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Your guide to stamp duty and other upfront costs

By Emma Smith

You’ve probably saved up all your hard earned cash for your deposit, but have you thought about the other upfront costs that come with buying a property? Here we’ll guide you through a few other costs to factor in before you buy a home.

When preparing to buy your first home or your next property, it’s easy to become focused on saving for your deposit and forget about the other upfront costs. Beyond the deposit, things to factor into your budget also include stamp duty, any grants you may be eligible for, legal and bank fees, building inspections and lenders mortgage insurance (LMI).

Check out our guide to help you before you buy your first home or next property:

The deposit

The biggest upfront cost you will pay is the deposit. A lender will generally expect you to have a deposit of 20%, but you will need to pay 10% upfront to the real estate agent, who holds it in trust, on purchase day when you sign and exchange contracts. The remainder needs to be available for settlement day.

How much will my stamp duty be?

Land transfer duty or stamp duty costs differ from state to state and vary depending on the value of your property. Use a Stamp Duty Calculator to get an estimate for your location.

While stamp duty is one of the largest costs associated with buying property, other government fees and charges may apply to a sale of a property, depending on the property and its location. Check with your local state revenue office.

Does stamp duty apply to me?

As of July 2017, Victoria and NSW have waived stamp duty costs for first home buyers purchasing properties up to a certain amount and introduced stamp duty concessions for some other buyers. There are other discounts or concessions that may apply, so use our calculator for an estimate and refer to your relevant State Revenue Office for information on what concessions, if any, you may be eligible for.

Do I qualify for the first home owner grant (FHOG)?

It’s not only outgoing costs you need to know about – some buyers are eligible for grants, like the first home owner grant (FHOG). Again, the rules about who can access the FHOG vary from state to state, so start by finding your location on to see how much you can expect to receive. Your mortgage specialist can help you gather the documents you need for your application and lodge it with your local state revenue office.

How much are pest and building inspections?

A professional building and pest inspection is an important step to take once you find a property you’re interested in. Costs are usually between $300–$600. While it can be tempting to skip these inspections – especially if you’re not sure whether you’ll be able to win the property on auction day – this upfront cost is much cheaper than dealing with extensive repairs you weren’t aware of before buying.

Which legal/conveyancing fees will I need to pay?

As your property settlement takes place, a lawyer or licensed conveyancer will take care of tasks such as reviewing your contract of sale, checking the title of your land, calculating rates and taxes, and liaising with your lender. These fees can run from the hundreds to the thousands and the cost of these services may vary depending on who you chose to use and the complexity of your purchase. For more info about conveyancing fees, see the Australian Institute of Conveyancers’ website.

Should I factor in bank fees?

Talk to your lender about how much to expect when setting up your home loan. Fees to be aware of may include:

  • Establishment fees, also known as start-up, set-up or upfront fees.
  • Ongoing fees, sometimes referred to as service or administration fees.
  • Fees for changes to your mortgage, such as early exit fees, refinancing fees or fees for making changes to a fixed-rate mortgage.

What is lenders mortgage insurance (LMI)?

If you’re buying a home with a deposit that’s less that 20% of the property purchase price, your lender will usually charge lenders mortgage insurance (LMI). In most cases this cost will be rolled into your home loan. But it’s still important to be aware of and factor into your long-term budgeting.

Moving and repair costs

Finally, don’t forget to factor the cost of moving into your new home, including removalists, establishing utility or service connections and any repairs to essentials like plumbing, heating or cooling.

When will I have to pay these upfront costs?

Again, when you pay these fees depends on where you are located, but generally:

  • Pest and building inspections – ideally before purchase day
  • 10% deposit – on purchase day, when you sign and exchange contracts
  • Stamp duty – usually payable at or soon after settlement
  • Legal fees – often at or soon after settlement
  • Bank fees, establishment fees and LMI – usually when the loan is set up at settlement
  • Moving and repair costs – at or after settlement

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