Buying a Home in Australia: Every Upfront Cost You Need to Budget For
Key Takeaways
• The deposit is only part of the picture; there are several other upfront costs that can add up to thousands or tens of thousands.
• Stamp duty is usually the highest cost after the deposit, though first home buyers often get concessions or exemptions.
• Other costs include lender's mortgage insurance, conveyancing, inspections, government fees, insurance, and moving.
• As a rough guide, budget around 4% to 5% of the purchase price for costs on top of your deposit, less if first-home-buyer concessions apply.
When people save to buy a home, they tend to focus on one number: the deposit. But the deposit is only the beginning. There is a cluster of other upfront costs, some large, some small, that can catch buyers off guard and blow a carefully planned budget. Knowing them in advance is the difference between a smooth purchase and a nasty surprise.
This guide walks through every upfront cost you are likely to face when buying a home in Australia, grouped to make them easy to plan for. None of them is hidden, exactly, but they are easy to overlook, and together they make a real difference to how much you actually need.
Every purchase is a little different, and the costs depend on your state, your deposit, and the property. If you would like a clear picture of what you will need upfront, chat to Loan Street Finance, with no cost and no pressure.
The Deposit: Your Starting Point
The deposit is the cost everyone knows about, and it is usually the largest single amount you will need.
Your deposit is the share of the purchase price you pay yourself, with the loan covering the rest. It typically ranges from 5% to 20% of the price, and the more you put in, the less you borrow and the more costs like lender's mortgage insurance you can avoid. It is the foundation of your budget, but it is far from the only thing to save for.
Government Costs
The government charges several fees when property changes hands, and these are often the highest costs after the deposit. They usually include:
• Stamp duty, also called transfer duty, is the tax on the property purchase. It is usually the largest of these costs and varies by state, price, and buyer type, though first home buyers often receive concessions or exemptions.
• Transfer and mortgage registration fees, smaller government charges to register the change of ownership and your mortgage, typically a few hundred dollars in total.
Stamp duty is significant enough to plan for carefully, and because the rules differ so much by state and situation, it is worth checking exactly what applies to you.
Lender Costs
Your lender may charge a few fees to set up the loan, and one potentially high cost can apply if your deposit is under 20%. Common lender costs include:
• Lenders mortgage insurance (LMI), charged when your deposit is below 20% of the price, unless it is waived. It protects the lender, not you, and can run from a few thousand to tens of thousands of dollars, though it can often be added to your loan rather than paid upfront, and first-home-buyer schemes, guarantors, and some professions can avoid it altogether.
• Loan application or setup fees, covering the cost of arranging the loan, which some lenders charge, and others waive.
• A property valuation fee, where the lender assesses the property's value, which is sometimes included in the application fee or waived.
These vary a lot between lenders, so they are worth comparing, and a broker can often have some of them waived or reduced.
Professional and Inspection Costs
A handful of professionals help make sure your purchase is sound and legally watertight, and their fees are money well spent. Budget for:
• Conveyancing or legal fees, for the solicitor or conveyancer who handles the contract, searches, and settlement, usually around $1,000 to $2,500.
• A building and pest inspection, to check the property's condition before you commit, usually costs around $400 to $800.
• For apartments, a strata or body corporate report, which reviews the building's finances and records.
Skipping inspections to save a few hundred dollars can cost far more later, so they are rarely worth cutting.
Other Costs to Remember
Finally, there are several smaller costs that are easy to forget but still need a place in your budget. These can include:
• Home and building insurance, which lenders require to be in place from settlement, paid as an upfront premium.
• Settlement adjustments, where you reimburse the seller for council rates, water, and any strata fees they have already paid in advance.
• Moving costs, such as removalists, utility connections, and any immediate furniture or repairs.
Individually, these are modest, but together they add up, so it pays to leave a little room in your budget for them.
One Cost You Usually Do Not Pay
It is worth clearing up one common worry, because it is good news.
Using a mortgage broker typically costs you nothing. Brokers are generally paid a commission by the lender, not a fee by you, so you get expert help comparing loans and managing the process at no direct cost. It is one part of buying where the expertise is free.
