Hidden Costs of Buying a Home

When most people think about buying a home, they focus on the purchase price and the deposit. But the purchase price is just the starting point. There is a long list of additional costs — some expected, some genuinely surprising — that can add 5-10% or more to the total amount you need to complete your purchase. Failing to budget for these costs is one of the most common mistakes home buyers make.

These additional costs fall into three broad categories: government charges (such as stamp duty and registration fees), professional services (legal, inspection, and valuation fees), and practical costs (moving, connection fees, and immediate property needs). Some are one-off costs payable at or before settlement, while others are ongoing expenses that begin as soon as you take ownership.

For a $700,000 property, total upfront costs beyond the deposit can range from $15,000 for a first home buyer with stamp duty exemptions to $45,000 or more for a non-first-home buyer in a state with high stamp duty rates. Understanding these costs upfront allows you to budget accurately and avoid the stress of unexpected expenses during what is already an intense process.

In this guide, we will walk through every significant cost you should budget for, with current estimates and state-specific details where relevant. Use this as your checklist when planning your purchase budget.

Property transfer taxes go by different names around the world — stamp duty in Australia and the UK, transfer tax or recording fees in the USA, land transfer tax in Canada, and conveyance fees in New Zealand. Regardless of the name, they represent one of the largest upfront costs.

Stamp duty (also called transfer duty) is a state government tax paid by the buyer when purchasing property. It is typically the single largest upfront cost after the deposit itself. The amount depends on the purchase price, the state or territory where the property is located, and whether you are eligible for any concessions.

Stamp duty is calculated on a sliding scale — the more expensive the property, the higher the rate. Each state and territory has its own rate schedule, which means stamp duty on the same-priced property can vary significantly depending on where you buy. It is payable at or shortly after settlement, and cannot be financed as part of your home loan (unlike LMI, which can be capitalised).

In Australia, stamp duty varies by state:

These figures are approximate and change periodically as state governments adjust thresholds and rates. Always use your state revenue office's online calculator for an accurate estimate based on your specific purchase price. Your conveyancer will also calculate the exact amount as part of their settlement process.

Some states, including NSW, have introduced or are considering options to pay stamp duty as an annual land tax instead of a lump sum. This can help with upfront cash flow but may cost more over the long term if you hold the property for many years. Evaluate both options carefully before choosing.

Whether you use a solicitor or a licensed conveyancer, you will need a legal professional to handle the property transfer process. Their role includes reviewing the contract of sale, conducting title and planning searches, liaising with the seller's solicitor, coordinating with your lender, and managing the settlement process through electronic settlement platforms.

Conveyancing or closing costs vary by country — in Australia they range from $1,200 to $3,500, while in the USA closing costs can be 2-5% of the purchase price. The exact amount depends on the complexity of the transaction, the jurisdiction you are buying in, and whether you use a conveyancer or a solicitor (solicitors generally charge more but can also provide legal advice on complex matters). Most conveyancers offer a fixed-fee package that covers the standard process, with additional charges for out-of-scope work.

On top of the conveyancer's professional fees, you will pay disbursements — these are the out-of-pocket costs your conveyancer incurs on your behalf, such as title searches ($20-$50), planning certificates ($50-$100), strata searches for apartments ($200-$350), and registration fees ($150-$400). Disbursements typically add $500 to $1,000 to the total conveyancing bill.

If you are buying at auction, it is essential to have your conveyancer review the contract before auction day. Auction contracts are usually unconditional, meaning once you sign, you are committed. Your conveyancer can identify any unusual clauses, easements, covenants, or planning restrictions that you should be aware of before you bid.

A building and pest inspection is one of the most important pre-purchase checks you can conduct, and it is a cost that should never be skipped to save money. A qualified building inspector will assess the structural integrity of the property, identify any defects or maintenance issues, and flag potential problems that could cost thousands to repair.

A combined building and pest inspection typically costs between $400 and $800 for a standard house, with prices higher for larger or older properties and for multi-storey homes. The inspection usually takes two to three hours, and you will receive a detailed written report within 24 to 48 hours. Most inspectors welcome you attending the inspection so they can walk you through their findings in person.

The pest inspection component specifically looks for evidence of termite activity, both current and historical. Termite damage is one of the most costly issues that can affect a home — many homes in termite-prone regions will be affected by termites at some point. The inspection also checks for other pests such as borers and fungal decay.

If the inspection reveals significant issues, you have several options depending on the terms of your contract. You may be able to negotiate a price reduction, request that the seller complete repairs before settlement, or in some cases withdraw from the contract entirely under a building and pest condition. Your conveyancer can advise on the best course of action based on the findings.

For apartments and townhouses, a strata inspection report is equally important. This is a separate report prepared by reviewing the body corporate records and minutes. It reveals any planned special levies, outstanding building defects, litigation, and the financial health of the strata scheme. Strata reports cost between $200 and $350.

Lenders Mortgage Insurance (LMI) is a significant cost for anyone borrowing more than 80% of the property value. While technically it insures the lender against default, you are the one who pays the premium. LMI costs can range from a few thousand dollars to $30,000 or more, depending on your deposit size and loan amount.

