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Budgeting for all costs involved in buying a home

When looking to buy a property, what you need for a deposit can quickly become the focus. While it’s definitely the biggest upfront payment you’ll need to make, it’s not the only one. There are some other short-term and long-term costs that should be factored into any budget for a new home. 

The home loan

After the deposit, the biggest and perhaps most obvious cost involved in buying a property is your mortgage repayments. You can estimate what your monthly mortgage repayments are likely to be using our repayment calculator.

The other cost involved in taking out a home loan can be an ‘establishment fee’. This is a once off payment that is often required to take out a home loan. Some lenders will run special offers that waiver these fees, so keep an eye out.

The insurance

If you borrow more than 80 per cent of a property’s purchase price, you will probably need to pay Lenders Mortgage Insurance (LMI) to protect the bank in case you default on the loan. How much LMI you pay depends on how much money you borrow and your location.

You should also factor in the cost of Home and Contents Insurance. This type of insurance covers you if something unexpected happens to your property or your belongings within it.  

The taxes and government fees

The primary tax to think about is stamp duty. This is a tax that is applied by all states and territories and is based on a number of factors included the property purchase price, property type (owner-occupier vs investment) and location. In some cases, state governments have introduced initiatives that waiver or discount the stamp duty for first home-buyers.

The inspection

It may feel like an unnecessary upfront cost but undertaking a professional building and pest inspection may save you in spending significant amounts on unexpected maintenance or repair issues over the long term. A qualified inspector will look for faults in the property, whether they can be repaired and also estimate the cost to get them fixed. Your inspection report may also help in negotiating the purchase price. To find a registered inspector, visit the Victorian Building Authority website.

The legal fees

When buying a property it’s generally recommended that you engage a conveyancer or solicitor to prepare the contracts and agreements required. While this can be done yourself, minor errors in the contract can create significant costs in the future.

The set up

So, you’ve purchased your home and now it’s time to move in. Often this will involve paying for removalists, connections fees (e.g. internet) as well as furniture and other necessities to set yourself up.

The maintenance

Many people buy a home with renovations in mind, and it’s likely you’ll also be up for some unexpected repairs or maintenance costs throughout the home ownership journey. Whether big or small, it’s also important to consider these costs when working out what you can afford to buy, and your savings goal. 

A cost for all home owners is council rates, so be sure to factor this in to your ongoing costs as well.