Whilst there are many costs in purchasing a home as well as in obtaining the mortgage loan, it is well worth your trouble.  Did you know that approximately every 10 years your home will double in value?  

You need to be aware that some of the costs incurred in purchasing a home need to be paid prior to the property settling so you should ensure that you have enough to pay for these.  Your conveyance solicitor will give you a reasonably accurate figure of your costs. 

Some of the fees that you could expect to incur are outlined as follows: 

Fees that are paid upfront: 

• Deposit on the contract
  When you sign the contract, you may decide to put a deposit down to make your contract more attractive to a vendor (seller).  A substantial deposit of 10% certainly shows a vendor that you are a serious purchaser.
• Property Inspection fees
  
  Building Inspection: 
  A building inspection involves a thorough inspection of all accessible areas of the building to determine its overall condition and defects and must be undertaken by an experienced professional to ensure that you obtain a detailed knowledge of the structural adequacy and condition of the property you are purchasing.
  
  It is sensible to obtain a building inspection on any house you purchase, even if it is new.   You could expect to pay in the vicinity of $450 but it is best to obtain a quote first.
  
  Pest Inspection:
  A pest inspection is for the detection of wood destroying insects, such as borers and termites (white ants). Experts carry out the pest inspection within accessible areas to determine the extent of damage (if any) that may be in accessible areas. A pest report contains information on current and past infestation to a building.  After the pest inspection you will receive a report that contains pest report information sheet.
• Government fees
  A number of government fees will apply, including land transfer registration fees and government taxes. These fees are a mixture of flat fees and variable charges that change with the price of the property. You need to read the fee structures for your particular state carefully to make sure you understand all the charges that apply.
• Legal fees
  Legal fees range depending on whether your choose to use a solicitor or a conveyancer.  Conveyance fees are generally between $500 and $1000 for a property purchase.
• Lenders valuation fee
  Your lender will expect you to pay for the cost of a valuation.  The price is usually around 0.05% of the property purchase price. 

Fees that are payable at settlement: 

• Stamp duty
  Stamp duty rates vary from states to state and these can add a very significant cost to the property you are buying.  First home owners may be eligible for a reduced rate of stamp duty in some states.  Investors pay higher stamp duty rates than those who will be living in their home.
• Lenders Mortgage Insurance (LMI)
  Whenever you have less than 20% deposit, you will almost always have to pay mortgage insurance or LMI.  This insurance is a one-off payment by the borrower to the lender (or lender's insurer) to insure the loan.  It insures the lender for any short fall on a loan, so if you were sold up because of defaults, it covers the difference between what you are sold for and the amount still owing.   As mortgage insurance is worked out on a sliding scale, you will need to ask your lender for a quote before you can budget for this cost.   The higher amount you borrow, and/or the less downpayment you make, the higher the LMI becomes.   If you have 20% or more deposit and all other factors are in line, LMI may be paid by the lender. 

Fees that are payable after settlement

Lenders Fees

Apart from the valuation fee, most lenders will take their fees out at settlement if asked to.  Some of the fees charged by lenders are: 

• Home Loan Application Fees
• Home Loan Establishment Fees
• Service Fees
• Lenders Legal Fees
• Account Transaction Fees
• Exit Fees (or Deferred Establishment Fees) 

It is difficult to give a guide to fees as they differ so much between lenders. By way of example, the application fee amount may be as low as nothing or as high as 1.5% of the loan amount. It is extremely important to be very clear on these costs up front or you may end up being short of funds at settlement.. 

Loan Protection Insurance

Loan protection insurance can protect you in unforseen circumstances, where you are not able to meet your loan repayments, such as death, disability, trauma or involuntary loss of employment.  This is expensive insurance but is certainly worthwhile considering to ensure peace of mind.

Moving costs

Another important set of costs to consider are moving expenses, especially if you are moving a long distance. These can be quite significant, and vary considerably from company to company, so it’s worth shopping around. 

Other costs

There are other costs such as utility connection or transfer fees.   Often bonds will need to be paid to these organisations.