Buying a home is one of the biggest financial decisions most people will ever make. The deposit gets all the attention, but it’s the costs lurking behind the purchase price that catch many buyers off guard.
From legal fees to government charges, the expenses that sit outside the headline figure can add tens of thousands of dollars to a property transaction. Knowing what to expect before you start house hunting puts you in a much stronger position to budget accurately and avoid any unwelcome surprises at settlement.
The Deposit Is Just the Beginning
Most buyers spend months, sometimes years, saving for a deposit. It’s the number everyone fixates on, and for good reason. In most Australian states, you’ll need somewhere between 5% and 20% of the purchase price set aside before a lender will take your application seriously.
But here’s where things get tricky. The deposit is only one piece of a much larger financial puzzle. Once you factor in stamp duty, legal costs, inspections, insurance, and lender fees, the total upfront spend can be 3% to 5% higher than the purchase price alone. On a $700,000 property, that’s an extra $21,000 to $35,000 that needs to come from somewhere.
The buyers who navigate this smoothly are the ones who build a complete cost picture early. Those who don’t often find themselves scrambling at the last minute or, worse, pulling out of a purchase because the numbers no longer work.
Stamp Duty: The Big One
Stamp duty is typically the single largest additional cost in any property purchase. It’s a state government tax calculated as a percentage of the property’s value, and the rates vary depending on where you’re buying.
In New South Wales, for example, stamp duty on a $750,000 property sits at roughly $29,000. In Victoria, the same property would attract around $31,000. These are significant sums, and unlike many other costs, stamp duty is non-negotiable and due at or before settlement.
First-home buyers may qualify for concessions or exemptions depending on the state and the property price. It’s worth checking the specific thresholds that apply in your area, as they can save you thousands. But even with concessions, stamp duty remains one of the biggest line items in any property budget.
Legal and Conveyancing Costs
Every property transaction requires legal work. Whether you engage a solicitor or a licensed conveyancer, someone needs to handle the contract review, title searches, settlement coordination, and the mountain of paperwork that comes with transferring property ownership.
This is one area where it genuinely pays to understand what you’re being charged for. Many buyers simply accept the first quote they receive without comparing or asking what’s included. The reality is that conveyancer fees can vary significantly depending on the provider, the complexity of the transaction, and the state you’re purchasing in. Getting a clear breakdown upfront helps you avoid unexpected charges and ensures you’re comparing like for like.
A standard conveyancing package typically covers contract review, title and planning searches, liaison with the lender and the seller’s legal team, and attendance at settlement. Some providers bundle disbursements (the third-party search costs) into their quote, while others list them separately. Always ask for the total cost, not just the professional fee, so you know exactly what you’re paying.
Skipping proper legal representation to save a few hundred dollars is one of the riskiest moves a buyer can make. A good conveyancer catches issues in the contract, identifies planning restrictions, and protects your interests throughout the process. The cost is modest relative to the value of the asset you’re purchasing.
Building and Pest Inspections
A building and pest inspection is one of the smartest investments you can make before committing to a property. It typically costs between $400 and $700, depending on the size and location of the home. For that price, you get a detailed report on the structural condition of the property and any pest activity, particularly termites.
What the inspection reveals can have a huge impact on your decision. Major structural defects or active termite damage might be grounds for renegotiating the price, requesting repairs, or walking away from the deal entirely. Without an inspection, you’re essentially buying blind.
Some buyers skip this step in hot markets where competition is fierce and offers need to move fast. That’s understandable, but it’s a gamble. The cost of an inspection is insignificant compared to the cost of discovering serious problems after you’ve already settled.
Lender Fees and Mortgage Costs
If you’re borrowing to buy, your lender will add its own layer of costs to the transaction. These can include loan application fees, valuation fees, and ongoing service charges. Some lenders waive certain fees as part of promotional offers, but it’s important to read the fine print.
One fee that catches many buyers by surprise is Lenders Mortgage Insurance (LMI). If your deposit is less than 20% of the property value, most lenders will require you to pay LMI, which protects the lender (not you) in case you default. On a $600,000 loan with a 10% deposit, LMI can cost upward of $10,000. It’s a significant amount, and it’s often capitalised into the loan, meaning you’ll pay interest on it for the life of the mortgage.
Understanding your lender’s fee structure before you commit to a loan product saves you from nasty surprises down the track. Ask for a full cost disclosure in writing and compare it across at least two or three lenders before making your decision.
Insurance You’ll Need From Day One
Most lenders require you to have building insurance in place before settlement. This covers the physical structure of the property against damage from fire, storms, and other insured events. If you’re buying a unit or apartment, the body corporate typically handles building insurance, but you’ll still want contents cover.
Beyond building insurance, it’s worth considering income protection or mortgage protection insurance, especially if you’re stretching to meet repayments. Losing your income while carrying a large mortgage is one of the fastest paths to financial distress, and a basic protection policy can provide a safety net during tough periods.
The cost of insurance varies widely depending on the property type, location, and level of cover you choose. Budget somewhere between $1,000 and $2,500 per year for a standard home and contents policy. It’s a cost that continues long after settlement, so factor it into your ongoing ownership expenses.
Council Rates, Strata, and Ongoing Ownership Costs
The costs don’t stop once you pick up the keys. Council rates, water charges, and (for apartments) strata levies are ongoing expenses that every property owner needs to account for.
Council rates vary by local government area but typically run between $1,200 and $3,000 per year for a standard residential property. Strata levies for apartment owners can range from modest to eye-watering depending on the building’s age, facilities, and maintenance needs. Some older buildings carry special levies for major works that can run into five figures.
Before you buy, ask for the most recent council rate notice and strata statements. These documents give you a clear picture of what your regular outgoings will look like and whether there are any large expenses on the horizon.
How to Build a Realistic Property Budget
The most practical thing you can do before entering the market is build a comprehensive budget that captures every cost, not just the deposit and the purchase price. Start with the big items like stamp duty, conveyancing, and inspections, then layer in the lender costs, insurance, and moving expenses.
A good rule of thumb is to set aside 5% of the purchase price for total transaction costs on top of your deposit. That gives you a buffer for the expected expenses and a small cushion for anything unexpected that comes up during the process.
For broader insights into how economic conditions, interest rate movements, and housing market trends are shaping property decisions right now, the financial markets coverage on Financial Content offers useful context for buyers trying to time their entry into the market.
Making Informed Decisions in a Changing Market
Property markets shift. Interest rates move. Government policies around stamp duty concessions and first-home buyer grants evolve over time. The buyers who do best are the ones who stay informed, plan carefully, and don’t let emotion override the numbers.
Rushing into a purchase because you’re worried about missing out is one of the most common and most costly mistakes in real estate. Taking an extra week to get your finances properly sorted, your legal team in place, and your inspection booked is never a bad idea.
The hidden costs of buying property aren’t actually hidden. They’re well documented and entirely predictable. The difference is whether you take the time to account for them before you sign on the dotted line, or whether you discover them one by one as the bills start arriving. A little preparation goes a long way, and your future self will thank you for it.
