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Hidden Costs of Buying a Home

Buying a house is an exciting milestone for many Australians, but it’s important to consider the costs beyond the purchase price. There are several hidden costs associated with buying a house in Australia that can quickly add up and catch unsuspecting homebuyers off guard.

This article is a valuable resource for anyone interested in purchasing property in Australia and wants to learn about the associated hidden costs. It covers everything from the well-known stamp duty to the often-overlooked mortgage registration fee.

Whether you’re a first-time buyer or an experienced investor, this article has got you covered with all the information you need to make an informed decision.

Stamp duty

Stamp duty is a state government tax on property transactions and is based on the value of the property. Stamp duty is one of the more expensive hidden costs, although first-home grants can significantly or completely reduce the cost.

The cost of stamp duty varies depending on the state or territory in which you’re purchasing the property. You can expect to pay around $20,000 for a $500,000 in most states in Australia.

Building inspection and pest inspection

A building inspection and pest inspection are essential before purchasing a property. The cost of these inspections can vary, depending on the size of the property and the level of detail required.

A building inspection can identify any major defects or issues with the property, while a pest inspection can identify any signs of termite damage or infestation. The cost of a combined building and pest inspection for a standard three-bedroom house can range from $400 to $800.

Mortgage registration fee

When you take out a mortgage, there is a fee to register the mortgage with the state or territory land registry. The cost of this fee can vary depending on the state or territory, but it is usually around $100-$200.

Transfer fee

A transfer fee is a fee that is paid to transfer the property title from the seller to the buyer. The cost of this fee varies significantly depending on the state or territory.

For example, a $500,000 house in NSW will have an estimated transfer fee of $150, but the same-value house in SA will cost you approximately $4,400.

Loan application fee

Most lenders charge a loan application fee when you apply for a home loan. This fee can vary, but it is usually around $500-$1,000. Some lenders may waive this fee as part of a promotion, but it’s important to check the fine print.

Lenders’ mortgage insurance

Lenders’ mortgage insurance (LMI) is insurance that protects the lender in case you default on your loan. If you have a deposit of less than 20% of the property value, you may be required to pay LMI. The cost of LMI varies depending on the lender but you can expect to pay close to $10,000 for a $500,000 house with a 10% deposit.

Moving costs

Moving costs can vary depending on the distance, amount of belongings, and level of service required. Hiring a professional removalist can cost anywhere from a few hundred to several thousand dollars, while additional costs include packing materials, storage fees, and utility disconnection and reconnection fees.

To save money, consider decluttering before the move, asking friends or family for help, or negotiating with removalists for a lower price.

Conveyancing and legal fees

Conveyancing and legal fees are essential when purchasing a property. These fees cover the legal work required to transfer the property title from the seller to the buyer. The cost of these fees can vary depending on the complexity of the transaction, but they usually range from $1,000 to $3,000.

Buying a house in Australia involves more than just the purchase price. It’s important to consider the hidden costs associated with buying a property to ensure you can afford the full cost of homeownership.

Typically, the hidden costs of buying a house can amount to 5%-10% of the total purchase price. And that excludes the house deposit.

On a $500,000 house, you can expect to pay $25,000 to $50,000 on setup fees and costs.

Why not speak to an accountant or mortgage broker about the hidden costs? You’ll be better prepared to make an informed decision and avoid any financial surprises.

A Mortgage Broker and Accountant that can help!

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