While the price of the property itself is significant, buyers also need to allow for several other costs that come with purchasing a home or investment property. Some are obvious. Others are easy to overlook until settlement is close.

The purchase price is only one part of the total amount you need. Buyers may also need to budget for stamp duty, conveyancing, inspections, lender fees, mortgage registration, transfer fees, lender’s mortgage insurance, settlement adjustments and moving costs.

This matters because a property can look affordable based on the advertised price, but become tight once all transaction costs are included. The safest approach is to calculate your total cash required before signing, not after your offer is accepted.

Do not budget only for the deposit. Your true upfront cost is the deposit plus government charges, lender costs, legal costs, inspections, settlement adjustments and any insurance or moving costs that apply.

Stamp duty

In most cases, stamp duty is going to be the largest additional cost that comes with the purchase of a home.

Stamp duty, also known as transfer duty in some states, is a transaction tax that the buyer pays on the purchase of a property. It is a state-based tax, and the rates vary between the different states and territories. Stamp duty can also vary depending on the purchase price of the home, whether the property is owner-occupied or investment, and whether any concession applies.

Generally, stamp duty can sit around four to five per cent of the purchase price, although the actual amount depends on the state or territory and the buyer’s circumstances. Buyers should always check the relevant state government calculator rather than relying on a rough estimate.

In many states and territories, eligible first home buyers may receive a stamp duty exemption or concession up to certain property value thresholds. The threshold and qualification requirements vary from state to state. First home buyers are often required to move into the property as an owner-occupier and live in it for a minimum period.

The gotcha is eligibility. A buyer may assume they qualify because they are a first home buyer, but the property price, property type, residency rules, previous ownership history or occupancy requirement may affect the outcome.

Conveyancing, settlement and legal fees

When you purchase a property, you will need to deal with the contract, transfer documents, mortgage documents, searches, settlement figures and other legal or administrative documents.

Most people choose to engage a conveyancer, settlement agent or lawyer to do it on their behalf. It is possible to do some paperwork yourself in certain situations, but professionals can save time, reduce mistakes and help identify contract or title issues before they become expensive.

On average, you can expect to pay around $1,000 to $1,500 for conveyancing or settlement costs, although the final amount depends on the state, property type, complexity and whether additional searches or legal work are required.

A cheap quote is not always the cheapest outcome. If the service does not include proper contract review, clear communication, search review or settlement support, the buyer may end up carrying more risk.

Building and pest inspections

Many home buyers choose to buy a property subject to a satisfactory building and pest inspection. This gives the home buyer peace of mind that the property is in reasonable condition and that they will not be faced with major surprises when they take possession.

A building and pest inspection is conducted by a professional inspector and will often cost around $400 to $500, depending on the property and location. Larger homes, older homes, regional properties or urgent inspections may cost more.

If you are looking to buy a property at auction, it is highly advisable to order a building and pest inspection before auction day, as an auction is usually an unconditional sale. If you are purchasing by private treaty with a cooling-off period, then the building and pest inspection should be completed before the cooling-off period expires or before any relevant condition deadline.

For apartments, townhouses or villas, a strata or body corporate report may be just as important as a building inspection. A property can look fine internally while the building has water ingress, cladding issues, special levies, low capital works funds or unresolved defects.

Loan application fee

When you apply to a lender for a loan to buy a property, there may be an application fee that comes with it.

The loan application fee is put in place to cover the loan setup and establishment costs incurred by the lender. These costs can sometimes be included in the overall mortgage, although that means you are effectively borrowing the fee and paying interest on it over time.

The loan application fee will depend on the type of loan you are taking out and also on your personal situation. Generally, loan application fees may be around $500 to $800, but there are cases where they can be more than $1,000.

Some lenders waive application or package fees as part of a promotion or product structure, but buyers should check the full loan cost rather than focusing only on one waived fee.

Mortgage registration and transfer fees

When you take out a mortgage, there are costs that come with the formal registration of the mortgage and also with the transfer of ownership.

Mortgage registration fees vary from state to state, but are commonly around $100 to $200. Transfer fees can be more expensive in some states and may vary depending on the property value or title system.

