Buying your first home involves more than saving a deposit and working out what you can afford to borrow. There are costs before settlement, costs that appear on settlement day and ongoing expenses that begin once the property is yours.
For a first home buyer in Adelaide, understanding these costs early can make your property search much clearer. It helps you work out not just the maximum purchase price you can achieve, but the comfortable price that leaves enough room for inspections, conveyancing, government charges and the everyday costs of owning a home.
Here are the main costs to allow for when buying your first home, when they apply and how you may be able to reduce or avoid them:
Upfront costs of homeownership
Your home deposit
Your deposit is usually the largest upfront amount you need to prepare.
Traditionally, buyers aim to save a 20% deposit, because borrowing 80% or less of a property’s value can help you avoid Lenders Mortgage Insurance (LMI).
But not every first home buyer needs to save a 20% deposit. Depending on the lender, loan, your circumstances, and government programs, you may be able to buy with a smaller deposit.
In fact, putting every available dollar into your deposit might reduce your loan slightly, but it could leave you without a buffer for moving, insurance or an unexpected repair shortly after settlement.
If you are unsure what deposit makes sense for your circumstances, reach out to a mortgage broker before you start making offers. They can help you understand your comfortable borrowing range, deposit requirements and the other costs to expect.
Stamp duty
Stamp duty is a South Australian Government tax that can apply when property changes ownership.
For buyers who need to pay it, the amount depends mostly on the property’s value, but it can be one of the biggest costs on top of your deposit.
Fortunately, if you are buying or building a new home, you may qualify for South Australia’s first home buyer stamp duty relief. See our complete guide on first home buyer grants and schemes for more information.
Still, not every buyer is eligible for relief. It is a good idea to have the likely stamp duty amount calculated before setting your purchase budget.
Lenders Mortgage Insurance (LMI)
LMI can apply when you borrow a high proportion of the property’s value, commonly when you have less than a 20% deposit.
LMI protects the lender if the loan cannot be repaid and they suffer a loss.
The cost varies according to factors such as the amount you borrow and the size of your deposit. Depending on the loan, it may be paid upfront or added to the home loan (although adding it to your loan means you may also pay interest on it!).
In some cases, LMI can be avoided. Like with stamp duty relief, government-funded programs allow eligible first home buyers to purchase with a smaller deposit and not pay LMI. Lenders may also have different policies for some borrowers or professions.
Before you decide whether to pay LMI or keep saving, consider the deposit required, total borrowing, loan costs and any government assistance you may be eligible for.
Conveyancing and legal costs
A conveyancer or solicitor handles the legal transfer of the property into your name and plays an important role in the buying process.
Their work can include reviewing property documents, preparing settlement paperwork, conducting searches and making the financial adjustments required at settlement.
This is a cost you should plan for, not treat as optional.
Fees vary between providers and according to the complexity of the purchase. Ask for a clear quote explaining both the professional fee and any additional searches or disbursements you may have to pay.
Choosing purely on price may not give you the full picture. What matters is understanding exactly what work is included before you proceed.
Building and pest inspections
If you are buying an established property, a building and pest inspection is another upfront cost worth allowing for.
The purpose is to identify issues that may not be obvious when you walk through an open inspection, such as structural problems, moisture damage, termite activity or other defects.
The inspection does not guarantee that nothing will go wrong with the home in future, but it gives you valuable information before you make a significant financial commitment.
Costs vary based on the property and provider. Depending on how you buy and the conditions in your contract, you may need to organise inspections quickly, so it is useful to know who you will contact before making an offer.
Skipping an inspection may save money upfront, but it can expose you to considerably larger costs if a serious problem is discovered after purchase.
Property and mortgage registration fees
Buying a home also involves government registration charges.
Land Services SA charges fees to register property transactions, including the transfer of ownership and registration of a mortgage. These fees are separate from stamp duty and can change each financial year. Check the fees for this year on the Land Services SA website or talk to your broker.
Your conveyancer can generally provide an estimate of the registration and search costs relevant to your purchase before settlement.
These charges can be easy to overlook because they are much smaller than a deposit or stamp duty, but they still need to be included in the cash you have available.
Costs at settlement
Settlement is when ownership formally transfers to you, but there can be more involved than just paying the remaining purchase price.
Your conveyancer prepares adjustments for some property expenses that have already been paid, or are still owing, between you and the seller. These may include council rates.
These are normal parts of a property transaction, but they can surprise first home buyers who have only budgeted for the deposit and conveyancing fee. Ask your conveyancer what adjustments are likely to appear on your settlement statement.
Ongoing costs of homeownership
Moving and setting up your home
Moving in creates another group of expenses. Removalists, utility connections, furniture, appliances, window coverings, locks and minor repairs can add up fast.
A newly built property may also need landscaping, fencing, driveways or other items that were not included in the building contract.
Buy you do not need to pay for everything immediately.
One of the easiest ways to save as a first home buyer is to separate what the home genuinely needs and what you would just like to change. Keeping some savings available after settlement can provide more flexibility than furnishing or renovating everything at once.
Mortgage repayments and interest
Once you own the home, your regular mortgage repayment will probably be your largest ongoing cost.
Your repayment depends on the amount borrowed, loan term, interest rate and repayment structure. If your loan has a variable interest rate, repayments can change when the rate changes.
When setting your budget, consider more than whether you can meet the initial repayment. Think about how your household budget would cope if repayments increased or another expense arose at the same time.
Council rates and the Emergency Services Levy
Homeowners also need to budget for council rates and South Australia’s Emergency Services Levy (ESL). Eligible South Australians may qualify for a concession on their principal place of residence.
Rather than thinking of these as occasional surprises, it can help to convert annual or quarterly bills into a monthly amount and set money aside regularly.
Strata or community fees
If you buy an apartment, unit or certain townhouses, you may also have strata or community title contributions.
These payments help cover shared property costs like insurance, common-area maintenance and other expenses managed by owners.
Before purchasing, review the relevant documents with your conveyancer so you understand the regular contributions. A property with a lower purchase price is not necessarily cheaper to own if its ongoing fees are significantly higher.
Home and contents insurance
Insurance is another cost to consider before settlement rather than after you move in.
Your lender will generally require the property itself to be appropriately insured before settlement.
Costs differ significantly according to the property, location, level of cover and insurer, so getting quotes while you are considering a property can help you build a more accurate ownership budget.
Maintenance and repairs
Unlike renting, there is no landlord to contact when something breaks in a home you own.
Air conditioning, plumbing, roofing, appliances, gardens and general wear can all create expenses over time. These will not always be predictable.
Keeping money available after settlement can help you deal with an unexpected repair without immediately relying on credit.
You should consider that buffer when you buy, rather than when you have already moved in.
Work out the full cost before choosing your price range
The price of the property is only one part of what your first home will cost.
Before you start making offers, work through your deposit, stamp duty position, government charges, conveyancing, inspections, loan costs and the amount you want to keep available after settlement. Then consider the mortgage, council rates, insurance, maintenance and any strata or community fees you will need to manage over time.
There may also be first home buyer grants, stamp duty relief and Australian Government programs that change how much you need upfront. Our complete guide to first home buyer grants and schemes explains those options separately.
A Rise High mortgage broker can help you understand your borrowing capacity, compare suitable home loan options and work through the costs that need to be accounted for before you buy.
Knowing those numbers before you find the property means you can set a price range based on the bigger picture, with enough room for both buying the home and comfortably owning it.
