Extra costs when buying a home

18.01.22 | Marc Barlow | Resources

Extra costs when buying a home

With any luck, you’ll have already spoken to us at Mortgage Broker Melbourne to sort out your finances, pre-approval and spending limit.

But if you’re not at that stage yet, it’s easy to forget that there are more costs involved in buying a house than just the loan deposit. When you’re planning to purchase a property, it’s easy to get fixated on the big numbers.

If you’ve saved, say, $80,000, you might think that you’re in the market for an $800,000 Melbourne property with a 10% deposit. Unfortunately, that’s not quite right…


Loan establishment

While there are some exceptions, most lenders charge a home loan application fee. The amount varies from loan to loan (rarely more than $800), and is designed to cover the lender’s costs, such as:

  • writing your loan contract
  • conducting a property title checks
  • performing a credit check on you
  • attending the settlement meeting with your conveyancer or solicitor and a vendor representative.

Most lenders have products that don’t have application fees, and sometimes our brokers have been known to talk lenders into waiving fees.

Once the application is approved, some lenders then charge an establishment fee for setting up your loan and accounts. Again, we can often help you avoid this fee, or make sure the loan conditions make it worthwhile.

While there’s a lot of talk about 10% deposits, keep in mind that not everyone qualifies for this rate. And even if your lender will accept a 10% deposit, they may want an additional payment from you. Please see or article explaining Lenders mortgage insurance.

In some cases – especially with smaller lenders or properties in regional or rural areas, you might also be charged a valuation fee, to cover costs for your lender to confirm the property is worth what you paid for it.


Property-related costs

As part of your purchase and transfer of the title, you might want to get a professional building inspection carried out. It’s a good idea, but does set you back a few hundred dollars for each property you get inspected. Better that than finding $20,000 worth of termite damage after you move in though…

You’ll also need to take into account the various government fees, including the notorious Stamp Duty (more than $40,000 in Melbourne for that $800,000 home), transfer fee and payment to your conveyancer. (Concessions to the rate of Stamp Duty are available in some circumstances, please chat with us to find out more).


Set-up costs

And then there are all the regular costs associated with setting up a new home, including:

  • home and contents insurance
  • utility costs (connecting electricity, gas and telephone can attract a fee)
  • council rates (including water rates)
  • body corporate fees (if applicable)
  • unexpected repairs (it’s good to have some emergency money just in case).


Talk to us

If all of this seems overwhelming, don’t worry. Our brokers know the ins and outs of these purchase expenses. Together, we can help you reduce these costs wherever possible and make sure you get the best bang for your home-purchase buck!

Contact Mortgage Broker Melbourne today for a no-obligation conversation about how we can help you purchase sooner.