1. Stamp duty

Stamp duty is a tax levied on property purchases, and because it’s handled by state and territory governments, exactly how much you’ll pay varies around the country. The common thread is that duty is based on the actual price you pay for your home – not the advertised price.

A number of states offer stamp duty exemptions or discounts (often up to certain property values) for first home buyers. If that sounds like you, speak with your Aussie Broker to know if you’re eligible – many states have boosted first home buyer entitlements since 1 July 2017.

For other buyers stamp duty is an unavoidable cost, and as it can run into tens of thousands of dollars it’s definitely worth budgeting for. Check out Aussie’s stamp duty calculator to know what you could be up for.

On the plus side, in some states, like New South Wales, buyers can have up to three months following the purchase of their home to pay stamp duty. This provides extra time to scrape the funds together.

2. Lenders mortgage insurance

If you buy your home with less than a 20% deposit, be prepared to pay lenders mortgage insurance. This type of cover protects the lender (not the home owner) if the borrower cannot keep up their repayments, and the one-off premium paid at the outset holds for the life of the loan.

How much you’ll pay in LMI depends on a range of factors including how much you borrow and the size of your deposit. If it’ll be a financial struggle to pay the premium upfront, ask your local Aussie broker about adding LMI to your loan. Some lenders permit this. The downside is that this will increase your monthly repayments, plus you’ll be paying interest on LMI, which inflates the cost over time.

3. Pre-purchase property reports

A property can look great but don’t take things at face value. Remember, the vendor is presenting the place in its best possible light, and furniture and trimmings can be strategically placed to hide serious flaws like rising damp or cracked walls.

The real hidden nasties can be tucked away out of sight in the roof cavity or below the floorboards – anything from damaging colonies of termites to dodgy electrical wiring.

That makes a combined pest and building inspection a worthwhile investment to be sure you’re not buying a property time bomb laden with budget-breaking problems.

For apartment buyers, organising a strata report can make good financial sense. These reports detail any special levies unit owners may be asked to contribute to, and whether the strata scheme has adequate funds to manage future maintenance and repairs – if it doesn’t, owners could be asked to cough up extra cash to cover the shortfall.

4. Legal fees

Buying a home involves plenty of behind-the-scenes legal work to transfer the property into your name. However, it pays to have your legal team lined up before you sign on the dotted line of the contract of sale.

Many contract terms will be standard but vendors are free to include clauses that favour themselves at the buyer’s expense. Having a legal expert review the contract ensures you’re aware of anything that could disadvantage you as a buyer.

5. Home and contents insurance

Your new home is a major asset, and along with your furniture and personal belongings, it’s definitely worth insuring. It’s important to have cover in place by settlement date when the property is legally yours. The trouble is, this could be the time when your cash resources are on the lean side, so look for ways to save.

To understand all the upfront purchase costs that can apply to your home, talk to your Aussie Broker.