Owning a home is a significant milestone, providing stability and long-term financial benefits. However, buying a home in Victoria, comes with a range of costs beyond the property price. From upfront expenses to ongoing fees, being informed about these costs is crucial. This guide also highlights options like the 5% deposit Lenders Mortgage Insurance (LMI) scheme and the potential value of using a buyers advocate to navigate the property market.

Upfront Costs of Buying a Home

1. Deposit

Most lenders require a deposit of 5–20% of the property price. For a $600,000 home, this equates to $30,000–$120,000. However, under the Australian Government’s First Home Guarantee, eligible buyers can secure a property with a 5% deposit without paying LMI, reducing upfront costs significantly.

2. Stamp Duty

Stamp duty (land transfer duty) is a major upfront expense. Victoria offers exemptions for eligible first-home buyers purchasing properties under $600,000, with discounts for homes valued up to $750,000.

3. Buyers Advocate Fees

A buyers advocate, or agent, can assist with finding the right property, negotiating the best price, and navigating the purchasing process. While optional, their expertise is valuable, especially in competitive markets. Buyers advocate fees in Victoria typically range from $2,000 to $15,000 or 1% – 2% of the purchase price depending on the service type and property value. This cost can be charged as a flat fee or a percentage of the property price and should be factored into your budget.

4. Lenders Mortgage Insurance (LMI)

For buyers with less than a 20% deposit, LMI is usually required, costing thousands of dollars. However, the 5% deposit LMI waiver under the First Home Guarantee eliminates this cost for eligible buyers, saving an average of $10,000–$30,000.

5. Legal and Conveyancing Fees

Legal experts handle the transfer of property ownership. These fees range from $800 to $2,500 in Victoria.

6. Building and Pest Inspections

These inspections ensure the property is structurally sound and free from pest damage. Costs range from $600 to $900.

7. Loan Application Fees

Some lenders charge a one-time fee for processing your loan, typically between $200 and $600.

Ongoing Costs of Homeownership

1. Mortgage Repayments

Monthly mortgage repayments are often the most significant ongoing cost. Factors influencing repayments include the loan size, interest rate, and loan term.

2. Council Rates

Local councils charge rates for services like waste collection and infrastructure maintenance. These fees vary based on property value, typically costing $1,000–$3,000 annually.

3. Home Insurance

Protecting your home and its contents is essential. Comprehensive insurance can cost between $800 and $2,000 annually.

4. Utilities

Electricity, gas, water, and internet costs can add up to $2,500–$4,000 annually.

5. Strata Fees (if applicable)

Apartment or townhouse owners may pay strata fees for shared property maintenance. These fees can range from $500 to $3,000+ annually.

Hidden and Variable Costs

1. Maintenance and Repairs

Routine upkeep is essential to maintain your home’s value. Annual maintenance costs often range from 1–2% of the property’s value.

2. Renovations

Home improvements, such as updating kitchens or landscaping, come with varying costs depending on the project’s scale.

3. Emergency Fund

Setting aside funds for unexpected repairs or emergencies is vital for financial stability as a homeowner.

First Homeowner Support Programmes in Victoria

1. First Home Guarantee (5% Deposit Scheme)

This government initiative allows eligible first-home buyers to secure a property with as little as a 5% deposit without paying LMI. This program applies to various types of homes, including new builds and existing properties, within specific price caps.

2. First Home Owner Grant (FHOG)

First-home buyers purchasing a new property under $750,000 in Victoria can receive up to $10,000, or $20,000 in regional areas.

3. Stamp Duty Concessions

First-home buyers purchasing properties under $600,000 are exempt from stamp duty, with partial concessions available for homes valued up to $750,000.

Conclusion

Understanding the costs of homeownership in Victoria ensures you’re financially prepared for every step of the journey. From upfront expenses like deposits, stamp duty and buyers advocate fees to ongoing costs such as mortgage repayments and council rates, thorough planning is essential.

Take advantage of support programs like the First Home Guarantee, which allows eligible buyers to secure a home with a 5% deposit without LMI, and seek professional advice, including a buyers advocate, to streamline your property search. With careful budgeting and research, you can confidently take the first step toward owning your dream home.

If you need help purchasing a property reach out to us for a FREE no obligation chat.

Melanie Dennis 0416 218 003