10 Hidden Costs First-Time Buyers Miss in Property Contracts

When first-time buyers calculate how much they need to purchase a property, most focus on the deposit and the mortgage repayments. But the true cost of buying a home extends well beyond the purchase price. From government taxes to professional fees, inspection costs to insurance requirements, these "hidden" costs can add $20,000 to $50,000 or more to your total outlay.

Knowing about these costs upfront — ideally before you sign a contract — means no nasty surprises at settlement and a much smoother buying experience.

1. Stamp Duty (Transfer Duty)

The single largest additional cost for most buyers. Stamp duty is a state government tax calculated as a percentage of the purchase price. For a $750,000 property in NSW, expect to pay approximately $29,000 in stamp duty. In Victoria, the same property would attract around $40,000. Use our stamp duty calculator to get an exact figure for your state and property value.

First-home buyers may be exempt or eligible for concessions depending on the state and property value. Always check with your state revenue office before budgeting.

2. Conveyancing and Legal Fees

A conveyancer or solicitor handles the legal transfer of property ownership. Costs typically range from:

• Conveyancer: $800 - $1,500 for a standard residential purchase
• Solicitor: $1,500 - $3,500 depending on complexity
• Additional disbursements: Title searches ($20-$50), certificate fees, registration fees ($150-$300)

Do not skip professional legal advice to save money. A missed clause in a contract can cost far more than any conveyancing fee.

3. Building and Pest Inspections

A pre-purchase building inspection examines the structural integrity of the property, while a pest inspection checks for termites and other infestations. Combined reports cost:

• Building inspection: $400 - $700
• Pest inspection: $250 - $350
• Combined building and pest: $500 - $800

For older properties, a building inspection is essential. Structural defects like cracking foundations, roof damage, or rising damp can cost tens of thousands to repair. In some states (ACT, for example), building and pest reports must be attached to the contract by law.

4. Strata Reports (for Units and Apartments)

If you are buying a strata-titled property, a strata inspection report reviews the body corporate records including financial statements, meeting minutes, by-laws, and any pending special levies. Cost:

• Strata report: $250 - $400

This report can reveal serious red flags — ongoing litigation, defect claims against the builder, or a depleted sinking fund that could lead to special levies of $10,000 or more per owner.

5. Loan Application and Establishment Fees

Your mortgage lender may charge various fees to process and establish your home loan:

• Application fee: $0 - $600 (many lenders waive this)
• Valuation fee: $200 - $600 (the lender orders their own valuation)
• Settlement fee: $200 - $400
• Registration of mortgage fee: $150 - $200 (state government fee)

Shop around and negotiate — many lenders will waive application fees for competitive borrowers. Online lenders tend to have lower or no establishment fees.

6. Lenders Mortgage Insurance (LMI)

If your deposit is less than 20% of the property value, most lenders require Lenders Mortgage Insurance. LMI protects the lender (not you) if you default on the loan. It is a one-off premium that can be substantial:

• 10% deposit on a $600,000 property: LMI could be $8,000 - $12,000
• 5% deposit on a $600,000 property: LMI could be $15,000 - $25,000

LMI can usually be added to the loan amount (capitalised), but this increases your total debt and interest costs. Some lenders offer LMI waivers for certain professions (doctors, lawyers, accountants) with deposits as low as 10%. For strategies to reduce or avoid this cost entirely, see our guide on understanding LMI and how to avoid it.

7. Building Insurance

Your lender will require building insurance to be in place from the date of exchange (not settlement) in most states. This protects the property against fire, storm damage, and other events. Annual premiums vary by location and property type:

• Standard house: $1,000 - $2,500 per year
• Flood or bushfire zone: $3,000 - $10,000+ per year
• Strata properties: Building insurance is included in strata levies

Note that in NSW, the risk of loss passes to the buyer at exchange under the Conveyancing Act 1919, so you need insurance from that moment — not from settlement.

8. Adjustment Costs at Settlement

At settlement, costs are adjusted between buyer and seller based on the settlement date. You may need to reimburse the seller for:

• Council rates: If the seller has prepaid rates beyond the settlement date
• Water rates: Similar prepayment adjustment
• Strata levies: If the seller has paid the current quarter in advance
• Land tax: In some states, land tax is adjusted at settlement

These adjustments are calculated by your conveyancer and added to your settlement figure. They typically range from $500 to $2,000 depending on timing.

9. Moving Costs

Often forgotten in the excitement of buying, moving costs can add up quickly:

• Professional removalists: $500 - $3,000+ depending on distance and volume
• Storage (if needed): $200 - $500 per month
• Mail redirection: $49 - $132 through Australia Post
• Utility connections: $100 - $300 for electricity, gas, internet setup fees
• Lock changes: $150 - $400 (recommended for security)

10. Ongoing Costs You Should Budget For

While not part of the purchase itself, these recurring costs catch many first-time buyers off guard. For a full breakdown of what to expect after you move in, see our property holding costs breakdown:

• Council rates: $1,000 - $3,000 per year depending on the council area and property value
• Water rates: $800 - $1,500 per year (fixed service charges plus usage)
• Strata levies: $500 - $2,000+ per quarter for units and apartments. Older buildings with lifts, pools, or gyms will have higher levies
• Maintenance reserve: Budget 1-2% of the property value per year for ongoing maintenance and repairs on houses
• Contents insurance: $300 - $800 per year
• Land tax: Applicable to investment properties and in some states to all land above a threshold

Total Hidden Costs: A Real Example

For a first-home buyer purchasing a $700,000 apartment in Sydney with a 10% deposit:

• Stamp duty (with FHB concession): ~$0 - $10,000
• Conveyancing: ~$1,200
• Building and strata report: ~$700
• Loan fees: ~$500
• LMI (10% deposit): ~$9,000
• Building insurance: Included in strata
• Settlement adjustments: ~$1,200
• Moving costs: ~$1,500
• Total additional costs: ~$14,100 - $24,100

How to Prepare

Related Guides

• Stamp Duty Calculator — Calculate exact stamp duty for your state
• First Home Buyer's Guide — Step-by-step guide to buying your first home
• Due Diligence Checklist — Everything to check before buying
• What Is LMI? — Lenders Mortgage Insurance explained