LMI is calculated as a percentage of the loan amount, and the percentage increases as your loan-to-value ratio (LVR) increases. A borrower with a 15% deposit (85% LVR) will pay significantly less LMI than a borrower with a 5% deposit (95% LVR). The LMI premium also scales with the loan amount — larger loans attract higher premiums in absolute dollar terms.

Most borrowers choose to capitalise their LMI, meaning it is added to the loan balance rather than paid upfront. This avoids depleting your savings but means you pay interest on the LMI premium over the entire loan term. On a $15,000 LMI premium capitalised over 30 years at 6%, the total cost including interest is approximately $32,000.

There are several ways to avoid or minimise LMI. Saving a 20% deposit eliminates it entirely. The federal government's Home Guarantee Scheme waives LMI for eligible first home buyers with as little as 5% deposit. Some professions — including doctors, dentists, lawyers, and accountants — qualify for LMI waivers through lender professional packages. And guarantor loans avoid LMI by using a family member's property as additional security.

Read our full guide on deposits and LMI for a detailed breakdown of costs at different deposit levels.

The costs don't stop at settlement. Moving into a new home involves a range of practical expenses that are easy to overlook when you are focused on the legal and financial aspects of the purchase. These costs can easily add $3,000 to $10,000 or more to your total outlay.

Professional removalists typically charge between $500 and $2,500 for a local move, depending on the volume of furniture, the distance, and whether you need packing services. Interstate moves can cost $3,000 to $8,000 or more. If you are moving on a tight budget, hiring a van and enlisting friends can reduce this cost significantly, but factor in the physical effort and the risk of damage to your belongings.

Utility connections are another immediate cost. Electricity, gas, water, internet, and phone connections typically involve establishment fees of $50 to $150 each. Some providers charge higher fees for new connections in newly built or renovated properties. Shop around for the best deals on electricity and gas, as rates vary significantly between providers, especially in deregulated energy markets.

Don't forget to arrange mail redirection through your postal service — a 12-month redirection costs approximately $120 for an entire household. This ensures important mail reaches you while you update your address across banks, government agencies, subscriptions, and other services.

Owning a home introduces a range of ongoing costs that renters do not face. Being aware of these costs before you buy ensures that your budget accounts for the true total cost of home ownership, not just the mortgage repayment.

Property taxes (called council rates in Australia/NZ, council tax in the UK, or property taxes in the USA/Canada) are a mandatory local government charge based on the value of your property. They fund local services such as waste collection, road maintenance, libraries, and parks. Council rates vary widely depending on your local government area but typically range from $1,200 to $3,000 per year for a standard residential property. They are usually payable quarterly.

Water rates include a fixed service charge plus usage charges. The fixed charge is typically $200 to $400 per year, with usage charges on top. Strata levies apply to apartments and townhouses and cover building insurance, maintenance of common areas, a sinking fund for future major works, and building management fees. Strata levies can range from $500 to $5,000 or more per quarter, depending on the building's facilities and age.

• Building and contents insurance: $1,500-$3,000/year (required by your lender for building cover)
• Council rates: $1,200-$3,000/year depending on your local government area
• Water rates: $400-$800/year for a typical household
• Strata levies (if applicable): $2,000-$20,000/year depending on building size and facilities
• Home maintenance: Budget 1-2% of the property value per year for ongoing upkeep
• Land tax (if not your primary residence): Varies by state, can be significant for investors

Home maintenance is the cost that catches many new homeowners off guard. As a renter, your landlord covers repairs and maintenance. As an owner, everything from a leaking tap to a new roof is your responsibility. Financial planners recommend budgeting 1-2% of the property's value per year for maintenance — that is $7,000 to $14,000 per year on a $700,000 home. While you may not spend this amount every year, big-ticket items like roof replacements, plumbing overhauls, and painting can cost tens of thousands when they arise.

With so many costs to account for, creating a comprehensive purchase budget is essential. The good news is that once you are aware of all the potential expenses, budgeting for them is straightforward — it just requires discipline and some conservative assumptions.

Start with the purchase price and work outward. Add your estimated stamp duty (use your state revenue office's online calculator for an accurate figure), conveyancing fees ($2,000-$3,000), building and pest inspection ($500-$800), and any LMI if applicable. This gives you the total amount you need for settlement. Then add your moving and setup costs ($3,000-$10,000) and a three-month emergency buffer. The grand total is your true "ready to buy" number.

For ongoing costs, add up your estimated mortgage repayments, council rates, water rates, insurance, strata levies (if applicable), and a maintenance allowance. Compare this total to your current rent to understand how your monthly housing costs will change. Many first home buyers are surprised to find that the total cost of home ownership is 20-40% higher than rent on an equivalent property, once all these additional costs are included.

Use our borrowing power calculator to model your repayments, then add the ongoing costs outlined above to get a realistic picture of your total monthly outgoings as a homeowner.

New to buying? Start with our complete first home buyer guide