Whether you’re a homeowner or investor, buying a new property is an exciting venture.

It’s fair to say it’ll be one of the biggest purchases you’ll ever make and one of the most complex.

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Unfortunately, not all would-be buyers are aware of all the costs of buying a house.

There is a lot more to the price of your property than just the purchase price alone.

In fact, when you add up all the potential fees when buying a house they can add a whopping 7% on top of the property price.

Buying a property needs to be a logical and well-researched investment, not one driven by emotion or fear, and the more knowledge and insight you can get before taking the leap, the better it will be for your finances.

So, when buying a house, what other costs are involved?

Here is a complete list of costs when buying a house, including any “hidden” costs, which you need to consider before planning your next purchase.

1. Research costs

It makes complete sense that every home buyer does their ground research of the property market in the local area as the first step on their property buying journey.

While there are many free suburb profiles online, there might be some research avenues that would come at a cost. Corelogic for example provides comprehensive property and suburb data at a fee.

2. Inspection report fees

A building inspection report and a pest inspection report will give you an accurate picture of the condition of the property and help you assess the likely costs of maintaining it moving forward.

  • Building Inspection: A building inspection checks structural soundness and lists any visible defects and necessary repairs. Approximate cost: $300–$700
  • Pest Inspection: A pest inspection checks for any signs of past or present pest infestation. Approximate cost: $200–$350
  • Strata Inspection: A strata inspection examines and reports on the written records of the owners’ corporation. A strata report, if you’re buying a townhouse or apartment, can also tell you whether the property is well-run, well-maintained and adequately financed.
    It is additional to the certificate that the seller supplies, providing relevant information about strata levies, insurances. Approximate cost: $200–$350.

3. Buyer’s agent fees

A buyers’ agent will usually charge you a percentage of the purchase price of the property they secure for you. This is usually in the order of 2.5% of the property’s value.

But while some see this as a cost, I see it as an investment – mistakes are expensive and good advice is cheap in comparison.

I’ve found that the most expensive advice you’ll get is usually free, on the other hand using a proficient buyer’s agent will even the odds in your favour and stop you from making the common and costly mistakes that many property buyers make.

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4. Valuation fee

Your lender usually requires a formal valuation of the property you are buying. This fee may be included in the application fee charged by your lender.

5. Survey report fee

A survey shows where the property is in relation to the boundaries of the land. Lenders often require a survey report. Approximate cost: $400 – $700.

6. Conveyancer or solicitor fees

A conveyancer, or solicitor, is the person who oversees and manages the actual transaction of the sale of a property from a seller to a buyer and manages the preparation of any legal documents needed for the transaction.

If you’re wondering how much the legal fees are when buying a house, these can vary as there is no “official” charge but the average cost of conveyancing can roughly be between $1,000 -$2,200.

And in addition to the service fee, you will usually also be charged for ‘disbursements’ including a title search, certificate fees, photocopying and paperwork registration costs.

According to the NSW Office of Fair Trading, the conveyancing process can include services such as the following:

  • Arranging building and pest inspections
  • Examining a strata inspection report if the property is part of a strata scheme
  • Arranging finance if necessary
  • Examining and exchanging the contract of sale
  • Paying the deposit
  • Arranging payment of stamp duties
  • Preparing and examining the mortgage agreement
  • Checking if there are outstanding arrears or land tax obligation
  • Finding out if any government authority has a vested interest in the land or if any planned development could affect the property (e.g. local council, Sydney Water, Roads and Traffic Authority)
  • Finding out any information that may not have been previously disclosed such as a fence dispute or illegal building work
  • Calculating adjustments for council and water rates for the property settlement
  • Overseeing the change of title with the Land and Property Information NSW
  • Completing any final checks prior to settlement
  • Attending settlement

7. Home loan application fees

Most lenders charge a home loan application fee to cover the costs of legal contracts, property title checks and credit checks and also a fee for setting up the mortgage in their banking system.

8. Accountant fees

A good accountant will pay for themselves many times over by understanding your personal situation and helping you structure your investments accordingly, as well as ensuring you take advantage of the myriad of legal tax “loopholes” available.

Paying for an accountant is even more valuable if you’re buying for investment purposes.

9. Home building insurance costs

It’s a good idea to get home building insurance before completing a property purchase.

The cost of building insurance will depend on the age, size, location and type of construction of the property but generally fits into two categories costing anything between $220-$1,000.

