Expect the Unexpected: The Hidden Costs of Buying a Home

Are you 100% sure you saved enough for your dream home? Be prepared, and find out some of the hidden costs of buying a home in Australia.


July 26, 2022

hidden cost header

What if you thought you saved enough, and in the end, you’re $10,000 short from securing the keys to your home? Surprises are fun and exciting but never when you pay more than you thought you would. Prepare and manage your budget better and smarter by knowing what and how much you need to pay for your dream home.

With the house prices softening in some areas in Australia, you may be thinking of finally purchasing the property you’ve been eyeing. You may think that saving for your deposit is enough. You calculate the purchase price, your deposit and repayments. Then, you believe, ‘Well, this is easy. Let’s buy the house!’

But when you’re in the process of purchasing, your total comes out more than you expected. Terrifying, right? Homeownership is definitely more than that. You should consider the upfront and ongoing costs that may slowly creep behind your back and shock you.

For your peace of mind and security, we reveal some of the hidden costs that you need to watch out for when buying your home:

hidden cost summaryLOAN APPLICATION FEES

loan application fees

1. Loan Application Fee: When you apply for a home loan, the bank or lender will likely charge you the loan application or establishment fee for processing your loan. The cost reaches a couple of hundred dollars, but it depends on your lender and other factors, such as your loan type and security.

Want to save money and avoid this fee? You may consider negotiating this fee because some lenders may waive it under certain situations.

2. Lender’s Property Valuation: A lender will likely ask for a valuation to ensure you’re asking and paying for the right value of the property. Lenders may conduct the property valuation themselves or let you use a third party. Nonetheless, you cover this cost.

3. Lender’s Mortgage Insurance (LMI): Most lenders require at least 20% of your property’s value to ensure you do not pose a risk to them. If you deposit lower than 20%, you may need to pay LMI.

LMI protects lenders if you borrow more than 80% of the property’s purchase price. The amount of the LMI depends on your lender, deposit and loan. This insurance gives confidence to lenders to allow you to borrow up to 95%.

If you’re a first-home buyer or a single parent, you may qualify for schemes that allow you to deposit lower than 20% without paying LMI.


government and legal fees

1. Stamp Duty: This is the tax you pay when you buy a property. It depends on the price you pay for the property and varies per state and territory. If you’re a first-home buyer, you may qualify for stamp duty concession rates or exemptions if you meet certain eligibility criteria.

You can also easily use our stamp duty calculator to estimate how much you’ll pay for stamp duty.

2. Transfer Fee: The relevant state government sets the fee. This covers the transfer of the title of the property from the seller to you.

3. Mortgage Registration Fee: This fee is for registering your mortgage on the title record for the property. This fee is charged by state and territory governments, and the cost varies. This also allows you to check any claims that exist on the property.

4. Conveyancing and Legal Fees: This is the fee you pay a conveyancer or solicitor who does the legal work involved in buying your home. All the stages in purchasing a property involve complex legal paperwork and requirements.

Having a conveyancer or solicitor who handles these things and gives expert legal advice can help you avoid mistakes and unexpected expenses.


essentials fees

1. Insurance: Home and content insurance protect you in case your home or belongings are damaged by a range of events, including fire, storm and flood. Home insurance (property or building insurance) covers the permanently attached or fixed items, such as the main dwelling while the contents insurance protects your possessions (e.g. couch and appliances).

Buyers usually combine both, but you may also choose to have one for the home and one for the contents.

2. Utilities and Connections: Never forget to review your building contract if it includes site and connection costs. You need to set aside money for the connection of services, such as electricity, water, landline and internet. Some providers may also charge extra for long distances.

3. Moving Costs: Some forget to consider the cost of actually moving into the property. The cost depends on several factors, such as the location, duration, items and insurance. Some services charge by the hour, and some charge based on your items.

If the service provider doesn’t include insurance yet, you may consider including insurance to protect your items during packing and unpacking.


maintenance fees

1. Building and Pest Inspection: Imagine buying a property for a high price only to find out that it’s infested with pests. A big yikes, right? Inspection fees are for the assessment of the property’s condition done by a qualified inspector. A building inspection covers the quality of the construction, including major and minor structural issues and safety hazards. A pest inspection is for the assessment of insect infestations.

This is important to ensure that the property is structurally sound and free from pests. Moreover, if repairs are necessary, you may use the inspection report to negotiate the property’s price.

2. Council and Water Rates: These fees vary from each state and are determined by the local council. You and the seller may negotiate the adjustments on the settlement of these fees.

3. Strata Fees: If you buy an apartment unit or a townhouse that is a part of a complex, you may have a strata title. This means that you should pay strata fees, which include the general management of the building and the common areas.

Strata fees may cost you thousands of dollars, but it depends on the location and property type.

Ready to purchase your dream property?

Buying a home is already challenging. Then, adding all the painful paperwork and legal requirements involved with the hidden costs makes it even more complicated.

Get in touch with our brokers for free, and we will do the heavy lifting for you! We work with over 40 banks and lenders, so you may have more choices and also be eligible for schemes that may help you save money!

first home buyer seminar july 27

If you are around Sydney, you may also be interested in our First Home Buyer Seminar on 27 July in Kogarah. Register today, and know the ins and outs of owning your first home, (including the fees you need to pay) from our panel of expert speakers.

Have a question? You can always ask with just one click!

• Email us today at info@itssimple.com.au
• Call us on 1300 796 137
Book a chat with our friendly customer service team

Stay tuned for our upcoming blogs to know how much you need to deposit to get one step closer to your dream home!





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