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Dreaming of purchasing a new home?

Everyone knows that buying a home is an expensive process. With additional costs on top of the price of the property to think about, it’s important to have your finances in order to avoid any nasty surprises.

In some cases, the upfront costs for a property valued at $400,000 could be up to 11% of the property's value.

To make sure you’re not caught off guard, here’s a list of the upfront costs of buying a home.

- __Related: [Your guide on home loan deposits](https://www.lendi.com.au/home-loans/deposit/)__
- __Related: [What is the total cost of buying a home?](https://www.lendi.com.au/inspire/property/what-is-the-total-cost-of-a-home-loan/)__
- __Related: [How much does it cost to refinance?](https://www.lendi.com.au/inspire/finance/how-much-does-it-cost-to-refinance/)__

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## #1. Home loan deposit
Let's start with the big one. The largest and most notable expense will be your deposit. Of course, this cost will vary depending on the type of property you’re purchasing, as well as its location, size and value.

Most buyers aim to save a deposit of 20% of the purchase price to avoid any extra charges such as [Lenders Mortgage Insurance (LMI)](https://www.lendi.com.au/home-loans/lmi/). 

With property prices on the rise, saving this amount could be a difficult task. But, there are [other options available if you don’t have a 20% deposit saved](https://www.lendi.com.au/inspire/finance/how-to-buy-a-home-with-a-low-deposit/).

In some cases, you may be able to [avoid paying LMI](https://www.lendi.com.au/inspire/finance/how-can-i-avoid-paying-lmi/). For example, [professional home loans](https://www.lendi.com.au/inspire/finance/why-do-some-professions-get-better-home-loans/), which are home loans available to eligible borrowers in specific professions, can waive LMI fees for those who have a [Loan to Value Ratio (LVR)](https://www.lendi.com.au/home-loans/lvr/) higher than 80%.

Depending on your circumstances, some lenders can provide home loans to borrowers who have a deposit as little as 5%.

Keep in mind, in these instances you may need to pay LMI, which we’ll talk about next.

## #2. Lenders Mortgage Insurance
[Lenders Mortgage Insurance](https://www.lendi.com.au/home-loans/lmi/) was designed to protect the lender in the case the borrower defaults on their home.

LMI is typically charged when you have a deposit of less than 20% of the price of the property – in other words if your Loan to Value Ratio (LVR) is above 80%. 

Keep in mind that the smaller your deposit, the more you’ll likely be charged LMI. 

%%Will you need to pay LMI?%%

## #3. Stamp duty

Transfer of property ownership contracts can involve complex legal requirements. 

Since October of 2018, conveyancing work for Australian residential property transactions must be completed by a person with the correct legal qualifications. This means you’ll need to hire a conveyancer or solicitor to make sure all contracts and documents are up to scratch. 

[Conveyancers](https://www.lendi.com.au/inspire/property/how-conveyancing-works-and-how-much-it-costs/) are generally more affordable than solicitors. This is because conveyancers usually specialise in standard property transfers, whereas solicitors may be required for more complex property transfers.

In Australia, conveyancers will typically charge around $800-$1,400 per property settlement.

In most cases, conveyancers will be able to get the job done and they usually charge a flat fee compared to solicitors who typically charge for their work per hour.

%%Calculate your stamp duty in seconds%%

## #4. Legal fees
The transfer of property contracts can involve complex legal requirements, so it is worth considering hiring a conveyancer or solicitor to act as your legal representative and make sure all the documents are up to scratch.

Conveyancers are generally more affordable than solicitors as their expertise is specifically the conveyancing process while solicitors may be needed in more complex property transfers. The NSW Housing guide states that conveyancers usually charge from $800 - $2,500.

In most cases, conveyancers will be able to get the job done and they usually charge a flat fee compared to solicitors that are likely to be paid on an hourly basis.

![ig-graphic-7-hidden-costs-of-buying-a-home](//images.ctfassets.net/o2gysnvd04sg/1leia69NCAfVfSRFfRpjGz/b0a28b7fa9912e25e244ce8faf623e10/51551288467_967b810451_z.jpg)

## #5. Home loan application and establishment fees
When you apply for a loan, some lenders will charge application and establishment fees for your loan. While some lenders may waive the fee, prices typically vary between $200 and $700.

Additionally, there may be extra costs like [valuation fees](https://www.lendi.com.au/inspire/property/property-appraisals-vs-valuations-difference/) and survey reports.

Make sure you consider all fees while comparing home loans. Additionally, if you think you might refinance in the next few years, look for a loan that has affordable discharge fees when switching lenders. 

If the discharge fees are high, it can make it more difficult to get out of a loan and pressure you to stay on a mortgage that doesn’t work for you as your needs change.

You can [ask a Home Loan Specialist](https://www.lendi.com.au/book-appointment/) for help negotiating these fees or to negotiate on your behalf.

## #6. Property inspections
Before purchasing a property, your conveyancer or lender will usually require a property inspection to make sure that the home is in good condition and structurally sound.

The usual inspections include:

- __Building inspection:__ covers the structural integrity of the property to ensure there are no issues, as well as any visible defects that need to be repaired. Building inspections can typically cost around $200-$1,000
- __Pest inspection:__ ensures that there are no current issues due to pest infestation, as well as identifying if there has been any previous pest problems. Pest inspections can typically cost around $150-$300
- __Strata inspection:__ checks the records of the property and provides information on strata levies and insurances. Strata inspections can typically cost around $250-$300.

## #7. Moving fees
If you’re planning to move into your new house, there are multiple costs you’ll need to take into account. These include:

- __Removalists:__ depending on how far you are moving and how many items you’ll need to move, removalists can cost around $75-$300 per hour for a local move and more if you’re moving interstate
- __Phone line connection:__ this can cost anywhere from around $25-$200
- __Electricity connection:__ electricity providers will typically charge around $10-$90 for connection.

## Ask us anything
If you have any questions regarding the hidden fees of buying a home or home loans in general, [get in touch](https://www.lendi.com.au/book-appointment/). Our Home Loan Specialists are happy to help with any questions you may have. 

*The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.*