{"id":315195,"date":"2025-11-28T22:32:10","date_gmt":"2025-11-28T22:32:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/315195\/"},"modified":"2025-11-28T22:32:10","modified_gmt":"2025-11-28T22:32:10","slug":"think-youre-ready-to-own-a-home-here-are-the-costs-that-experts-want-you-to-consider","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/315195\/","title":{"rendered":"Think you’re ready to own a home? Here are the costs that experts want you to consider"},"content":{"rendered":"

Buying a home is the biggest financial investment most people will make, and is seen by many as a major milestone on the road to adulthood.<\/p>\n

But it’s a decision that requires extensive research and preparation before making a purchase.\u00a0<\/p>\n

“Buying a first home is exciting but can also be emotionally charged, and there are many important details both before and after the purchase that deserve attention,” financial advisor Stephanie Yeung says.<\/p>\n

So how do you know if you’re ready to take on the big commitment?<\/p>\n

Friends combine finances to buy dream home together<\/a><\/p>\n

Friends Gem and Renata have saved money buying a home together with their respective families in Wollongong, and say the pay-off goes much further.\u00a0<\/p>\n

We asked three financial experts \u2014 Nicola Beswick, Natallia Smith and Stephanie Yeung \u2014 about the up-front and ongoing costs of buying a home and their top tips to prepare for home ownership.<\/p>\n

Let’s get to it.<\/p>\n

What are the up-front costs of buying?<\/p>\n

The biggest hurdle to saving will be the deposit, which is often 20 per cent of the purchase price.<\/p>\n

Listed house prices may not tell you the full story, though. In a competitive market, you may end up paying well above the advertised price, so that could blow out your budget from the get-go, Ms Smith says.<\/p>\n

And if you haven’t accounted for added fees and charges, then you may want to read on.<\/p>\n

Lenders Mortgage Insurance (if applicable)<\/p>\n

Lenders Mortgage Insurance (LMI) is a one-off fee the bank charges when your deposit is less than 20 per cent of your home.<\/p>\n

It’s designed to protect the bank when you fail to meet repayments.<\/p>\n

You’ll pay between 1 and 5 per cent of your loan amount, depending on how much deposit you have.<\/p>\n

It can often be added to your mortgage amount, rather than being paid up-front, but you will then pay interest on that amount too.\u00a0<\/p>\n

Stamp duty<\/p>\n

Stamp duty, also known as transfer duty or land transfer duty, is the tax you pay on a property purchase.<\/p>\n

The costs vary from state to state, ranging between 3 and 5 per cent of the value of the home.\u00a0<\/p>\n

Depending on where you live, you may be able to receive a concession or exemption when you buy your first home.<\/p>\n

Conveyancing fees<\/p>\n

You will usually need to hire a solicitor or conveyancer to walk you through the legal process, conduct title searches, and draft up documents such as a contract of sale and memorandum of transfer.\u00a0<\/p>\n

Costs range between $800 and $2,500, but can increase with the complexity of the sale.\u00a0<\/p>\n

Building and pest inspection<\/p>\n

If you want to be confident in the quality and safety of the home you’re buying, you will need to pay for a building inspection.<\/p>\n

The location and size of the space, as well as whether it’s a house or apartment, will determine how much you will pay.<\/p>\n

Costs range anywhere between $250 and $1,000.<\/p>\n

It’s important to note that a building inspection report generally does not include a cost estimate of any repairs required.<\/p>\n

You can make your offer conditional on a building inspection being completed.\u00a0<\/p>\n

Keep in mind that if you’re buying at auction, your purchase is usually unconditional, so you may need to pay for an inspection before buying.<\/p>\n

Lastly, you may also want to set aside some money for the fun stuff.<\/p>\n

“Don’t forget other things like the new furniture, white ware, or other items you may want to add to your home,” Ms Beswick says.<\/p>\n

“They are the best part of buying a place, especially when you want to make it your own!”<\/p>\n

\"A Nicola Beswick says budgeting is key in managing the costs of home ownership.(Supplied: Nicola Beswick)What grants are available to home owners?<\/p>\n

“Grants can make a world of difference if you are eligible for them,” Ms Beswick says.<\/p>\n

Here are some schemes available on the market.<\/p>\n

First Home Owner Grant (FHOG)Australian Government 5% Deposit SchemeFirst Home Super Saver Scheme (FHSS)Sweeping changes to the first home buyer scheme explained<\/a><\/p>\n

The revamped scheme has come into effect, with first home buyers of all income levels now able to purchase a property with only a 5 per cent deposit. Here are the changes explained.<\/p>\n

The FHOG provides a one-time payment to those buying a new or extensively renovated home.<\/p>\n

However, the grant amount varies from state to state, and the value of the property must not exceed the stipulated cap.<\/p>\n

“The Australian Government 5% Deposit Scheme allows first home buyers to, as the name suggests, pay only a 5 per cent deposit on their first home while avoiding LMI,” Ms Beswick explains.<\/p>\n

The First Home Super Saver Scheme allows you to save for a home deposit through superannuation, where tax rates are generally capped.<\/p>\n

States may also offer other schemes where the government can own a percentage of your home, so it helps to check local sites.<\/p>\n

“That way you can get into the market and buy your own place with a bit of help from the government,” Ms Smith says.<\/p>\n

What are some ongoing costs to consider?<\/p>\n

Loan repayments on your mortgage may be the biggest line item in your budget.<\/p>\n

Whether they are taken out at a variable or fixed interest rate can affect how much you pay, though both have pros and cons.\u00a0<\/p>\n

“Locking a fixed rate gives you certainty where you’ll know [for example] for five years you’ll be paying the same amount of money,” Ms Smith says.<\/p>\n

But the challenge sets in when you come off a fixed-rate term and experience a hike.<\/p>\n

