How to calculate the cost of buying a home in Australia

How many smashed avocado on toast do you need to forgo in order to afford your first home? Hopefully, none at all! The cost of your first home depends on your budget and a range of other factors, including any additional costs you’ll be up for and any grants you’re eligible to receive.

So, before you start dividing the value of the house you want to get your hands on by however much brunch costs down at your local cafe, read on!

Calculate the upfront costs

When calculating how much you can afford to borrow for your first home loan, you need a solid grasp of all the upfront costs – including the payments you’ll need to make before you move in. These are:

• The deposit: With most lenders, you’ll need at least 5 percent of the property’s value as a deposit. For a $600,000 home, this will be $30,000. If your loan is subject to Lenders Mortgage Insurance, the 5 per cent may need to be genuine savings.
• Stamp duty: This fee differs between Australian states. For more details, please contact your Mortgage Choice broker.
• Lenders Mortgage Insurance: Applies if the amount of your deposit, less any costs financed, is less than 20 per cent of the property’s value (i.e., if you intend to borrow more than 80 per cent).
• Pest and building inspections.
• Valuation fees.
• Solicitor/conveyancing fees/pro rata council rate adjustments/Government registration fees.
• Lenders fees.
• Removalist costs.

(As of 28/6/17)

Factor in ongoing costs

Ongoing costs are just as important when estimating how much you need to save for your first home, as you’ll be making these for years to come.

Use our Home Loan Repayment Calculator to determine how much your repayments will be. Enter the type of loan (e.g. principal and interest, or interest-only), the interest rate, loan amount and loan term (e.g. 30 years) and you’ll see how much you’ll need to set aside each month or fortnight.

Make sure you also consider ongoing property costs such as:

• setting up phone and internet connections
• strata fees
• electricity and water
• council rates
• home and contents insurance.

Deduct any grants or concession that you’re eligible for

Most state governments offer First Home Owner Grants, or concessions on stamp duty.

Do your research by looking at government websites and see what’s available. You could save thousands if you’re eligible for a government grant or stamp duty reductions, and if you buy off-the-plan, there could be additional concessions.

So how much does it cost to buy a home in Australia?

Obviously the answer to this question depends on which costs you have, whether you’re eligible for government schemes and – of course – how much you can borrow. Get in touch with your mortgage broker, who can help you figure out your borrowing power – free of charge!