These fees are separate from stamp duty and are usually government or land titles charges. They are smaller than stamp duty, but they still need to be included in your funds to complete.

Lender’s mortgage insurance

Lender’s mortgage insurance, commonly called LMI, is generally relevant to people looking to take out a mortgage without a 20 percent deposit.

Lender’s mortgage insurance is put in place to protect the lender in the event of a borrower defaulting on their loan repayments. This is a common misunderstanding: LMI protects the lender, not the buyer.

The costs of lender’s mortgage insurance can be significant and are often upward of $5,000, although the amount varies widely. It depends on the loan size, deposit, loan-to-value ratio, borrower type, property type and lender policy.

The rate of lender’s mortgage insurance can be different for owner-occupiers and investors, and it is based on the risk the borrower places on the lender.

It may be possible to capitalise LMI, meaning it is included in the total loan amount, as long as the lender’s maximum loan-to-value ratio rules are met. For example, some lenders may allow this where the final LVR does not exceed 95 percent for owner-occupiers or 90 percent for investors, but policies vary.

Gotcha:

Adding LMI to the loan can reduce the cash needed upfront, but it increases the loan balance. That means repayments may be higher and you may pay interest on the LMI amount over the life of the loan.

Settlement adjustments

Settlement adjustments are easy to miss because they are usually calculated closer to settlement. They divide certain property costs between the buyer and seller based on the settlement date.

These may include council rates, water rates, strata levies, body corporate levies, land tax or other outgoings depending on the contract and state or territory.

For example, if the seller has already paid council rates for a period that extends beyond settlement, the buyer may need to reimburse the seller for the buyer’s share from settlement onward. This can increase the final funds required to complete.

Insurance costs

Insurance can also be part of the buying cost. The timing and type of insurance depend on the property, the state or territory and the contract terms.

For a freestanding house, buyers may need building insurance from exchange or from another date required under the contract or by the lender. For strata properties, the building is often insured by the owners corporation or body corporate, but buyers may still want contents insurance, landlord insurance or other cover.

Do not leave insurance until the last minute. Lenders may require evidence of insurance before settlement, and delays can create unnecessary pressure.

Moving and connection costs

Moving costs are not part of the legal settlement, but they are still real cash costs for buyers. These may include removalists, cleaners, utility connections, internet setup, locksmiths, minor repairs, furniture and immediate maintenance.

First home buyers often underestimate this category because the focus is on getting the loan approved and reaching settlement. Keep a buffer so you are not financially stretched the moment you receive the keys.

Quick buyer checklist

• Stamp duty or transfer duty: Check the state government calculator and confirm whether any concession applies.
• Conveyancing or legal fees: Budget for contract review, searches, settlement work and transfer documents.
• Inspections and reports: Allow for building, pest, strata or other specialist reports before signing or before deadlines expire.
• Lender fees: Check application fees, package fees, valuation fees and other loan establishment costs.
• Government registration fees: Allow for mortgage registration and transfer fees.
• LMI: Confirm whether lender’s mortgage insurance applies and whether it will be paid upfront or capitalised.
• Settlement adjustments: Keep a buffer for council, water, strata, body corporate or other adjustments.
• Insurance and moving costs: Budget for cover, removals, utilities, locksmiths and immediate property setup.

Check your numbers in Loan Summary

Before making an offer or signing a contract, check the numbers in Domium’s Loan Summary. You can see your purchase costs and fees, deposit, estimated LMI and required loan amount in one place.

It is free, self-serve and takes under a minute. Domium logic also flags when you may be putting too little down and spending too much on LMI, so you can make a clearer next-step decision before the pressure starts.

Final takeaway

The purchase price is not the full cost of buying property. Buyers need to budget for taxes, legal work, inspections, lender charges, registration fees, insurance, settlement adjustments and moving costs.

The exact costs depend on the state or territory, property type, purchase price, loan structure and buyer eligibility for concessions. A broker, conveyancer or solicitor can help estimate the likely costs before you sign.

The safest move is to calculate your total funds to complete early, then keep a buffer. Settlement is not the time to discover that your budget only covered the deposit.