Costs to Allow For When Buying or Building a Home

Buying or building a home is a big financial commitment. The cost of the property itself obviously accounts for the lion’s share, but it’s by no means the only cost. There are quite a few other out-of-pocket expenses you need to allow for. Below is a summary of the costs you’re most likely to encounter when buying or building a home.

Stamp duty

Stamp duty is a tax you pay to the state government when you buy a property. When you buy an existing house, you pay stamp duty on the entire value of the property (i.e. house and land).

• WA first home buyers — If you’re buying your first home (up to $500,000), you don’t have to pay stamp duty at all! It’s waived by the WA government.
• Victorian first home buyers — If you’re buying your first home (up to $600,000), you get a 20% discount on your stamp duty.

If, on the other hand, you build, you only pay stamp duty on the land. The government waives the stamp duty on the house to encourage property development. Use our stamp duty calculator to find out how much your stamp duty will cost.

Legal fees and conveyancing costs

When you buy any property, the title of ownership must be transferred to you. This is a legal task which, by law, must be handled by an appropriately qualified legal specialist (a conveyancer or solicitor). As well as the conveyancer’s service fee, you must also pay a legal fee associated with the transfer of title itself.

Recommended conveyancers

• WA — We recommend Axiom Conveyancing in Western Australia.
• Vic — We recommend Principal Conveyancing in Victoria.

Agency fees

Most people engage a real estate agent to sell their property. Agents usually charge a fee that combines their commission on the sale (typically 2-4% of the sale price), and any advertising costs passed on by newspapers, photographers, copywriters, etc.

Obviously you’ll incur agency fees only if you’re selling an existing property at the same time as buying your new property.

Removalist Costs

Furniture, fridges, freezers, dishwashers, washing machines, microwaves, kitchen utensils, books, clothing… The list of items you need to move into your new home is extensive, and most require a degree of care in packaging and transport. In most cases, a professional removalist company is the sensible — if not only — choice for transferring your possessions from one house to another.

Rent

If you sell your existing house before you’re able to move into your new one (e.g. it’s being built, it hasn’t settled, or you simply haven’t found the right house to buy), you have to allow for rent.

The amount you pay will obviously depend on the size and location of the property.

TIP: Don’t forget you’ll be paying for removalists twice, if you rent between houses.

Pre-start

When you’re building a new home, it will come with standard fittings as part of your building contract. Things like bench tops, taps, light fittings and cupboards. While definitely serviceable, these fittings are usually quite basic, and many buyers choose to upgrade them.

You’d typically upgrade during the pre-start phase. This is after you get pre-approval on your loan, but before formal approval is granted. It’s very important that you set a budget for any upgrades you’re planning, and that you stick to your budget. Otherwise your loan could fall through when applying for formal approval.

Expenses when you move in

When you’re building a new home, the contract price often doesn’t include decorative items like:

• Floor coverings in dry areas (carpets/tiling)
• Window treatment (blinds/curtains)
• Landscaping (front and back garden)
• Brick paving
• Interior painting/wallpaper
• Air conditioning

Depending on your budget, you may choose to move into the house without these items, but either way, it pays to know their cost.

Got a question about costs that’s unique to your situation?

Some new home finishing costs are dependent on your situation (e.g. site costs when building). If you’d like specific guidance on home loan costs, building costs, or finishing costs, please enquire below or call us now on 1300 883 292.