Why Buying a Home Costs More Than You Think: Hidden Expenses Explained

Why Buying a Home Costs More Than You Think: Hidden Expenses Explained

Many first-home buyers prepare diligently by saving a deposit and calculating their loan repayments—but still find themselves surprised by how much homeownership really costs. It’s not just about the property price and the deposit. There are additional upfront, ongoing, and unexpected costs that can add thousands to your overall budget.

Without proper planning, these hidden expenses can delay your purchase or put pressure on your finances down

the track. Here’s what to watch out for—and how to budget smart from the beginning.

Upfront Costs: What You Need Before Settlement

The deposit is only one part of the upfront equation. To complete your purchase and settle your home, you’ll need to budget for several additional expenses that are often overlooked.

Here’s what to include in your upfront planning:

• Stamp duty: One of the biggest additional costs. Depending on your state and property value, this could range from several thousand to tens of thousands of dollars. First-home buyer exemptions may apply.

• Lenders Mortgage Insurance (LMI): If your deposit is less than 20%, most lenders require LMI. This cost is often added to your loan but can still impact affordability.

• Legal and conveyancing fees: Expect to pay $1,500–$3,000 for professional assistance with contracts and settlement.

• Building and pest inspections: These are critical checks, costing around $500–$800. They help identify structural or maintenance issues before you buy.

• Loan and settlement fees: Some lenders charge application and settlement fees, which may range from a few hundred to over $1,000.

Tip: A general rule of thumb is to set aside 5–7% of the purchase price to cover upfront costs beyond the deposit.

Ongoing Costs: The Price of Owning a Home

Once you’ve moved in, regular expenses begin. These are often underestimated, especially by first-home buyers who focus solely on mortgage repayments.

Here’s what to expect after settlement:

• Council and water rates: Local charges that can cost between $1,500 and $3,000 per year, depending on your location.

• Home insurance: Required by most lenders, with premiums typically starting from $1,000 annually.

• Strata fees: If you’re buying an apartment or townhouse, these can range from $1,000 to $5,000 per year to cover shared property maintenance.

• Repairs and maintenance: Older homes may need regular upkeep. A safe estimate is 1–2% of the property’s value annually.

• Utility bills: Electricity, gas, water, and internet add up over time and need to be factored into your cash flow.

Tip: Homeownership includes ongoing responsibilities—so be sure to budget beyond just loan repayments.

Unexpected Costs: What Can Catch You Off Guard?

Even with careful planning, a few costs tend to surprise new homeowners. These often arise after settlement, during or just after the moving-in phase.

Here are some common examples:

• Renovations and upgrades: You might want to repaint, update appliances, or refresh landscaping.

• Interest rate changes: A rising interest rate can lead to higher mortgage repayments over time.

• Moving expenses: Removalists, cleaning, connection of utilities, and new furniture can quickly add up.

• Emergency repairs: A plumbing or electrical issue could cost thousands, especially if not detected during inspections.

Tip: Always keep an emergency buffer for property-related costs that can’t be predicted.

Bringing it all together

Buying a home comes with more financial responsibility than many buyers anticipate. Beyond your deposit and repayments, you’ll need to factor in a range of upfront, ongoing, and unexpected expenses. The more prepared you are, the easier it will be to manage your home with confidence.

Planning to buy your first home? Book your investment session with PropVest and let’s make sure you’re financially ready for the full journey into homeownership.

Disclaimer: This article is for general information only and does not constitute financial, legal, or lending advice. You should seek advice from a qualified professional before making any property or investment decisions.