The True Cost of Buying Your First Home: What Most Budgets Miss

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27 May

A comprehensive breakdown of the often-overlooked expenses in the Australian property market

Purchasing your first home is a significant milestone, filled with excitement and anticipation. However, many first-time buyers focus solely on the purchase price, overlooking additional costs that can substantially impact their budget. Understanding these expenses is crucial to avoid unexpected financial strain.

Here's a detailed guide to the true costs associated with buying your first home in Australia in 2025.

1. Lenders Mortgage Insurance (LMI)

Estimated Cost: Varies widely; can exceed $40,000 depending on loan amount and deposit size Money.com.au

If your deposit is less than 20% of the property's value, most lenders will require you to pay LMI. This insurance protects the lender in case you default on your loan. The premium can be paid upfront or capitalised into your loan, increasing your repayments over time.Money.com.au

Tip: Some professions may be eligible for LMI waivers. Consult with your lender or mortgage broker to explore your options.

2. Stamp Duty

Estimated Cost: Varies by state and property price; significant expense

Stamp duty is a government tax based on the property's purchase price and location. In New South Wales, for example, the amount can be substantial, but first home buyer concessions may apply. Use the NSW Stamp Duty Calculator to estimate your liability.Stamp Duty Calculator

3. Legal and Conveyancing Fees

Estimated Cost: $1,200–$2,500 OurTop10

Engaging a licensed conveyancer or solicitor is essential to manage the legal aspects of your property purchase. They handle tasks such as contract reviews, title searches, and settlement processes, ensuring a smooth transaction.

4. Building and Pest Inspections

Estimated Cost: $500–$1,500 ServiceTasker

Before finalising your purchase, it's advisable to conduct building and pest inspections. These assessments can uncover structural issues or pest infestations, potentially saving you from costly repairs in the future.

5. Loan Application and Bank Fees

Estimated Cost: Varies; some lenders charge up to $600

While some lenders may waive application fees, others might charge for services like loan processing, valuations, or package fees. It's important to discuss these potential costs with your lender or broker.

6. Moving Costs

Estimated Cost: $2,600–$5,850 for interstate moves Best Rated Transport

Relocating involves expenses such as hiring removalists, transportation, and potential temporary accommodation. Costs can vary based on distance and the volume of belongings.

7. Council Rates, Insurance, and Strata Fees

Council Rates: Capped increases between 3.7% and 7.6% for 2025–26 in NSW The Nightly+13IPART+13councilmagazine.com.au+13
Home Insurance: Average annual premium around $2,000, with potential increases due to natural disasters finder.com.au
Strata Fees: Typically range from $500 to $5,000 per quarter, depending on property amenities stratajem.com.au

These ongoing expenses are essential to consider in your long-term budgeting.

Summary of Additional Costs

Expense Category Estimated Cost Range

Lenders Mortgage Insurance (LMI) Varies; can exceed $40,000

Stamp Duty Varies by state and property price

Legal and Conveyancing Fees $1,200–$2,500

Building and Pest Inspections $500–$1,500

Loan Application and Bank Fees Varies; up to $600

Moving Costs $2,600–$5,850 for interstate moves

Council Rates Capped increases between 3.7% and 7.6%

Home Insurance Approximately $2,000 annually

Strata Fees $500–$5,000 per quarter

Planning Ahead

Being aware of these additional costs allows you to budget more effectively and avoid financial surprises. Consider consulting with financial advisors or mortgage brokers to gain a comprehensive understanding of your financial commitments when purchasing a home.

Ready to Start the Conversation?

If you're considering buying your first home, we're here to assist you. At Financial Wellness Hub, we offer complimentary 20-minute sessions to help first-time buyers:

Review mortgage options
Plan debt management strategies
Map out a clear path to future financial success

It's a no-pressure, one-off chat designed to give you clarity and confidence as you take your next steps.

Book your complimentary session here: https://financialwellnesshub.as.me/complimentary-session

By Brett Tarlington

Brett Tarlington