Buying property – the hidden costs

You have your deposit, but what else do you have to pay when buying a house?

It is easy to become confused when saving to purchase a house. As well as a deposit of up to 20 percent, there are other expenses that you must consider before you can start making offers on your dream property.

One of the major costs you will come across on your journey to home ownership is stamp duty.

Stamp duty is charged by state governments in Australia in relation to the transfer of land or property. The amount of stamp duty you pay will change depending on how much you purchase a home for and also which state you live in. Factors such as the purpose of the property (investment or for you to live in), whether or not is your first home purchase and whether you are buying a brand new home also impact the amount of stamp duty you pay.

For example, in NSW, a $500,000 property purchase that will be someone’s primary residence and which is not their first home purchase will incur stamp duty of approximately $17,990. The government will also collect $136.30 each for mortgage registration and transfer fees.*

If you are a first home buyer buying a new home in NSW, you are entitled to a concession of $10,000 and are also exempt from paying stamp duty (on homes up to the value of $650,000). Non-first home buyers receive $5,000 to put towards the cost of stamp duty on a new home in NSW.

Similar concessions apply in Queensland for first home buyers, with a stamp duty exemption and a first home buyer concession. In this state, however, mortgage and transfer fees are steeper and will set you back $1406.

In Tasmania, South Australia and the ACT, stamp duty must be paid regardless of your status as a buyer, while in other states (WA, NT, Vic), concessions apply for first time home buyers.

An online stamp duty calculator with give you a general idea of how much stamp duty you can expect to pay for your state, your status and the type of house you are purchasing.

Other Fees

As well as stamp duty, the other expenses that you can incur as part of the process of buying a house include:

• Solicitor / conveyancing fees (up to $3,000)
• Building / pest inspection fees
• Lender’s Mortgage Insurance (if you have less than 20% deposit)
• Buyer’s agent fees
• Loan application fees
• Valuation fees (your lender may wish to independently value the property)
• Title insurance (to protect you from claims against the title you hold on your property)
• Water / Council rates (if the vendor has paid these in advance you may need to refund them on a pro rata basis)

It is important to meet with a Property Lending Specialist to discuss all the fees involved with buying a property as part of the purchasing process. They will explain exactly how much money you require so that you don’t hit any surprise stumbling blocks that prevent you from achieving your property dreams.

*Figures are subject to change