A Real-World Example: Adding Up the Extras
Here is a rough illustration, with round figures, of how the upfront costs beyond the deposit can stack up. Treat it as a guide only, since your figures will depend on your state and situation.
Imagine buying a $650,000 home with a 20% deposit of $130,000, so no lender's mortgage insurance applies. On top of that deposit, you might face stamp duty as the largest extra (varying widely by state, and reduced or removed for many first home buyers), plus conveyancing of around $1,800, a building and pest inspection of around $500, government registration fees of a few hundred dollars, and insurance and moving costs of perhaps $1,500 between them.
Excluding stamp duty, which varies by state and buyer type, those extras alone can easily reach $4,000 to $5,000. Add stamp duty for a buyer who does not qualify for a concession, and the total climbs much higher. As a rough rule, many buyers budget around 4% to 5% of the purchase price for upfront costs beyond the deposit, with stamp duty making up the bulk, and far less if first-home-buyer concessions apply.
Tips to Budget With Confidence
A little planning turns these costs from a shock into a line on a spreadsheet.
• Get an estimate of stamp duty for your state and price early, since it is usually the biggest extra.
• Check whether first-home-buyer concessions reduce your stamp duty or LMI.
• Ask lenders which fees apply, and whether any can be waived.
• Set aside a buffer of a few thousand dollars for the smaller costs and surprises.
• Ask a broker to map out your likely upfront costs before you start looking.
The buyers who plan for these costs are the ones who reach settlement without stress.
Where to Read More
It helps to see the full list of costs laid out by an independent source. The Australian Government's MoneySmart service explains the costs of buying a home, from the deposit through to settlement, so you can budget with confidence.
Frequently Asked Questions (FAQs)
What costs do I need to budget for besides the deposit?
Several. The main ones are stamp duty, lender's mortgage insurance if your deposit is under 20%, conveyancing or legal fees, a building and pest inspection, government registration fees, home insurance, and moving costs. Some are large, like stamp duty, and others are modest, but together they can add up to thousands.
How much should I budget for upfront costs in addition to the deposit?
As a rough guide, many buyers set aside around 4% to 5% of the purchase price for costs beyond the deposit, with stamp duty making up most of it. If you qualify for first-home-buyer concessions, it can be considerably less. The exact figure depends on your state, your deposit, and the property.
What is the biggest cost after the deposit?
Usually, stamp duty. For most buyers, it is the highest cost after the deposit, and it varies widely by state, purchase price, and buyer type. Many first home buyers receive concessions or exemptions that reduce or remove it, so it is worth checking what applies to you.
Do first home buyers pay less in upfront costs?
Often, yes. First home buyers may pay reduced or no stamp duty, and can sometimes avoid lender's mortgage insurance through government schemes or a guarantor. These concessions vary by state and scheme, but they can save many thousands of dollars, making them well worth exploring.
Does it cost anything to use a mortgage broker?
Generally not. Mortgage brokers are usually paid a commission by the lender, not a fee by you, so you can get help comparing loans and managing the process at no direct cost. It is one of the few parts of buying a home where the expertise is free.
When do I pay these upfront costs?
Mostly around exchange and settlement. You pay your deposit when contracts are exchanged, and the bulk of the other costs, including stamp duty, conveyancing, government fees, and adjustments, are settled at or around settlement. Inspections are paid earlier, before you commit to buy. Your conveyancer will guide you on timing.
The Bottom Line
Buying a home costs more upfront than just the deposit, and buyers who plan for that avoid nasty surprises. Stamp duty is usually the largest additional cost, followed by costs such as lenders' mortgage insurance, conveyancing, inspections, government fees, insurance, and moving. None are hidden, but they are easy to overlook, and together they can add up to many thousands of dollars.
The good news is that they are all knowable in advance. Get an estimate of your stamp duty, check whether first-home-buyer concessions apply, ask your lender which fees you will face, and leave a buffer for the smaller items. Do that, and you will know exactly what you need before you start looking. If you would like help mapping out your upfront costs, we would be glad to walk you through them.