“It’s really good to fix the rates when they are low but there’s no real advantage to fix them when they are high,” Ms Smith says.<\/p>\n

\"Woman Natallia Smith says the ultimate goal of home ownership should be paying off your home loan as fast as possible.(Supplied: Natallia Smith)<\/p>\n

Variable rates are subject to fluctuations in the cash rate in Australia.\u00a0<\/p>\n

For borrowers on a variable rate, Ms Smith advises: “Always check what your rate is because sometimes the banks are not very good at passing [cuts] on to consumers.”<\/p>\n

When that happens, she says to call the bank to ask for a reduction.<\/p>\n

But there are also plenty of costs that go beyond mortgages, Ms Beswick says.<\/p>\n

Here’s what you should account for.<\/p>\n

Home and contents insurance<\/p>\n

Home and contents insurance protects your property and belongings against unfortunate events like theft and\u00a0wild weather.<\/p>\n

What is covered will depend on your policy.<\/p>\n

While various factors determine how much you pay, premiums may be higher if your area is at a greater risk of natural disasters or crime.<\/p>\n

A higher excess will lower your premiums but increase your out-of-pocket expenses.<\/p>\n

Council rates<\/p>\n

Council rates are a type of tax that pays for local government services and infrastructure projects.<\/p>\n

This includes the building and maintenance of public spaces, such as libraries and parks, roads and waste management.<\/p>\n

The value of your property, which gets reviewed every two years, is a key factor in determining how much you pay.<\/p>\n

Strata fees (if applicable)<\/p>\n

Strata fees, also known as body corporate fees, only apply to apartment owners.<\/p>\n

These fees are paid into a joint fund to finance repairs and maintenance on the entire property.<\/p>\n

According to Ms Smith, payments can go as high as $10,000 to $15,000 a year.\u00a0<\/p>\n

This amount also increases every year, in line with inflation.<\/p>\n

Utilities\u00a0<\/p>\n

This includes all household running costs such as water, gas, power and internet.<\/p>\n

However, some states offer concessions and rebates for energy bills, so it’s worth researching options in your area.<\/p>\n

Maintenance and repairs<\/p>\n

Maintenance is a cost that Ms Beswick says people often account for the least and can be difficult to predict.<\/p>\n

“Preparing for breakdown of appliances and upkeep of your garden and building is necessary to consider,” she says.<\/p>\n

You may find there are more repairs in the first year, Ms Smith says.<\/p>\n

“Sometimes when you buy something you don’t really know what the place looks like and what needs to be fixed until you start living in it,” she says.<\/p>\n

Personal insurance<\/p>\n

Having personal cover, like life insurance, can help you and your family pay the mortgage in tragic circumstances.<\/p>\n

“People often insure their belongings but forget their most important asset, the ability to earn an income,” Ms Yeung says.<\/p>\n

“Personal insurance options, such as income protection, total and permanent disability cover, trauma or critical illness cover, and life insurance, can work separately and\/or together to provide financial support if unexpected illness, injury, or accidents occur.”<\/p>\n

How to know if you are financially ready to own a home\u00a0<\/p>\n

While experts have slightly different answers, they all echo the same idea.<\/p>\n

Understanding your cash flow and how much savings you have are important factors.<\/p>\n

“You’re on the right track if you can cover a deposit and initial costs without depleting your non-home deposit savings,” Ms Beswick says.<\/p>\n

“Always expect the unexpected \u2026 as a slight mishap, such as a broken air conditioner or a leaking pipe, can throw your budget out for the month.”<\/p>\n

She recommends spending no more than 35 per cent of your income on mortgage repayments, insurance, rates and fees.<\/p>\n

That should give you enough leeway to build on your emergency savings buffer while paying for other living expenses comfortably.<\/p>\n

\"A Stephanie Yeung is a big believer in having a first home that is sustainable and affordable in the long run.(Supplied: Stephanie Yeung)<\/p>\n

Ms Yeung notes that some people check affordability by stress testing, for example, adding 2 to 3 per cent to the current interest rate to see how higher repayments would impact the budget.<\/p>\n

“You need to have a savings buffer that goes beyond living from pay cheque to pay cheque,” she says.<\/p>\n

Having at least six months’ worth of income in savings is ideal, adds Ms Smith.<\/p>\n

“It’s important not to spend more than you earn,” she says, and the same goes when purchasing your own home, as she warns home owners not to overextend their budget.<\/p>\n

Ms Yeung agrees and sees this as a potential financial pitfall.<\/p>\n

“Banks might, based on current circumstances, give people a much higher loan than what they need,” she says.<\/p>\n

“So people are borrowing to the limit of what they can borrow rather than what they can afford \u2014 and those are two very different things.”House-sitting saved me enough to buy my own home<\/a><\/p>\n

At 42, Amna did not want to join a share house or spend all her money on rent. She turned to house-sitting to save a deposit. \u00a0\u00a0<\/p>\n

While being clear on home ownership costs can help, it’s also important to understand how life plans can impact the budget.<\/p>\n

“If a working couple plans to have a family and one of them decides to take time off [for caretaking duties], then there is actually a change in your income circumstance,” Ms Yeung says.<\/p>\n

Lastly, she warns not to cave in to emotions when making a purchase, such as the fear of missing out.<\/p>\n

Here is her advice for first home owners.<\/p>\n

“There’s no need to rush. Understanding the numbers before making a major financial commitment is important because managing repayments over time is critical,” Ms Yeung says.<\/p>\n

Your first home doesn’t have to be a dream home. Financial security often comes from reducing debt and eventually paying off your mortgage.”<\/p>\n

Note: This information is of a general nature and does not consider your personal circumstances. Please seek professional advice before acting.<\/p>\n

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