Hidden Costs for Buying a House in Australia

House purchase price is not the final cost that you need to be ready to pay if you want to buy a home in Australia. There are many other fees and charges involved and as a result the final price for buyer is significantly higher. On average, the extra costs of buying a property worth $700,000 would be 5-11%. And if you do not arrange your finance accordingly to cover all extras, you might have some issues.

We know that the chances of planning total expenses without knowing additional costs are a hundred to one. So, to make it easy for you, we have prepared the guide of all the unforeseen costs of buying a home:

For instance, if you want to buy an apartment or house in NSW of $700,000, you might expect to pay the following extras on top:

Property market value :                                                  $700,000

Extra costs: 

• Lender’s Mortgage insurance:                                      $16,000
• Stamp duty: $0 for FHB                                                $26,000
• Mortgage registration and transfer fees (combined) :  $296
• Legal Fees:                                                                   $1,000
• Home loan application fees:                                         $500
• Build and pest inspection :                                           $600
• Moving fees :                                                                $750

Additional Costs  starts from $19,146  to $45,146

The Property

Of course, the biggest expense first.

Deposit for the property will cost you the most amount of money. And the purchase price and deposit will vary according to the location, size, space and other factors.

While discussing the price, keep in mind that extra costs like stamp duty and LMI vary according to the property's value. So, if you negotiate well, you will be cutting a little off from the property's cost and some from additional expenses.  

Avoiding expenses like Lender's Mortgage Insurance is also a good way to lower the budget without compromising your dreams. And the most efficient way to do that is by saving a minimum of 20% of the property price. You might be interested to use Online tool on our website and check if it is more beneficial for you to save for deposit for a long time or buy a house now without having 20% deposit ready to go.

Based on the circumstances and the lender, you might get the loan with a deposit as little as 5%. However, don't forget that you will have to pay Lender's Mortgage Insurance if the deposit percentage is close to the minimum.

Read the next point to understand about Lenders Mortgage Insurance. 

Estimated Cost: 10% deposit ~$ 70,000

Lender's Mortgage Insurance

LMI (Lender's Mortgage Insurance) is the premium you have to pay to the lender when the loan deposit is less than 20% of the property's cost. It helps to reduce the risks for lenders if the borrower does not meet loan repayments and can’t pay for loan anymore.

The LMI usually ranges between 1 and 3 percentage of the property's value, and the borrower has to pay it in addition to their monthly loan repayment. 

So, if you are looking for bigger savings, the best idea would be to avoid LMI. You can avoid LMI by saving at least 20% of the budget before buying the home.

And if you do not have 20% of the property value at the time of purchase, make sure you calculate possible LMI in advance. That way, you won't be caught off guard by this extra expense. If you want to know how much roughly LMI might be, you can use online LMI Calculator on our website.

In our example, if you want to purchase a house as a main place of residence in NSW for $700,000 and have a deposit around 10% the LMI premium can be around $16,000. 

Estimated Cost : $16,000

Stamp Duty

Stamp duty is the one-time fee or tax you have to pay while buying a property in Australia and as these fees are under the regulation by the state or the territory you belong to, the amount will vary drastically. The amount will be under the tax law of the area where the transaction takes place.

For instance, if you buy an established house worth $700,000 in New South Wales, the stamp duty will be around ~ $26,000.

Stamp duty Calculator is available for you on our website if you want to check how much tax you need to pay.

It is one of the highest additional costs you will have to cover while purchasing a house. However, there are some exemptions according to the state and particular circumstances. First-time house buyers can get a significant discount and concession rate can be applied. You can read more about first home buyers grants by downloading the FHB Guide from our website.

In all other circumstances, you will have to pay the full amount of stamp duty according to the law. So don't forget to include stamp duty while calculating the house buying budget.

Estimated Cost : $26,000

Mortgage registration and transfer fees

In order to register the mortgage and transfer the ownership while purchasing a property you will need to pay a mortgage registration and transfer fees. They are not substantial and different in all states. 

Estimated Cost : $296

Legal Fees

As you already know, documentation of property sales involves complex legal procedures, and a single loophole in the documents can be troublesome for the buyer. The presence of conveyancers or solicitors who can act as your legal representatives will significantly help during the documentation. They can ensure that the documents are up to the mark and you are safe to move forward with them.

If you have confusion choosing between a conveyancer and a solicitor, we suggest you go with a conveyancer. A conveyancer will have significant experience in conveyancing as their area of practice is narrowed to that. They will charge you a fixed fee, and according to the NSW housing guide, it ranges between $800 and $2500. 

However, if you have to deal with complex legal formalities and procedures, consult a solicitor. Solicitors usually charge clients on an hourly basis and can be higher than a conveyancer. 

Estimated Cost : $1,000

Home Loan Application and Establishment Fees

It is not an assured additional expense; nevertheless, some lenders will charge borrowers fees for establishing the loan while applying for the loan. The amount varies from lender to lender and can be something between $0 and $500. 

Lenders can also charge you an additional fee for preparing and registering a home loan. This additional charge includes title search, valuation charges and lender's legal fees.

Estimated Cost : $500

Property Inspection

To ensure the structural soundness and quality of the building it might be very important to organize pest and building inspection especially for old houses.

Estimated Cost : $600

Moving Fees

Once you finish the mortgage, agreements, and other formalities, the next step is moving to your new property. You will have to pay for the transportation of your belongings. And depending on the number of items and the distance between both places, the amount varies drastically. Professional removalists cost $150 - 250 per hour.

Estimated cost : $ 750

What to do next?

Obtain Pre-approval for a home loan and start your house hunting. Mortgage brokers from NG Loans will be happy to guide you and explain all fees involved in purchasing a new house in Australia. Book a free consultation today and start your journey with NG Loans. 

Please remember that all figures and calculations are an estimate only and can vary depending on many circumstances.