Understanding the costs of buying a home

Taxes & government fees

Stamp duty is likely to be your biggest cost outside of the deposit and mortgage. It’s a state government tax based on the purchase price of your property and typically needs to be paid within 30 days of settlement.

You may be able to increase your home loan to cover this cost, though conditions apply. And if you’re a first home buyer you may be exempt from stamp duty or entitled to a rebate or concession such as the First Home Owner Grant.

You’ll also need to pay a fee for the registration of your property’s title to the Land Titles Office in your state or territory. And if you’re buying a brand new home, GST may apply to the inspection and valuation of the property.

Insurances

If you have a smaller deposit and need to borrow a high proportion of the value of the property – what’s known as the loan to valuation ratio – you’re likely to be charged an amount to cover the lender’s risk.

This is known as Lenders’ Mortgage Insurance, or Low Deposit Premium, and both protect the lender. The circumstances of your loan may also determine whether this will apply.

As a home owner you may need some other forms of home insurance to protect your home and contents against fire, flood, theft and more.

Moving costs

Once the deal is done and the keys are yours, there’ll be some costs involved either to move in or set the property up for new tenants. If it’s the former, you may need to get removalists to help you.

Make sure to also budget for the connection of utilities such as electricity, water, gas and internet. There will also be council rates and potentially strata fees and taxes to cover.