Home Drop Talk Podcast The hidden costs of buying your first home

The hidden costs of buying your first home

hidden costs of home ownership
There are hidden costs when buying a home
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A home is a need in life. It’s a shelter that allows us to enjoy time with our friends and family. It’s a sanctuary where we rest and relax after a hard-working day as well as learn and grow throughout our lifetime. That’s why buying a home is an important decision in life. For many of us, the first step towards home ownership is saving for a deposit, which is usually 5% to 20% of the property’s purchase price. But did you know that there’re many more costs to consider when buying a home? And it’s important to prepare for these additional costs so that the goal of owning your dream home is not jeopardised.

the importance of home
A home is important for everyone

The process of buying a home involves many steps and lots of money – hundreds of thousands or even millions.

Conveyancing and legal fee

If you’re new to buying a home, it makes perfect sense to engage a conveyancer or a solicitor that specialises in property transactions. The process of buying a home involves a lot of paperwork and steps. A qualified professional can help guide you throughout the process. The cost for such services is usually around $500 to a little over $2,000.

a conveyancer can help
Ask a conveyancer or solicitor for help

Stamp duty

Stamp duty is a tax that is payable to the state government when purchasing a property. Generally, the amount payable is between 1-7%, depending on which state or territory the property is in and the purchase price. First home buyers may receive a discount on stamp duty. Again, the amount of discount depends on which state or territory the property is in and the purchase price.

Mortgage registration fee

This is a charge payable to the state government for registering your mortgage on the title of your property. The cost varies from state to state, but it’s usually in the $100 to $200 range.

Transfer registration fee

This is a charge payable to the state government for registering your name on the title of your property. Some states and territories charge a set fee, while others charge according to the purchase price. The cost is generally a few hundred to a few thousand dollars.

Loan application fee

This is a fee charged by the lender or bank for your loan application. Some lenders may not charge it. If required, it’s usually a couple of hundred dollars.

Lenders Mortgage Insurance

If you borrow more than 80% of the property’s purchase price, you’ll need to pay Lenders Mortgage Insurance (LMI). LMI protects the lender in the event that you’re unable to pay your mortgage repayments. The insurance can cost anywhere from a few thousand to tens of thousands of dollars. You may have the option to add this cost onto your loan, but doing so will mean that your mortgage repayments will be higher as you’ll be paying additional interest.

there are many fees
Be aware of the government and bank fees

Pre-purchase research costs

Doing pre-purchase research is absolutely important when buying a property. It helps you to decide whether the property is right for you. After all, buying a property involves a lot of money. Without adequate research, you may run into unexpected problems and losses down the track. Depending on the type of property you’re buying, there’re many things you can consider in terms of research. For example, if you’re buying a house, you can consider ordering building and pest inspection reports to see if there’re any structural or pest problems. If you’re buying an apartment or unit, you can consider ordering a strata report to see if there’re any building or strata management issues. These reports are usually a couple of hundred dollars each.

Lender’s property valuation

When you’re buying a home, the lender will likely require a valuation report on the property to ascertain the value of the property and the maximum loan amount. This usually costs a few hundred dollars. Even if the lender doesn’t require it, you may still consider ordering one as part of your pre-purchase research.

Utility bills

Generally, the utility bills that are of concern in a property transaction will be the bills for water, council and strata (if you’re buying an apartment/unit). Depending on the property you’re buying, you may be required to pay some of these bills for a certain period in advance. Also, these are ongoing bills. So, it’s important that you’re fully aware of their costs when you do your pre-purchase research and that they’re within your long-term budget.

Insurance costs

One of the insurances you should get when having a home is home and contents insurance. The cost for this varies from several hundred to several thousand dollars per year – depending on what’s being covered. Depending on your needs, you may want to consider getting other insurances too. It’s a good idea to speak to an insurance professional to determine your insurance needs.

Costs associated with moving, furniture, appliances and other household items

Will you be using existing furniture and appliances in your new home? If you are, you’ll need to consider removalist costs – the costs to hire a removalist vehicle and/or removalists. This may cost several hundred dollars. If you’re buying new appliances and furniture, it’ll be a good idea to set aside several thousand dollars for these. Some of these that you may be getting include:

Furniture

  • beds
  • sofas
  • cabinets
  • shelves
  • tables
  • chairs
  • oven
  • cooktop
  • rangehood
  • microwave
  • kettle
  • toaster
  • coffee machine
  • washing machine
  • dryer
  • refrigerator
  • freezer
  • dishwasher
  • air conditioner
  • heater
  • vacuum cleaner
  • television
  • iron

Cooking and Cleaning

  • cups
  • plates
  • bowls
  • cutlery
  • cooking utensils
  • pans
  • pots
  • mop
  • broom
  • buckets
  • tissues
  • toilet paper
  • garbage bags
  • detergents
  • soap

what's needed in a new home
A new home will need a lot of furniture and appliances

Connection costs

These are costs associated with connecting gas, electricity, phone and internet to your new home. It usually costs a few hundred dollars for each connection. For example, NBN Co charges a $300 new development fee to connect newly built properties to the NBN network.

Repair costs

When you buy an established property, there may be repairs that need to be done. It’s a good idea to take note of these when you do your pre-purchase research. That way you can budget for these and undertake them when you take ownership of the property. 

research is important
It pays to research…

Depending on the property, there may be other costs to look out for when you’re buying your home. It all adds up. Therefore, it’s best that you leave additional funds in your wallet to maintain flexibility throughout the buying process.



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I am passionate about helping individuals create wealth through property investments. I am the co-founder, mentor and financial writer at WatuDaily, specialising in property investment, business advice and personal money matters. I was previously a financial adviser for over 15 years and it is on that high that I wish to share my knowledge and experiences and channel them towards a vision and purpose of helping others to realise and achieve their financial goals through my publications. As a financial adviser, I won a number of industry awards for the outstanding contribution I made to my clients and peers. I hold a Bachelor of Applied Finance degree and a Master of Commerce in Accounting and Finance degree. In my spare time, I enjoy travelling and staying active through playing sport.

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