The hidden extra costs when buying a home

Why you need to save more than a deposit.

We all know buying a home is expensive, but there are lots of costs on top of your deposit you need to consider.

From hiring removalists, bond cleaning, building and pest inspections to conveyancing – the cost of buying and maintaining a home can really add up. 

We’ve joined forces with The Search People to build a list of what the most common expenses are so you can factor them in to your home-buying budget:

Conveyancing and legal fees

In Queensland, a solicitor who specialises in conveyancing provides advice and information about buying a property, transferring ownership, and assists throughout the selling process. You can expect to pay between $500 - $1400 for a conveyancing professional to oversee the legal due-diligence, settlement, and official transfer of property ownership. Always remember to ask your solicitor to outline the full process and provide an estimate of all legal fees and associated costs.  

Stamp duty and transfer fees

The Queensland Government allows you to claim a first home concession for stamp duty and transfer fees if you meet certain requirements. However, there are many exemptions to this rule so make sure you’ve done your research to figure out how it will impact the price of property you’re looking for. Stamp duty and transfer costs can cost tens of thousands of dollars depending on the property value, location, purchase reason and property type.

Mortgage registration 

This is an essential cost to register the security for your home loan and is paid when a home loan is established or discharged. In Queensland, the registration cost is $195, as at 17 November 2020. This cost is subject to change, so make sure you check here for accurate information. 

Building and pest inspection 

No one wants to move into a home and discover it has termites, or a structural fault. Make sure you do your due diligence and get a quality building and pest inspection conducted. While it can cost approximately $500, it’s worth it for peace of mind.

Loan application or establishment fees 

While this is a once-off fee, it will cover the cost of documenting the loan, preparing and organising the mortgage, booking and attending settlements and verifying documents. Make sure to ask your lender if they can reduce this or waive it – most banks will offer special promotions or incentives for first home buyers and in this competitive market it’s always important to ask!

Valuation fees 

It’s important your lender can be confident the amount you’re borrowing and the size of your deposit balances out, which is why they may charge you a valuation fee to perform a check on the property. This could vary from $100 - $300, but again make sure to ask if your lender can waive this. 

Lenders mortgage insurance 

Most first home buyers with less than a 20% deposit saved will need to take out lenders mortgage insurance (LMI). The cost of this depends on the value of your loan and how much of a deposit you have, so could vary from a few thousand dollars to tens of thousands. Use free calculators to work out how much LMI you may need to pay.

Removal costs 

The cost of moving can vary depending on how many belongings you need to move, how far you’re relocating and how much physical labour you need. Make sure to seek plenty of quotes but also choose a mover that is reputable and reliable. 

We know these additional costs may seem daunting, but owning your first home is still an achievable goal. You just need to make sure you’ve got your budget sorted, savings habits down pat and avoid these nine common mistakes

For more information about buying your first home, visit RACQ’s Financial Wellbeing Hub.

For more information about The Search People, Australia’s most cost effective property information ordering platform, visit their website.

The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.