Last Updated: 2nd September, 2021

There are several costs that either directly add to your mortgage or are charged as fees of some sort. Note: You can use our purchase costs calculator to estimate your total for upfront costs.

The Most Common Upfront Costs of Buying A Home

Below are the two most common upfront costs for a mortgage are deposit and stamp duty.


Your deposit is usually 20% of the total cost of the property. Most lenders expect at least 5% of the value of the property to come from your genuine savings. In case you can’t pay the deposit, there are alternatives, like a no deposit home loan or a guarantor home loan.

Government Fees

Stamp duty, also known as transfer duty, is a one-off tax the purchaser of a property pays. Stamp duty differs considerably from state to state. You can use our stamp duty calculator to get an estimate. First home buyers can qualify for stamp duty exemptions or concessions when buying property up to a certain value, which also varies among states. In New South Wales, on a $650,000 purchase of an existing home, first home buyers can save up to $24,585 in stamp duty.

Other Upfront Costs

Without stamp duty, property purchasing costs are greatly reduced. Some first home buyers pay only a couple thousand dollars in upfront costs. These costs include:

Lender’s Mortgage Insurance

Lender’s Mortgage Insurance (LMI) protects the lender if you default on the loan. A default is when you miss a payment or stop making payments. Paying LMI allows you to borrow a higher percentage of the purchase price ‒ sometimes more than 80% of the property value. Lenders have their own LMI provider, so you can’t choose one. What you can choose is a lender tied up with the cheapest LMI provider. When do I need to pay LMI?
Property Purchase Price Minimum Deposit
LMI not required LMI Required
20% 10% deposit 5% deposit
$800,000 $160,000 $80,000 $40,000
$700,000 $140,000 $70,000 $35,000
$600,000 $120,000 $60,000 $30,000

Conveyancing and Legal Fees

It is strongly recommended that first home buyers get a qualified conveyancer to handle the legal side of things. This will cost about $800 to $1,500. Conveyancing covers the legal and statutory process of transferring real-estate ownership. Generally, your conveyancer/solicitor will handle the preparation of the contract of sale, the exchange of contracts, and the settlement.

Building and Pest Inspection

An inspection is a detailed assessment of the condition of the property that a qualified professional performs. It can help you identify problem areas like cracked and damp walls, faulty roofs, etc. A building and pest inspection is recommended before you make any buying or selling decision. Depending on the property’s size and location, and the number of services you require from the inspector, the costs range between $200 and $1000.

Title Transfer Fee and Registration Fees

The mortgage registration fee in NSW is $143.50 and the land transfer fee is also $143.50. These are government fees for transferring the land title to your name and for registering the mortgage on the title, respectively.

Home Insurance Prior to Settlement

Banks require you to insure your property before they’ll advance the loan amount. So, when buying a property, make sure your policy starts before the proposed settlement date and is insured for at least the minimum amount the bank requires. The average home insurance premium is around $1,000 in NSW and must be paid annually.

Bank Fees

There may be some bank fees for lodging an application, valuation of the property, settlement, etc. These fees can vary from $0 to $900. However, many banks waive these for first home buyers.

Tips on Reducing Your Upfront Costs

The points below can help you reduce some of your initial expenses.