The true cost of buying — beyond the deposit

Most buyers save furiously for a deposit and assume that's the hard part done. Then the contract arrives and a second wave of costs lands — stamp duty, lender's mortgage insurance, legal fees, inspections — and suddenly the cash needed to settle is tens of thousands more than expected. Knowing the full picture early is the difference between a smooth settlement and a scramble.

Stamp duty: usually the biggest after the deposit

Transfer (stamp) duty is a state tax, and it's substantial — commonly tens of thousands of dollars, scaling with the purchase price. Every state and territory has its own rates and thresholds, and they change. First-home buyers can be fully or partly exempt below certain price caps, but those caps differ everywhere and have edges that surprise people: a few thousand dollars over a threshold can cost many thousands in duty.

Lender's mortgage insurance (LMI)

If your deposit is under 20% of the price (an LVR above 80%), most lenders require LMI — insurance that protects the lender, not you. On a higher-LVR loan it can run into five figures. It can be added to the loan, but then you pay interest on it for years. Government schemes such as the First Home Guarantee can waive LMI entirely for eligible buyers with as little as a 5% deposit, which can save a fortune — so it's always worth checking eligibility before assuming you'll pay it.

The smaller costs that add up

Beyond those two, budget for conveyancing or legal fees, building and pest inspections, a possible valuation fee, government transfer and mortgage registration fees, loan application or settlement fees, and moving costs. Individually they're modest; together they routinely add several thousand dollars.

How to budget properly

A useful rule of thumb is to allow roughly 5% of the purchase price for costs on top of your deposit — more in higher-duty states, less if a first-home concession applies. But a rule of thumb is just a starting point. The cleaner approach is to model your specific price, state, deposit and buyer type, then keep a buffer for the unexpected. Going in with the true number means no nasty surprises a week before settlement.