How much does it cost to buy a house?

We all know that saving for a house deposit can be an arduous task, but it’s not the only expense to plan for. 

Buying a house or unit isn’t just about securing a new home – it’s a complex legal process involving multiple professionals, financers, and state or territory governments. From fees to taxes, the costs of buying property can add up quickly and, if you’re not careful, could surprise you. 

Here’s what you can expect to pay when purchasing property, along with some tips to help you save your hard-earned cash:

1. Your deposit

Expect to pay: At least 5% of a property’s value 

Perhaps the most renowned cost of buying a house is the deposit. It’s a lump sum that a buyer needs to put down in order to secure a home loan to fund the remainder of the purchase price.

Typically, you’ll need a deposit of between 5% and 20% to buy a house, but lenders have been known to be flexible, particularly if you have someone willing to act as guarantor.

Lenders Mortgage Insurance (LMI)

If you’re borrowing more than 80% of the value of your property, you might also be up for Lenders Mortgage Insurance (LMI).  LMI is an insurance product that protects a lender if a borrower defaults on their home loan, and it’s typically the homebuyer that pays for it.

How much LMI costs tends to vary based on the insurance provider, the size of your deposit, and how risky you appear as a borrower.

Your Mortgage’s LMI calculator to provide an estimate of how much you might be up for.

2. Conveyancing fees 

Expect to pay: Between $1,500 and $2,500 

Having a solicitor or conveyancer on your side when buying property can be invaluable. In saying that, they are professionals and do charge for their services. 

A solicitor or conveyancer will guide you in preparing all the documentation required for you to buy a house and be your go-between with the bank and the vendor. 

There are two costs you might face when using a conveyancer’s services: their fee and any disbursements. Disbursements are costs the conveyancer pays for that you’ll reimburse them for and typically cover the likes of title search and registration fees.

While DIY conveyancing kits are available, there’re generally no substitute for the real thing. 

3. Stamp duty 

Expect to pay: Depends on the value of the property you’re buying, what you intend to use it for, and whether you’ve owned property before.

Stamp duty may be the second largest expense you’ll face when buying a house, potentially adding up to tens of thousands of dollars.

You can get an estimate of your potential liability using our stamp duty calculator.

Stamp duty, also known as transfer duty, is a state or territory government tax charged to those who buy property. Thus, how it’s calculated and charged varies between states and territories. Different states and territories also offer different discounts or even waivers to different buyers. 

If you’re buying your first home, a house to live in, or you’re building a new property, you might be able to minimise or dodge the cost. 

4. Building and pest inspection costs 

Expect to pay: $300 to $700 

Getting a professional building and pest inspection when buying a house is strongly advised. 

These provide information on the structural integrity of the building and inform you of any problems which might bring costly repairs later on. After all, no one wants to buy their dream home only to find it’s riddled with termites or structurally unsound. 

5. Home loan fees 

Expect to pay: $100 to $900

Home loan fees can add up quickly, from application charges to settlement costs. These fees and charges are typically made transparent for borrowers, but it’s essential to review your contract carefully or consult a mortgage broker to avoid unexpected surprises.

Some common home loan fees that may be charged include:

• Loan establishment fee
  Sometimes called an application fee, this is a one-off upfront cost to process your home loan application. 

• Valuation fee
  Sometimes called a security assessment, this fee covers the cost of employing a valuer to assess the value of the property you’re purchasing.

• Settlement fee
  Another processing fee, this time covering the cost of setting up your home loan.

• Rate lock fee
  By paying a rate lock fee, your rate will be set at the time of your application and won’t increase before your loan is paid out.

Other costs you might choose to fork out for

Buyer’s agent 

Expect to pay: 1% to 3% of your purchase price (though, many use a fixed fee structure)

A buyer’s agent can come in extremely handy, given they typically have a wealth of experience buying property – an activity that most Australians only do a few times in their life. 

Though, buyer’s agents also charge for their services. On the other hand, many argue their expertise often results in a buyer getting a better deal on their house purchase, perhaps even negating the buyer’s agent’s fees. 

Removalists 

Expect to pay: $300 to $6,000, depending on how far you’re moving and how much stuff you have.

You might also choose to engage removalists to help you move from your old property to your new house. The cost of hiring removalists varies greatly. After all, you might only need their assistance to move a bulky couch a few blocks over, or you might be moving the contents of a five bedroom house to the other side of the country. 

Even if you don’t engage a removalist’s services, remember to factor in the cost of buying boxes and hiring a moving van yourself – these costs can also add up.

Ongoing costs you’ll face after buying a house

It’s also worth remembering that the costs don’t stop coming once you’ve bought a house. Unlike renters, homeowners need to pay for ongoing costs, including the following:

• Council rates
  When you buy a property, you’ll pay the vendor back for any rates they’ve paid ahead of time. You’ll then face an annual or quarterly rates bill, the size of which will vary between local governments.

• Strata and body corporate fees
  If you’ve purchased an apartment, unit, or townhouse, you’ll probably need to pay body corporate or strata fees. 

• Maintenance and repairs
  As a homeowner, you’ll also need to budget for regular maintenance and repairs on your property.

• Home and contents insurance
  Taking out building insurance will generally be a requirement of your lender. It’s also wise to take out contents insurance which covers all the contents within the property, including all your furniture, electronics, and so on.

How to minimise costs when buying a house in Australia

While many of the costs associated with buying a house in Australia can’t be avoided, some can be, while others can be minimised. Here’s how:

Shop around

When buying a house, don’t settle for the first option you come across. This applies to nearly every cost involved, including the property itself, your home loan, and professional services like conveyancing and inspections.

Prices and quality can vary widely, so it’s essential to get multiple quotes and compare options. Choosing a competitively priced conveyancer or inspector can save you hundreds without compromising on quality, while securing a low-cost home loan can significantly improve your financial outlook.

Here are some of the lowest-rate home loans available on the market right now:

Important Information and Comparison Rate Warning

Lean on discounts and special offers 

Check to see if you’re eligible to take advantage of stamp duty concessions, which can significantly reduce upfront costs, particularly for first-home buyers. 

Additionally, many lenders offer promotional deals, such as cashback offers, fee waivers, or discounted rates for limited periods. Keep an eye out for these incentives, but read the fine print to ensure they align with your long-term financial goals.

Consider government homeownership schemes 

Explore government initiatives like the Home Guarantee Scheme, which can help you secure a property with a lower deposit, or state-specific schemes offering grants and assistance for first-home buyers. These programs can reduce your upfront costs and make homeownership more accessible.

Don’t be afraid to negotiate

From lender fees to removalist costs, many expenses are negotiable if you’re willing to ask for a better deal. While it might feel intimidating, the worst outcome is simply being told ‘no’ – and you could end up saving hundreds or even thousands of dollars.

_{This article was first published by Nila Sweeney in 2018 and updated by Gerv Tacadena in 2022. Last updated by Brooke Cooper in 2024.}

_{Image by R ARCHITECTURE on Unsplash}