Purchase Costs for Buying a House | Full Breakdown

The main upfront costs: deposit and stamp duty

The journey to owning a home involves more than just the property price. The most significant upfront financial hurdles are typically the deposit and stamp duty. The deposit is the initial cash you put down, usually 10-20% of the purchase price.

Stamp duty, also known as transfer duty, is a state government tax calculated based on the purchase price and the state/territory where you buy. This cost can easily run into tens of thousands of dollars and must be factored in as a compulsory expense. It is non-negotiable, although first-home buyers may be eligible for significant concessions or exemptions depending on the state and property value.

• Deposit: 10-20% of the property price.

• LMI: Applied if the deposit is less than 20%.

• Stamp duty: Varies significantly by state and property value.

It's vital to have these funds ready before settlement. HeyNest connects you with an independent mortgage broker who helps you calculate these exact costs and structure your finance application to ensure you have adequate reserves, eliminating nasty surprises.

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The necessary professional fees and charges

Beyond the large government taxes, you must budget for a range of essential professional and legal services. These fees ensure the property transaction is legally sound and that the asset you are buying is worth the price and structurally safe. Key costs include:

• Conveyancing/legal fees: Charged by a solicitor or conveyancer to prepare and lodge legal documents, conduct necessary searches and manage the settlement process. This is a crucial service to protect your interests.

• Building and pest inspections: Highly recommended to uncover any structural defects or pest infestations before finalising the purchase. This is a small price to pay for peace of mind.

• Valuation fee: While often covered by the lender, some may require you to pay for an independent valuation of the property to confirm its market worth.

These costs vary based on the service provider and location but are non-negotiable steps in mitigating risk. Understanding all the purchase costs for buying a house is key to an accurate budget. HeyNest's digital platform streamlines the initial consultation, allowing your connected broker to efficiently guide you on the average costs for these services in your specific Australian region.

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Ongoing costs and loan fees to budget for

A comprehensive financial plan must account for costs that kick in once the purchase is complete or during the loan application process. These include fees levied by the lender and other necessary government charges that occur at or immediately after settlement. Consider the following additional purchase costs for buying a house:

• Lender establishment/application fees: Upfront fees charged by the bank to set up the loan. These can sometimes be waived or packaged.

• Settlement dees: Paid to the bank and potentially to the land titles office for the official transfer of ownership.

• Council rates and utilities adjustments: At settlement, you will be required to reimburse the seller for any rates or utility bills they have pre-paid past the settlement date.

• Home and contents insurance: Mandatory insurance required by the lender before settlement to protect their investment against fire and other disasters.

A hidden benefit of using a broker via HeyNest is their ability to compare loan products across multiple lenders, often finding options that have lower or waived application fees. This impartial expert negotiation can significantly reduce your overall upfront burden, ensuring you get the best financial terms for your property purchase.

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Frequently asked questions

Is stamp duty included in the home loan?

No, stamp duty is typically an upfront cash expense that must be paid at settlement and is generally not included in the principal loan amount.

What is Lenders Mortgage Insurance (LMI)?

LMI is an insurance policy that protects the lender (not you) if you default on your loan and is required if your deposit is less than 20%.

What is the difference between a solicitor and a conveyancer?

Both handle the legal transfer of property, but a solicitor is a licensed lawyer who can offer broader legal advice, while a conveyancer specialises solely in property transfer.