As you would know the major cost involved in buying a house or apartment is the purchase price, but there are a number of extra costs that come with buying a home.

Taking time to plan and budget for the complete costs associated with buying a house or an apartment will help ensure you are not faced with any surprises that may cause issues with the property settlement process.

Here is a look at what is often called the hidden costs of buying a house or apartment.

Home loan deposit

Your home loan deposit is the initial contribution a buyer makes to the purchase price of a property. The larger your deposit the less you need to borrow.  Which means you will pay lower monthly repayments and lower interest costs over the lifetime of the loan.

Talk to our home loan experts about how much you have saved, how much you could borrow, whether you can afford to buy a house or an apartment and whether you will need Lenders Mortgage Insurance.

We are here to help you work through several scenarios and help plan your financial situation. 

Purchase price of the property

This one is obvious, but as we are listing all the costs of house or an apartment, we feel it is important to include. Once signed contracts are exchanged between the buyer and seller, the buyer is expected to pay the deposit on the property.  This is normally 10% of the purchase price.

Depending on the settlement terms in the contract you will then be expected to pay the remaining balance of the purchase price on settlement day.  You need to ensure your finances are sorted.

Loan costs when buying a house or an apartment.

• Application fees when buying a house or apartment. 

This is a one-off cost to apply for a loan and covers bank fees and settlement attendance fees. It will cost between $500-$1,000.

• Valuation fee

Necessary to determine how much a property is valued at so a lender can be reassured they will be able to recoup their loan if they were forced to sell the property due to the buyer defaulting on their payments.  Expect to pay about $200-$300.

• Monthly service fee

Costs of lender administration on the loan and may include charges for redraw or prepayment of a fixed rate loan. The cost per month can range from $5 to $15.

Annual fee

Some lenders charge annual fees on their home loans.  Talk to your lender about this.  Annual fees vary, but they usually range between $250 - $450.

• Search processing fee

The cost to search for a title related to the property you want to purchase. It can also include other searches connected to your loan application and will cost $40-$60.

• Stamp duty on buying a house or property.

This tax is paid in each State and Territory in Australia when you buy a property.  The amount payable depends on factors such as the location of the property and if you are eligible for any concessions or exemptions. First homebuyers may qualify for a reduction on stamp duty, but you need to contact the appropriate body in your State or Territory to understand how much you will need to pay.

• Insurance costs when buying a house or an apartment.

• Home and contents

Homeowners usually bundle their home insurance policy with a contents policy to cover them for the cost of rebuilding or repairing in the case of storm, flood or fire or theft.

Prices on insurance policies vary, so it is a good idea to get two to three quotes.