  • Replacement cover: To reinstate your property to its former condition. It means, simply, new for old.
  • Indemnity cover: To repair or reinstate your property taking into account depreciation on the dwelling.

10. Purchase price

The biggest expense is, of course, the purchase price of the property, which is likely to be financed via your own savings or equity as well as a mortgage.

11. Stamp duty

Stamp duty is often the second-largest cost associated with purchasing a property and varies depending on the state you live in and the total price of your property.

It’s an unavoidable state tax levied on the purchase of all properties and could amount to tens of thousands of dollars.

Stamp duty calculations and costs differ across Australia so here’s a breakdown of what you can expect in each Australian state.

Stamp duty in Victoria

Stamp duty in Victoria is calculated on a sliding scale, starting at 1.4% for properties valued at $25,000 and below and going up to 5.5% for properties over $960,000.

Stamp duty in New South Wales

The rate varies widely, but for properties priced between $300,001 and $1 million, the NSW duty payable is $8,990 plus $4.50 for every $100 or part thereof over $300,000. Premium properties worth $3 million and above attract stamp duty of $150,490 plus $7 for every $100 or part thereof that the value exceeds $3 million. Take note that premium duty is only payable on residential land.

Stamp duty in Queensland

Queensland has no stamp duty payable for properties valued less than $5,000, and a rate of 1.5% applies between $5,000 to $75,000. However, this rises to $1,050 plus $3.50 for every 100 or part thereof over $75,000 when the property value falls between $75,000 and $540,000, and increases to as much as $38,025 plus $5.75 for every $100 or part thereof over $1,000,000 for properties valued at more than $1,000,000.

Stamp duty in South Australia

For properties worth $12,000 and below, stamp duty rates start at 1% of dutiable value. The highest amount is reserved for properties exceeding $500,000 in dutiable value in South Australia, as they are charged a stamp duty of $21,330 plus 5.5% of dutiable value over $500,000.

Stamp duty in Western Australia

In WA, for properties worth $120,000 and below, stamp duty is payable at a rate of 1.9%. It increases in increments to $28,435 plus 5.15% of dutiable value over $725,000.

Stamp duty in Tasmania

Stamp duty rates at Tasmania start at $20 for properties priced $1,300 or less. Now, properties in Tasmania are cheap, but not this cheap! Therefore, most buyers will be paying much more than this. For instance, the rate goes up to $5,935 plus $4.00 for every $100 or part thereof over $200,000 but less than $375,000.

Stamp duty in the ACT

In the ACT, the duty payable for properties worth $200,000 and below is $20 or $1.48 per $100, whichever is greater. The amount increases as the price of the property increases, going up to a flat rate of $5.09 per $100 (applied to the total transaction value) for properties worth $1,455,000 and above.

Stamp duty in Northern Territory

The Northern Territory follows a formula for the dutiable value of properties worth $525,000 and below. The complex formula is as follows: duty payable is equal to (0.06571441 x V2) + 15V, where V is the dutiable value of the property divided by 1000. The formula is not applicable for properties exceeding $525,000. Instead, those properties (not exceeding $3 million in dutiable value) get a flat rate of 4.95% of dutiable value. If the property price exceeds $3 million, the stamp duty is 5.45% of the dutiable value.

12. Lenders mortgage insurance

If your deposit is less than 20% of the purchase price of your property, you will usually be required to take out Lenders Mortgage Insurance.

But this may not be what you think – it protects your lender if you default on the loan and the property is sold for less than the outstanding loan amount.

It doesn’t protect you!

This insurance protects the lender

Premiums vary according to the loan amount, property price and the loan-to-value ratio. The mortgage insurance premium is a once-only payment.

13. Mortgage repayment fees and interest

Once you have secured your home loan, you’ll be charged both interest and also management fees.

Government incentives can help lighten the burden

First home buyers have the bonus of being able to take advantage of government grants and assistance put in place to incentivise new buyers into the market.

First Home Loan Deposit Scheme

One of the more talked-about government measures, the First Home Loan Deposit Scheme (FHLDS) allows eligible first home buyers across Australia to buy a property with a minimum deposit of 5 per cent without being charged lenders mortgage insurance.

Usually, a 20 per cent deposit is required if you want to sidestep LMI costs, which can, in some cases, cost up to tens of thousands of dollars but under the FHLDS, the federal government guarantees the difference.

The scheme does have property price thresholds though, so it’s important to check if the price bracket you’re aiming for falls below the cap.

