While the price of the property itself is significant, buyers need to be aware of several other costs that come along with the purchase of a property. While some of the costs are clear and easy to understand, some are hidden and can easily be overlooked.

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Stamp Duty

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In most cases, stamp duty is going to be the largest additional cost that comes with the purchase of a home.

Stamp duty is a transaction tax that the buyer pays on the purchase of a property. It is a state-based tax, and the rates vary between the different states and territories. Stamp duty can also vary depending on the purchase price of the home.

Generally, stamp duty will range between four and five per cent of the purchase price; you will find the different rates on the respective state government websites.

• ACT Revenue Office duties
• NSW Revenue taxes and duties
• NT Government stamp duty
• QLD Treasury transfer duty
• Revenue SA stamp duty
• State Revenue Office Tasmania duties
• State Revenue Office Victoria land transfer duty
• WA State Revenue duties

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In most states, first home buyers are not required to pay stamp duty on property purchases up to a certain threshold. The threshold and qualification requirements vary from state to state; however, first home buyers are required to move into the property as an owner-occupier and live in it for a period of at least 12 months.

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Conveyancing/Settlement and legal fees

When you purchase a property, you will be required to prepare the sales contract, mortgage documents and any other legal documents.

Most people choose to engage a conveyancer, settlement agent or lawyer to do it on their behalf. It is possible to do the paperwork yourself, however, professionals can save you a lot of time and ensure there are no mistakes.

On average, you can expect to pay around $1,000 to $1,500 for settlement costs.

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Building and Pest inspections

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Many home buyers choose to buy a property subject to a satisfactory building and pest inspection. This gives the home buyer the peace of mind that the property is in good condition, and they will not be faced with any nasty surprises when they take possession.

A building and pest inspection is conducted by a professional inspector and will cost around $400 to $500.

If you are looking to buy a property at auction, it is highly advisable to order a prior building and pest inspection, as an auction is an unconditional sale. If you are purchasing via private treaty with a cooling-off period, then the building and pest inspection needs to be done before it expires.

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Loan application fee

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When you apply to a lender for a loan to buy a property, there is often an application fee that comes with it.

The loan application fee is put in place to cover the loan setup and establishment costs incurred by the lender. These costs can be included in the overall mortgage.

The loan application fee will depend on the type of loan you are taking out, and also on your own personal situation.

Generally, loan application fees will be around $500 to $800, but there are cases where they will amount to more than $1,000.

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Mortgage registration & transfer fees

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When you take out a mortgage, there are costs that come with the formal registration of the mortgage, and also with the transfer of ownership.

Mortgage registration fees vary from state to state, but are normally around $100 to $200. Transfer fees can be more expensive  in some states, such as South Australia.
Calculate your transfer fees here.

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Lender’s Mortgage Insurance

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Lender’s Mortgage Insurance (LMI) is only applicable to people looking to take out a mortgage without a 20% deposit.

Lender’s Mortgage Insurance is put in place to protect the lender in the event of a homeowner defaulting on their loan repayments.

The costs of Lender’s Mortgage Insurance can be significant, and normally, they are upward of $5,000, however, this is not applicable to all home buyers.

The rate of Lender’s Mortgage Insurance is different for  owner-occupiers and investors, and it is based on the risk the borrower places on the lender.

It is possible to capitalize LMI (include it in the total loan amount), as long as the LVR does not exceed 95% for owner-occupiers, and 90% for investors.

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