The hidden costs

of buying a home


With housing affordability on the tip of the nation’s collective tongue right now, it’s understandable that many Australians are curious about what’s involved in assessing financial readiness to enter the market.

Entrepreneur and successful budget sentinel Tammy Barton, reminds homeowner hopefuls that there is more than the sale price to be considered.

“Most people are aware that they need to save up some cash, but there’s more to think about than just the deposit” the MyBudget founder warns.

With the current national mean residential dwelling price of $669,700, what are the hidden extras you need to budget for when planning for a new home?

Government fees and stamp duty: $26,000

Stamp duty is a government tax that needs to be paid by purchasers within 30 days of settlement. The rate of stamp duty differs significantly between states. Use an online calculator to check the stamp duty relevant to your new abode and its sale price. This example uses a purchase at the national mean, in the state of NSW.

Legal fees: $1,500 - $3,000

Engaging a legal specialist or conveyancer to take care of the legal particulars of a sale can attract fees at varying rates. Make sure you understand what services are being provided, and what the bill will look like at the end.

Pest and building inspection: $300 - $400

A common pitfall of home ownership is failing to identify issues that prove to be expensive in the long term. It may seem like your wallet never stays closed while buying a property, but the expense of an inspection can save you from later heartache.

Loan application/establishment fee: $600

These may be called a number of different things, so make sure you’re aware of what fees your lender has, and how much they amount to, before you commit.

Lender’s Mortgage Insurance: Could be as high as $20,000

If you have less than a 20 percent deposit, lenders will require you to pay Lender’s Mortgage Insurance (LMI). LMI protects the lender should you stop making your repayments. It does not protect you as the borrower. You can avoid paying LMI by having a minimum of 20 percent saved as a deposit. For the mean house price, that would be almost $134,000.

Removalist/moving van $100 - $2,000

Just when you think it’s all over, there will be a bill for any assistance you need with moving in.

Building insurance: Approximately $100/month

Your home will likely be one of the biggest purchases you ever make. Should the unthinkable happen, you’ll be thankful that you made room in your budget to insure the house.

These are estimated costs and will differ depending on the purchase price and state/territory

While all of these additional expenses can seem daunting, being aware of them ahead of time and having estimates prepared means that they can be built into your budget.

Tammy’s Tips for making home ownership more affordable:

Check for first home buyer schemes in your state
This can reduce the overall cost associated with buying if you haven’t yet owned a home. However, make sure that you understand the eligibility conditions of the scheme to avoid disappointment.

Tammy’s Tips for making home ownership more affordable:

  1. Check for first home buyer schemes in your state
    This can reduce the overall cost associated with buying if you haven’t yet owned a home. However, make sure that you understand the eligibility conditions of the scheme to avoid disappointment.
  2. Create a budget
    It is the only way to take control of your finances, and the earlier you start, the sooner you could be collecting your keys.
  3. Open a dedicated savings account and make regular deposits into it
    Cordoning off the money for a specific purpose decreases the likelihood that you’ll dip into it when other expenses or purchases come up.
  4. Pay off any existing debts, especially high interest loans and credit cards
    Paying money for the privilege of credit is a financial trap for those trying to get ahead. Wherever possible, eliminate the additional expense that high-interest credit arrangements attract, and the money that you save will help you hit your 20 percent deposit.
  5. Cut back on everyday spending, especially habitual spending like store-bought coffee or lunches
    The small things really do count! If you can manage to cut back $15 per week on coffee, $20 on lunches, $30 on drinking and $40 on eating out, you’ll be putting away an extra $5,460 each year.

Struggling to pay for a home deposit? MyBudget can help you get into your own place sooner with a customized budget plan to fast-track your savings.

We analyse your situation and design a plan that achieves your goals.

Until you’ve examined your finances in detail, it’s difficult to determine your exact financial position. At MyBudget, the budget plans we prepare are true long-range money management plans. The plan projects your finances over a 12-month period. So you have a clearer picture of what your future looks like, not just how your budget is week-to-week.

What will you do with your savings? Reduce your mortgage? Invest in shares? Take a holiday? Or simply enjoy the feeling of satisfaction that comes with having savings to fall back on.

Personal budgeting is the only way to truly gain control of your money and your financial future.

The benefits of personal budgeting:

  • Personal budgeting is the only way to gain a thorough understanding of your financial situation.
  • Personal budgeting ensures that you always live within your means, and provides a safety net for inevitable changes in life or when things go wrong.
  • Personal budgeting is the key to accumulating savings and achieving your financial goals.
  • Personal budgeting is one of the most effective methods for paying down debts and avoiding ongoing debt in the future.

Thousands of people come to MyBudget every year seeking our support and advice about managing their money. We can provide structure, support and guidance to help you get on track.

Get expert help from people who care.

MyBudget’s strives to find a solution for every individual. Unlike an App or spreadsheet program, our experts create a plan that’s specially designed to address your needs and priorities.

We also understand that the hardest part about budgeting is sticking to it. That’s why we do the legwork for you. We can manage your budget, pay your bills, save for you, and communicate with your creditors, if necessary.

Succeeding is easier when you have a team of experts supporting you along the way!