The cost of the home itself is only a subset of the total costs associated with homeownership. There are a lot of other costs that need to be factored into your budget, which can add more than 5% to the total cost.

There are many factors to consider when budgeting for a home, and the asking price is just the beginning. The Multi Dynamic team has set out what you can expect to pay for the additional costs of buying a house to help you budget. Be sure to compare quotes for the services you need and avoid paying unnecessary fees wherever possible. Don’t let the extra expenses come as a frustrating surprise.

1. Deposit

Put down within 24 hours of the seller accepting your offer, the deposit is credited in full towards the sale of the house. The amount can vary depending on where you’re buying.  A deposit is likely to be between 5% and 20%. While paying this amount before you can get a mortgage or start living in a house is unquestionably a significant financial expense, it does provide one benefit. Paying a deposit reduces your total amount, and you have less to pay interest on.

2. Lenders Mortgage Insurance (LMI)

As the name suggests, LMI protects the lenders in the event that you are unable to meet the mortgage repayments. The fee can be paid as a one-off sum or added to your loan. LMI is useful as it enables lenders to give a higher percentage loan (over and above the typical residential loan of 80%), reducing the amount of money that a buyer needs to join the property market. It may be a better option for buyers than continuing to save for a few more years and/or paying higher interest rates. For NSW, LMI and LMI’s stamp duty will be around $5,000 to $10,000.

3. Loan application fees and Legal fees

When you buy a home, you get into a legal contract. You must not only engage in a legal contract with the seller, but you must also notify the local council of the transaction. Loan application fees (also called establishment fees) are one-off payments and cover all application paperwork. Expect to spend approximately $1,000, depending on the lender’s policy. It is important to keep in mind the fees for legal work and seek a cost estimate prior to engaging in any representation.

4. Valuation fees

When purchasing a home, some lenders will want to evaluate the property to make sure they are not lending you more than the value of the property. Generally, there is a $300-$500 fee associated with property valuations, but at Multi Dynamic, we offer free property appraisal from our real estate experts, with years of industry experience.

5. Ongoing home loan fees

also known as service or administrative fees, these are charged monthly or yearly for the administration of your home loan. The amount will vary depending on the lender and the type of loan you have but it’s ranging from $5 to $500. 

6. Conveyancing Costs and Disbursements

The process of conveyancing simply means the transfer of the property into your name, but it has to be done by a professional - a conveyancer. These fees are approximately $800 to $2,500. On top of that, you will have to pay for disbursements - fees that a conveyancer will pay on your behalf, ex. Mortgage registration or inspection fees.

7. Stamp duty 

Stamp Duty is a tax applicable to certain property deals in Australia. Stamp duty costs will depend on the state, property value, and some other factors, like the type of the property, the nature and/or purpose of the property being purchased, such as whether the purchaser is a first homeowner. Stamp duty is charged in thresholds. The higher a property’s value is, the more a buyer will have to pay in stamp duty. But, if you are a first home buyer you might be eligible for exemption or a concession.

8. Mortgage Registration Fee 

Mortgage registration and transfer fees are the costs associated with formally registering a mortgage and transferring the property ownership upon buying a home. In NSW, it is estimated that the mortgage registration fee is $146.40.

9. Home loan interest rates 

During the Australian housing boom, the home loan interest rates remained ultra-low - around 2-3%, and some lenders can offer even lower rates. 

10. Survey report

Before you purchase a property, it's a good idea to have an expert assess its structure and condition. While a survey does involve an initial fee, which adds to the cost of purchasing a property, it does provide reassurance that your future home is in excellent condition and will assist you in avoiding unforeseen problems and costs at a later date. In New South Wales survey reports are not mandatory. The approximate cost is up to $1,000.

11. Building, Pest and Strata Inspections

Pest and Building inspections ensure the structural integrity of your home and ensure that there are no hidden defects or pest infestations that may severely impact the value of your home.

• A building inspection costs $300–$700 

• A pest inspection may cost around $200–$350 

• A strata inspection only applies to the units or complexes. You do not need it if you’re buying a house. Approximate cost: $200–$350.

12. Council Rates

Local government authorities levy annual taxes, which are called council rates. The basis on which these charges can be calculated varies from state to state but is commonly based in some way on the value of the property. Ingleburn is under Campbelltown city council. Council rates are paid quarterly or per year and aimed to support the community you live in. Minimal Residential rates for 2020/2021 for Campbelltown city council are $984.

13. Home Building Insurance

It is a vitally important cost that you should have in place as soon as (or slightly before) settlement occurs. Some lenders won’t approve your home loan without home building & contents insurance. The quotes will largely depend on the insurance company, but the approximate cost in NSW is $130-$200 per month.

14. Removalists

Moving can be a daunting task so you may want to consider removalists. Removals costs to hire a professional removals firm can range from $110 to $6,000, depending on the size of your house and how far you are moving. 

15. Electricity Reconnection 

Sometimes, the electricity is disconnected when the ownership of the property ends or changes. The reconnection will either cost you nothing or $12-40 in NSW according to EnegryAustralia.com. 

You're not alone if you think of purchasing a home as a one-time expense (the down payment and closing costs). The true cost of homeownership is the sum of your mortgage and all these additional costs. Some of them will become typical monthly expenses, while others may show up unannounced. By planning for these hidden costs when you’re buying a home, you can save yourself the unpleasant surprise of unexpected bills.