5 Essential Costs New Home Buyers Face Before Getting the Keys

1.      The Deposit: First Challenge for New Home Buyers

Let’s start with the biggie—your deposit. This is typically your largest upfront expense. Most lenders want at least 20% of the property’s value to avoid Lenders Mortgage Insurance (LMI). So for a $750,000 home, you’re looking at $150,000 you’ll need to have saved!

Look, I know that sounds like a lot. While a 20% deposit is ideal, many new home buyers purchase with less and pay LMI. It’s a personal financial decision that depends on your circumstances and how close you are to the deposit amount of the are your buying in.

**My Tip –  I’d say getting into the property market with whatever help you can get should be a priority. Let the property do the heavy lifting by paying you back in equity quicker than you could save. Plus, the LMI gets rolled into your loan payments—it’s not something you have to pay up front.

2.      Stamp Duty: The Tax New Home Buyers Often Forget

Now, stamp duty—this is a state government tax on property transactions that varies depending on:

• Which state or territory you’re buying in
• How much your property is worth
• Whether you qualify for first home buyer concessions or exemptions
• If it’s an investment property or your primary residence

Just to give you an idea, in New South Wales, stamp duty on a $750,000 property for a non-first home buyer would set you back about $29,000, while in Queensland it would be around $20,000.

**My tip – Use an online stamp duty calculator specific to your state to get an accurate estimate for your situation, then add this into your cost on top of the purchase price.

3.      Legal Stuff: Conveyancing Fees New Home Buyers Need to Budget For

Conveyancing is just a fancy word for the legal process of transferring property ownership. Technically, you could do this yourself, but honestly—don’t. Most new home buyers hire a solicitor or conveyancer to handle all the legal paperwork and searches.

This will usually cost you between $800-$2,500 depending on complexity and location, but worth every cent.

These professionals will:

• Go through your contract of sale with a fine-tooth comb
• Run all the necessary property and title searches
• Make sure all conditions are met
• Get your settlement documents ready
• Attend settlement on your behalf (so you don’t have to!)

**My Tip – Get a recommendation for a good conveyancer through your real estate agent or friends/professional circle. Never do your own conveyancing or contract work. I’m experienced and I don’t even do it myself!

4.      Inspections: A Must for New Home Buyers

Building and pest inspections help identify structural issues, maintenance concerns, and pest problems before you commit to buying.

You’re looking at around $300-$800 for a building inspection and $200-$400 for a pest inspection.

Many new home buyers combine these for a discount, with a total cost of approximately $500-$1,000.

**My Tip – Let me be clear: Never skip these inspections to save a few hundred dollars, particularly if you are inexperienced in buying property. Discovering major structural problems or termite damage after you’ve bought the place could cost you tens of thousands to fix! Plus anything you’re inspections do find, could be a good bargaining chip for a price reduction if repairable.

5.      Other Initial Fees New Home Buyers Should Know About

There are several other smaller fees you’ll need to pay:

• Mortgage Registration Fee: This government fee covers registering your mortgage on the title of your property. Expect to pay around $100-$200 depending on your state.
• Transfer Fee: This goes to the state government for transferring the property title from the seller to you. It varies by state and property value, typically $100-$1,400.
• Loan Application Fee: Most lenders charge to set up your home loan, usually $0-$800 depending on the lender and loan type. Some lenders will waive this fee as part of promotional offers, so shop around!
• Mortgage Broker Fee: If you use a broker, they typically get paid by the lender rather than charging you directly. But always clarify this upfront to avoid surprises.

Moving-In Costs: What New Home Buyers Need After Purchase

1.      Moving Expenses

The cost of physically relocating your stuff varies widely based on:

• How far you’re moving
• How much stuff you have
• Whether you hire professionals or convince your friends to help (pizza and beer bribes included!)
• If you need temporary storage

You’re looking at anywhere from $300 to $3,000+ depending on these factors.

**My tip – Get quotes from multiple moving companies and consider mid-week moves which can be cheaper than weekends. Sometimes you have to weigh up the time and effort against the cost factor. I think a removalist is worth the money if you have a house full of furniture and whitegoods.

2.      Insurance Requirements for New Home Buyers

Most lenders require you to have building insurance from the day of signing your mortgage documents and at latest, settlement. Honestly, you should consider contents insurance too.

Budget around $1,200-$3,500 annually for combined building and contents insurance for a $750,000 property (depending on what area you live in of course)

3.      Other Move-In Costs

Don’t forget about:

• Connection Fees: Setting up utilities like electricity, gas, water, internet, and phone services often costs $50-$200 per service.
• Immediate Repairs or Renovations: Even “move-in ready” homes might need some work to make them yours.

**My Tip – Don’t leave your utility connections to the last minute. These can sometimes take time (weeks in some cases) for the connection process to be completed.

Ongoing Ownership Costs New Home Buyers Should Prepare For

Council and Water Rates

As a property owner, you’ll pay ongoing rates to local councils for services and infrastructure.

This typically costs $2,500-$4,000 annually, charged half yearly, depending on location and property value.

Strata Fees (if applicable)

If you’re buying an apartment, townhouse, or villa in a strata scheme, you’ll need to pay quarterly strata levies.

These can range from $500-$2,500+ quarterly depending on the building and its facilities.

Home Loan Fees

Some loans come with ongoing fees like:

• Annual package fees ($300-$400)
• Monthly account keeping fees ($5-$20)
• Redraw fees
• Early repayment fees

Maintenance and Repairs: The Reality for New Home Buyers

As a homeowner, you’re responsible for all maintenance and repairs. Financial experts recommend budgeting 1-4% of your home’s value annually for maintenance, depending on the property’s age and condition. For a $750,000 home, that’s $7,500-$30,000 per year.

**My Tip – set up an account (maybe an offset on your mortgage) where you put a budget aside each week/fortnight as a maintenance fund. This way if any emergency repairs need to be done, you have some funds to go towards these and if you want to upgrade anything around the house, you also have the funds available.

The Surprise Expenses Many New Home Buyers Don’t Expect

Beyond the obvious costs, new homeowners are often surprised by:

1. Higher utility bills than they paid while renting, especially for larger properties
2. New furniture and appliance needs for a larger space or to replace items that didn’t fit
3. Garden and outdoor maintenance equipment and services
4. Emergency repairs like hot water system failures or roof leaks
5. Property depreciation expenses for investment properties

Creating Your Budget: Essential Planning for New Home Buyers

To avoid being caught off-guard, create a comprehensive budget that includes:

1. Upfront costs: All the initial expenses I’ve just walked through
2. Settlement period buffer: Extra funds for unexpected issues that arise between signing the contract and settlement
3. First three months’ expenses: A cushion for settling in and handling immediate needs
4. Emergency fund: At least three months of mortgage payments set aside for unforeseen circumstances

Sample Cost Breakdown for a $750,000 Property

Final Thoughts for New Home Buyers

Look, buying a home involves way more costs than just the purchase price and mortgage payments. By understanding and planning for these expenses before you start house hunting, you’ll approach the process with confidence and avoid nasty financial surprises.

Remember that these costs can vary based on where you’re buying, the type of property, and your personal situation. It’s always smart to chat with financial professionals, research specific costs in your target area, and get quotes for services before finalizing your budget or becoming a new home buyer!

Trust me, as someone who’s been through this process, being prepared for these additional costs makes the whole journey of becoming a homeowner so much smoother and more enjoyable. Happy house hunting!