State-based government support

Aside from a deposit, many Australians seeking to purchase their first property believe stamp duty is one of the biggest barriers stopping them from being home owners.

But most states and territories offer at least some assistance on this cost, including some exemptions, for eligible first home buyers.

NSW

  • Stamp duty exemption for new homes worth up to $800,000 (temporary measure until July 31, 2021).
  • Stamp duty concessions available for new homes up to $1 million. (temporary measure until July 31, 2021).
  • Stamp duty exempt for existing properties worth up to $650,000.
  • Concessions apply for existing properties between $650,000 and $800,000.
  • One-off grants of $10,000 if you buy a new or “substantially renovated” property worth up to $600,000.
  • You may also receive the grant if you buy land to build a new home worth up to $750,000 in total (land and home).

Victoria

  • First home buyers may pay $0 in stamp duty on all homes worth up to $600,000. Properties can be new or established.
  • Concessions apply for properties worth between $600,000 and $750,000.
  • $10,000 first home owner grant when you buy or build your first new home worth no more than $750,000.
  • $20,000 for new homes built in regional Victoria (until 30 June 2021).

Queensland

  • No transfer duty payable on all homes valued up to $500,000.
  • Concessions available for homes worth between $500,000 and $550,000.
  • One-off grant of $15,000 for first home buyers purchasing or building a new home of up to $750,000.
  • $5,000 may be granted after you buy or build a new home worth less than $750,000.

Western Australia

  • No transfer duty for all homes less than $430,000.
  • Sliding scale concessions for homes worth between $430,000 and $530,000.
  • One-off first home owner grant of $10,000 if you buy or build a new or “substantially renovated” home.
  • Value of property must be below $750,000 if south of the 26th parallel (including all Perth metropolitan areas). The 26th parallel marks the border between northern and southern Australia.
  • Value of property must be not exceed $1 million if north of the 26th parallel.
  • $20,000 Building Bonus grant for eligible applicants who build a new home on vacant land, or buy an off-the-plan home that is part of a single-tier development (such as a townhouse) before 31 December 2020.
  • an off-the-plan duty rebate of 75 per cent of the duty paid (capped at $50,000) for those buying a new unit/apartment, entering a pre-construction contract between 23 October 2019 and 23 October 2021.
  • an off-the-plan rebate of 75 per cent of the duty paid (capped at $25,000) for those buying a unit/apartment under construction, entering a contract before December 31, 2020.

South Australia

Australian Capital Territory

  • Pay no stamp duty on new or established properties of any value if you and your partner’s gross (before tax) income is below $160,000. If you have children, the threshold is lifted on a sliding scale, depending on the number of kids you have. The maximum income threshold is $176,650 for households with five or more children.
  • Owner-occupiers exchanging contracts before 30 June 2021 may pay no stamp duty on vacant residential blocks for a single house or off-the-plan units up to $500,000. They may also have their stamp duty reduced by $11,400 for off-the-plan unit purchases between $500,000 and $750,000.

Tasmania

  • Half price discount on stamp duty for purchases of established homes up to $400,000 until 30 June 2022.
  • One-off first home owner grant of $20,000 for new builds or purchases of new builds until 30 June 2022.

Northern Territory

  • Stamp duty discount of up to $18,601 for existing or new homes buyers and those buying land to build a new home, at the value of $650,000 or less.
  • $10,000 first home owner grant for new home constructions or purchases of new builds.
  • Similar to the FHLDS, the HomeBuild Access allows new home buyers or those building their new home to take out a home loan with a deposit of as low as 2 per cent, without paying LMI. Property price caps apply.

9 tips to avoid facing unexpected costs when buying a house

  1. Research, research, research
  2. Work out how much you can borrow
  3. Search for the right home loan
  4. Get pre-approval
  5. Take time to sniff out any issues with a property
  6. Work with professionals
  7. Use your head, not your heart
  8. Negotiate
  9. Don’t panic buy

What will your property sale cost you?

So there you have it.

As the above shows, there are many costs involved when buying a house or unit, some of which you might not even realise you needed to budget for. You can use our home buying and selling calculator to get a better idea of what it might cost you.

Kate Forbes
About Kate Forbes
Kate Forbes is a National Director Property Strategy at Metropole. She has 15 years of investment experience in financial markets in two continents, is qualified in multiple disciplines and is also a chartered financial analyst (CFA).
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