Costs involved in purchasing property
When you purchase a home, being aware of all the costs will help you make informed choices when it comes down to the the type of property you purchase and the type of loan you’d like.
We can categorised costs into three different types; Government Costs, Loan Establishment Costs and Purchasing Costs. We’ve also outlined which of these costs you will need to pay upfront and which are ongoing.
If and how the you need to pay will depend on the following factors:
- the state or territory the property in located in
- the loan purpose
- the type of property type
- Loan type - fixed or variable
- Loan amount
- Purchase Price
A mortgage broker can tell you exactly which costs will apply to you.
Upfront Government Costs
- Registration of Mortgage - The mortgage registration fee is paid when a mortgage is established or discharged (paid out) against a property. The Land Titles office in each state or territory collects the fee for registering the lenders mortgage on the title record for the property.
- Registration of transfer - A small fee to be paid to the State or Territory Government for the transfer the title the property you’ve purchased. This can be completed by a conveyancer or solicitor.
- Stamp Duty - Stamp duty charges are paid to the government when you buy a property. There are a few different types of stamp duty and they can vary from state to state. If you’re a first home buyer, or building a new home, you may qualify for stamp duty concessions. To find out more, visit our Stamp Duty Calculator.
- Land title fee - a small fee charged by state or territory governments to obtain title searches, images of dealings, plans and other documents. This can be completed by a conveyancer or solicitor.
Ongoing Government Costs
- Land tax - Land tax is an annual tax that is payable to the State or Territory Governments. The amount varies by state and territory.
Home financing cost
It’s important to note all these fees vary from lender-to-lender and depending on the type of product you choose, you will not have to pay some of these costs. Additionally, some of these costs can be added to your loan amount so that you do not have to pay upfront. A mortgage broker can negotiate to get some of these fees waived as well.
Upfront Financing Cost
Bank Fees - you will will have to pay some type of upfront, one-off fee to cover a lender's cost of establishing the loan. In some instances you may have to pay one or more of these fees, in other instances you can have these fees waived. Depending on the lender, these fees can be called any of the following
- Application Fee
- Establishment Fee
- Settlement Fee
- Bank legals fees
Lenders Mortgage Insurance (LMI) - LMI protects the lender if the buyer becomes unable to repay the loan. LMI costs vary significantly depending on your Loan-to-Value Ratio (LVR). Read more about Lenders Mortgage Insurance here.
Rate Lock Fee - If you take out a fixed interest rate you may need to pay a fee to your lender to lock in your interest rate.
- Security Guarantee Fee / Additional Security Fee - this initial fee is payable if one or more guarantors are listed on the loan schedule.
Ongoing Financing Cost
Loan Repayments - your loan repayments will commence after your loan settles and can be paid weekly, fortnightly or monthly with most lenders.
- Annual Fees - Some loans and lender charge annual fees depending on the product you select. This is an important fee to be aware of as it may impact how you compare loans.
Purchasing and ownership costs
Upfront Purchasing and ownership costs
- Conveyancer Fee - A fee charged by a conveyancer to process the title of a property between two parties.
- Solicitor Fee - If there are any complexities in transferring the title of a property you may need a solicitor to help and provide legal guidance.
- Building report - A building inspection report will need to be purchased before exchanging contracts to highlight any significant building defects or issues. This will help safeguard the buyer against potential, much larger, costs that could appear down the track.
- Pest Report - Depending on the age and materials of the property, it may also be worth investing in a pest inspection report prior to purchasing a property. Pest and building inspections can cost upwards of $400 and will tell you whether you’re about to inherit tiny termites and or structural damage.
Insurance - there’s plenty of options for insurance and the cover(s) you want to take out will depend on your personal circumstances and property you purchase. The most common types of insurance include;
- Home/Contents Insurance
- Income Protection / Mortgage Insurance
- Loan Insurance
- Building Insurance
- Read more about insurance options on our Home Loans Insurance page.
Telephone & Connection Fee - an upfront cost your telco will charge you for establishing phone and internet connections at a new address.
Utilities Connection Fee - an upfront cost your energy supplier will charge you for establishing energy connections at a new address.
- Moving Costs - Moving costs commonly include removalist or truck hire charges and the purchase of boxes.
Ongoing Fees & Ownership costs
Strata Levies - if you live in a unit or building you will need to pay fees into the strata for the ongoing maintenance of a the building.
- Council Rates - if you live in a house that is not part of a strata you will have to pay a annual council rate