of a property changes.
These fees vary between states and territories and are usually payable at settlement.
7. Home and Contents Insurance
Most lenders require building insurance to be in place before settlement.
You may also wish to arrange contents insurance to protect your belongings once you move in.
The cost depends on factors such as the property’s location, value and the level of cover you choose.
8. Council Rates and Utilities
Once you become the owner, you’ll become responsible for ongoing property costs, including:
- council rates
- water charges
- electricity
- gas
- internet
These ongoing expenses should form part of your household budget when considering how much you can comfortably afford to borrow.
9. Moving Costs
Moving house often comes with expenses that are easy to overlook.
These may include:
- removalists
- storage
- cleaning
- utility connections
- new furniture or appliances
While individually these costs may seem small, they can quickly add up.
Looking Beyond the Purchase Price
Buying a home is one of the biggest financial decisions you’ll make.
Understanding the full cost before you sign a contract can help you budget with confidence and avoid unnecessary surprises.
At You First, we believe it’s important to look beyond the purchase price and understand how your deposit, borrowing capacity, loan structure and ongoing costs fit into your broader financial plan.
If you’re preparing to buy your first home and want to understand the true cost of purchasing a property, we’re always happy to have a conversation.
The information in this article was accurate at the time of publication and is intended as general information only. It does not take into account your personal objectives, financial situation or needs. Laws, regulations and lending policies may change over time, so you should seek professional advice before making financial decisions.