Buying a house is more than just what is on the property’s price tag. There are some extra costs all buyers should be aware of prior to purchasing. The truth is, there is more to buying a home than just saving your deposit and waiting to hear whether your offer has been accepted. In fact, that’s the easy part. The more challenging part is making sure you have enough cash to pay for all the costs that crop up; the deposit you’ve saved is just part of the cost of buying. 

To ensure you’re prepared when the bills arrive, I’ve laid out a list of the possible fees and charges you need to prepare yourself for before signing that contract.

Let’s assume the following:
- Property is worth $500,000
- Owner-occupied (you will live in it for the first year at least)
- Mortgage rate of 5%
- Deposit: 10% ($50,000)

Based on this, here are some estimated costs. Costs vary depending on the provider and the state you’re buying the property in.

Pest and building inspection: $350

It is recommended that you get this done, even newer properties sometimes have defects that only a trained specialist can spot.

Stamp duty: $18,000

This varies from state to state. You can get an idea of how much stamp duty is by using online calculators. 

Loan application or establishment fee: $600

This is a one-off cost charged by the bank when you apply for a loan. Sometimes banks waive this fee if you’re taking a packaged loan, but not always.

Lenders mortgage insurance: $8,000

Lenders mortgage insurance is the premium you pay to insure the lender for lending you more than 80% of the value of the property. If you want to avoid this one, save a bigger deposit. The final amount will depend on the insurer, and in some cases can be added to your loan amount.

Document preparation fee/legal charges: $300

Your lender may charge a fee to prepare your home loan documents before the contract is approved.

Bank valuation fee: $400

The bank may charge you for arranging an independent valuer to assess the value of the property you’re planning to buy. In some cases this can be waived, but some include it in the cost.

Legal fees: Approx. $3,000

Depending on the state and complexity of the structure. For example, if you’re buying through a company or trust ownership, you may pay more than a simpler and more straightforward ownership structure.

Legal searches and enquiries: $250

A number of searches are required to ensure there are no encumbrances on the property.

Registration of title: $75

This is the cost of registering the title with your state government.

Title insurance: $360

This is insurance to protect you from any claims against the title of your property.

Council and water rates: $500

When you buy a property, you’re required to pay the seller the remaining yearly or quarterly rates, such as water and land. These will begin from the date of settlement and will be individual to the property and area.

Estimated Cost: $31,835 (inc Stamp Duty & LMI)

Estimated Cost: $5,835 (exc Stamp Duty & LMI)

Plus Deposit: $50,000

Total Estimated Cost: $55,835 - $81,835

Naturally, these are estimates, and will vary between states and may not all be required in your situation. However going into a transaction with your eyes open is definitely the better option.

See also:

Digital disruption set to lower costs of selling property

Conveyancing: the not so cheap flight

Tips to improve depreciation deductions this tax time