Whether you’re new to the home buying scene or have purchased before, 2023 is a whole new ball game. The cost of housing in Australia has increased over the past few years for many reasons. And the steadily increasing RBA cash rate continues to impact home buyers with interest rate increases (and more set to come!). These impact the upfront and ongoing costs of buying a home

In addition to the actual purchase price of your home, you’ll have your known upfront costs. However, there are also hidden costs of buying a home. Many of these you might never have considered. It’s important to know what these are and factor them into your budget.

The hidden costs of buying a home in Australia in 2023

When it comes to buying a home, there are some costs you may not consider when running the numbers. These include:

1. Stamp duty (or transfer tax)
2. Legal fees – including conveyancing costs, pest and building inspections and title searches
3. Government charges – including mortgage registration fee and transfer fee
4. Lender charges – including loan application fees and Lender’s Mortgage Insurance
5. Settlement adjustments
6. Moving costs

Stamp duty, transfer duty or conveyance duty

The major hidden cost of buying a home is stamp duty. Stamp duty (also known as transfer duty or conveyance duty) is essentially a transfer fee paid to the state or territory government where the property is located to transfer ownership of the property into your name.

It can cost tens of thousands of dollars, depending on where you live and whether you are eligible for any grants or concessions. And it is most commonly payable within three months of settlement of the purchase, or you may be subject to additional interest charges.

What stamp duty will you owe?

The calculation of stamp duty to be paid is based on several considerations, including:

• The state or territory where your property is located.
• The value (purchase price) of the property.
• Whether the property is vacant land. If vacant, whether you intend to build a home on it in which to live.
• Whether you are a first home buyer.
• Whether the property is a home in which you will live or an investment property.

Duty calculators

The amount of stamp duty payable varies between states and territories. You can get an idea of the stamp duty you may own by using state-specific online calculators:

• Queensland transfer duty rates and transfer duty estimator
• New South Wales transfer duty calculator
• Australian Capital Territory conveyance duty calculator
• Victoria land transfer duty calculator
• Tasmania property transfer duty calculator
• South Australia stamp duty calculator
• Western Australia transfer duty calculator
• Northern Territory land or property transfer stamp duty calculator

First home buyers

There may first home buyer concessions available in your state or territory which might help you avoid stamp duty. But even if you do meet eligibility criteria, a concession may still depend on the purchase price of your home. If the property is above a purchase amount, a first home buyer will be liable for the same duty as other home buyers.

The below list sets out the various concessions or grants available for first home buyers in Australia’s states and territories.

• Queensland
• New South Wales
• Australian Capital Territory
• Victoria
• Tasmania
• South Australia
• Western Australia
• Northern Territory

Legal fees

Legal fees are part and parcel of purchasing a home. But they may not be something you’ve previously factored into your budget. When you buy a home, a conveyancer or solicitor is engaged to advise on and arrange the various property inspections and title searches that are important in determining whether a property has any risk factors.

These include building and pest inspections, and state and local government title searches (such as to see if the property has previously flooded). There is also a fee for the conveyancer’s or solicitor’s professional services to prepare and lodge all the documents required to complete a property transaction. This includes the contract of sale and transfer of land document.

Fees are commonly paid up front by you as purchaser. Or they may form part of the property settlement from money made available by your home loan provider. Depending on how straightforward a conveyance is, the legal fees – including inspections and title searches – average between $700 to $2,000. This amount will increase if any issues with the property are discovered through the inspections and title searches.

Additional government charges

There may be additional government charges that you will be required to pay. These could include a mortgage registration fee and a transfer fee.

The mortgage registration fee is payable at settlement and allows your lender to register their mortgage over the property. The price of this fee is set by each state or territory. In Queensland it’s currently set at just over $200.

The transfer fee is another government charge that is payable by the purchaser regardless of whether you are a first time home buyer or not. It’s also in addition to any stamp duty you may owe. Again, this is set by the various locations, and is adjusted based on the purchase price of the home. In Queensland the transfer fee would be just over a $1000 for a $400,000 home.

Lender charges

Your lender may charge you fees depending on the type of loan product you are getting. In almost all cases you will be charged a loan application fee – those these are often waived for new customers. And if you don’t meet the requirements of lender, you may also need to acquire Lender’s Mortgage Insurance at an additional cost.

Settlement adjustments

When you buy a property, there are certain land charges that remain with the property. These can include rates, land tax, water charges and even body corporate levies. And because they are often missed in the planning process, tend to be hidden costs of buying a home.

At settlement these charges are adjusted between the buyer and the seller to ensure that both are paying their fair share. As the buyer this means that you’ll be on the hook for some extra hidden costs come settlement day .

Moving costs

Buying a home is very exciting. But moving is a hidden cost of buying a property that buyers often forget to think about. Of course, the cost will depend on where you live (and where you’re moving), how much you have to move, the timing and other factors.

Before you finalise your property purchase, get some quotes from removalists. Once you have an idea about the potential costs you’ll have a better idea of your budget.

Get in touch with experts!

We hope this helped you to understand the hidden costs of buying a home. We are here to help you navigate all aspects of the home loan road, including for first home buyers. Give us a call today at Lending Loop, our expert team are ready to help.