Getting the home buying costs on the table

While the property itself is by far and away the biggest line item in your home-buying budget, it’s certainly not the only thing to think about. And it’s important to know what you’re up against before you bid or buy.

Some of the upfront costs can be financed into your home loan – others can’t. Have the conversation early on with your lender about what can and can’t be included, because this will influence how much you need to save on top of your deposit. It could also influence how much you can pay for a property, as you may need money left over in your home loan for things like stamp duty or lenders mortgage insurance (LMI). Just be aware that, if you tack on additional costs to your home loan, then you’ll pay interest on those costs for the term of the loan, and you’ll be able to contribute less of your loan amount to the actual price of the property.

With all this in mind, let’s take a look at the main costs associated with buying a property.

Stamp duty

For most home buyers, stamp duty is an unavoidable truth. This government tax is usually the biggest upfront cost when buying a home – it can run into the tens of thousands of dollars. Most lenders will let you increase your home loan to cover this cost.

The good news? As a first home buyer, you might qualify for an exemption or concession on stamp duty. This can depend on where you live, the type of property you’re buying and how much it costs.

Our stamp duty calculator can give you an idea of what you might have to pay.

Solicitor or conveyancer fees

Most first home buyers get the help of a solicitor or conveyancer when it comes time to prepare documents, sign contracts and complete settlement. Generally, a conveyancer (who is a licensed professional with detailed knowledge of property law, but not a lawyer) is cheaper than a solicitor with specific experience in property law.

The cost of a conveyancer and solicitor can be expensive.  It’s a good idea to shop around to find someone you’re happy with, and you have every right to get a quote upfront.

Pre-purchase inspections

Before you commit to buying a property, you may want to hire a building inspector to check the structural integrity of the property – and a pest inspector to look for evidence of termites or other pests. There may be a pre-auction report you can purchase from the real estate agent, or you can organise your own.

If you want to buy an apartment, you may also want to request a pre-purchase strata report to get the lowdown on body corporate business, like the latest developments on Mr. Garret’s stinky bins and other by-law bugbears.

Lenders mortgage insurance

If you plan to borrow more than 80% of the property value, then you will likely have to pay LMI. While this is not necessarily an upfront cost (as many lenders let you add it on to your home loan), it still pays to be aware of it.

Home insurance

Buying your first home is a big responsibility, and you’ll need to get home insurance but you might consider getting both home and contents insurance

The ‘home’ part provides cover in case something happens to the building itself, such as a roof flying off in a storm. The ‘contents’ part provides cover for your belongings in case, say, an intruder spirits away your gadgets.

The property is your responsibility from the moment of settlement, so you need to have your insurance sorted by this date.

• See what this could cost you at ing.com.au/insurance

Moving costs

If you plan to live in the property you buy and don’t have a bunch of burly mates to give you a hand, don’t forget to factor in the cost of removalists. Many people also pay for a cleaner to come in and do a professional job of cleaning their current home before moving out.

When moving house, you may also have to buy furniture or appliances for the new place. These costs can quickly add up.