What are the upfront costs of buying a home?

There’s no way around it – getting your deposit together is tough work. Then, once you’ve finally saved enough, you’re hit with an array of other upfront costs. Here are 10 costs you need to factor in (apart from your deposit).

Stamp duty

Outside the deposit, this’ll be your biggest upfront cost. Stamp duty varies greatly from state to territory to state and the rules (and exemptions) can seem complicated.

Check out the government websites of your state or territory. But be warned: the various schemes change almost yearly so you’ll need to check and double check.

As of October 2014, if you’re a first homebuyer buying a $400,000 home, your stamp duty will range from nothing (Queensland and West Australia) to approximately $16,330 in South Australia. But many first homebuyers qualify for grants and exemptions.

Use our Stamp Duty Calculator to estimate stamp duty in your state or territory.

Transfer fee

This is a fee levied by state governments to cover the cost of transferring the title. Again, there’s a huge disparity between states and territories. In the Northern Territory, for instance, the transfer fee is just $137 (on a $400,000 home). In South Australia, it’s $2901.

Mortgage registration fee

Another one of those state/territory fees, though thankfully it's not a biggie. On that $400,000 house, the cost ranges between $107 (NSW) and $189 (Northern Territory).

Legal and conveyance fees

These fees are for a licensed conveyancer to review your contract, perform checks on the title, and draft the settlement documents. They basically do the paperwork. Depending on complexity, it’ll cost between $700 and $2500. Learn more at the Australian Institute of Conveyancers’ website, opens in new window.

Mortgage application fees

These are the fees your bank charges to set up your mortgage. Most banks charge additional fees (mortgage registration, loan service fee etc.) so ask them to itemise everything. Also ask if they offer reduced-fee deals or packages.

Lenders' Mortgage Insurance

If you get a 20% deposit together, you usually won’t need Lenders' Mortgage Insurance. But homebuyers with a smaller deposit will. This is a one-off fee equivalent to between 1 and 3% of your loan amount.

Inspection fees

A thorough building inspection is essential. You might be tempted to skip a pest inspection, but the average termite colony costs $7000 to remove.

Home, building and contents insurance

If you have a mortgage, building insurance is compulsory. Premiums vary sharply by state/territory, but budget around $1000 a year for home insurance (on a $400,000 house), and an average of $500 for contents.

Moving charges

These can vary massively depending on how much stuff you have, and how far you’re moving. Some estimates could be between $550 and $3500. It's a good idea to shop around and get at least 3 quotes.

Connecting gas, electricity and telecommunications

Try and negotiate with the vendor so the power stays on and you’re not hit with reconnection fees.

How much all up?

Your Mortgage website, opens in new window estimates upfront costs to be between 7 and 11% of the purchase price. On a $400,000 home, that’s $30,000-plus on top of the deposit.

It can be pretty daunting for first homebuyers, but remember the First Home Owner Grant may assist with stamp duty costs. See if your eligible to purchase your first home with a deposit of as little as 5% with the Home Guarantee Scheme.

We know that the home loan process can be daunting. You can dip your toes in the water with our ‘choosing the right home loan tool’ – It’s a great way to browse our loans and see what they could cost. When the time comes, don’t feel like you have to do it on your own. Call us on 13 78 79, visit your local branch, make an appointment with a mobile banker or, if you’re ready, feel free to apply online.

Budgeting to buy a house involves more than just calculating how much you can afford to spend on buying the house (and the amount of the deposit you need or have).  There are a number of costs associated with buying a home which should be factored into your budget. Here are some of the most common.

Stamp duty

Stamp duty is a state and territory government tax based on the purchase price of the property. Because it’s paid to the state or territory the property is in, the amount you’ll need to pay will vary depending on where you’re located as well as on the price of the property and other factors such as whether you’re a first home buyer or an investor

Unfortunately, stamp duty is often a significant cost, so it’s vital you take it into account when working out your costs. Our upfront costs calculator can give you an indication of how much stamp duty you could have to pay as well as other costs to consider when buying.

Depending on the state or territory there may be stamp duty concessions for some properties or buyers, such as if you’re building a new home to live in or if you’re a first home buyer. You can get details of any concessions that you may be eligible for from the revenue office website for your state or territory
 

• Australian Capital Territory
• New South Wales
• Northern Territory
• Tasmania
• South Australia
• Victoria
• Western Australia
• Queensland

Building and pest inspections

Although these may seem expensive, the price you’ll pay could be a fraction of the cost (not to mention headache) if you end up with pest infestations or building issues after you’ve bought. In some cases you may be able to combine both the pest and building inspection, which should help to keep costs down.

Legal costs

There are several legal steps involved with buying a home. These include:

• Completing a property and title search to make sure the seller is legally entitled to sell and that there are no encumbrances on the property
• Arranging a strata inspection and checking the strata body corporate records if your buying a unit that’s part of a strata scheme
• Reviewing and exchanging the contract of sale
• Arranging to pay stamp duty
• Overseeing the transfer of the title of the property from the seller to you.

Mortgage establishment fees

Depending on who your lender is and what loan you have, there may be various fees to establish your mortgage. These could include an application fee as well as valuation and settlement fees.

Title transfer fee

The title transfer fee is a state/territory government fee for transferring the property title from the seller to the buyer. The cost can vary significantly depending on what state or territory the property is in – you can find details of the charges on the website of the state/territory revenue office.

Mortgage registration fee

Another state or territory fee. As a property is the security for the mortgage, the state/territory government needs to register the home loan so that any future buyers can check for any mortgages on the property.

Lenders Mortgage Insurance (LMI)

If your deposit is less than 20%, you may need to pay Lenders Mortgage Insurance. LMI is designed to protect your lender should you default on your loan. With some lenders, however, you may be able to include the cost of Lenders Mortgage Insurance as part of your mortgage, so you won’t necessarily need to come up with the cost upfront.

Depending on your circumstances, one option that could be worth exploring is a Family Security Guarantee. This enables parents to use the equity in their home to help their children buy a home. Find out more

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