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Costs of buying a house in NSW

March 22, 2022
by
Craig Gibson

Buying property in NSW and want to learn more about what costs to expect in the process?

If you’re a first-time buyer, you may not know that there is a lot more to budget for than just the purchase price of a home. You could also be upsizing into a larger property, or downsizing for retirement, having not bought a property for some years. Regardless where you are in your property journey, itemising all of the costs involved will help you to budget for them. Ultimately, doing so can help you decide what property you can afford. 

Read our guide for accurate insights into what costs you should expect when buying a property in NSW. And while we don’t cover absolutely every single cent, you’ll get a comprehensive overview of the key costs to expect. We also have a cost guide to buying a house in Victoria and Queensland if you’re purchasing in those locations. If you’re after  an overall guide, then check out our easy-to-understand guide to buying a home.

Let’s start with all the upfront costs of buying a house in NSW.

Upfront costs of buying a house in NSW

Couple inspecting a house with an agent

There are a number of upfront costs involved when buying a house in NSW, which we’ll highlight below.

Stamp duty costs in NSW

NSW property stamp duty, or transfer duty as it’s otherwise known, is a compulsory tax on your property purchase that’s based on its value. It’s the largest cost you’ll have buying a home, so it’s worth knowing how much it could be. You can use an online stamp duty calculator to work out how much you will owe.

For example, on a property worth $500,000, you will pay stamp or transfer duty of $17,707 in NSW. This increases to $31,207 for a property worth $800,000. Exceptions include if you’re buying ‘off the plan’, a house and land package, or are a first time buyer.

If you’re a first home buyer in NSW, you will qualify for a number of concessions under the First Home Buyers Assistance scheme (FHBAS). The first of these is an exemption from stamp duty if the property’s value is $650,000 or less. If you pay between $650,000 and $800,000, you pay a discounted amount based on a sliding scale and the value of the property. 

Lenders Mortgage Insurance (LMI) 

Most lenders in NSW require a deposit of 20 per cent to secure a home loan, otherwise you will need to pay lender's mortgage insurance (LMI). This is a one-off lump sum which covers the lenders in case you can’t afford your regular mortgage payments. The amount varies from lender to lender, with the value of the property and any savings you have all being considered. 

Most lenders in NSW require a deposit of 20 per cent to secure a home loan.

For example, if you’re buying a $500,000 property and have managed to save $10,000 you will still need to pay LMI of $15,200.

If you’re trying to save for a home deposit, be sure to put these expert tips for saving for a deposit into practice.

Conveyancing fees NSW

Conveyancing is the legal transfer of the property from the seller to a buyer. Legal fees for buying a house in NSW vary, depending on the complexity of your purchase. Solicitors fees for buying a house can range from $800 - $2,500 for processing all the relevant documents and reviewing the contract of sale. 

You also need to ask your legal representative about the cost of disbursements, which are expenses they incur and bill for separately. These can include tasks such as conducting a title search and paying the land tax on your new property.

Solicitors fees for buying a house can range from $800 - $2,500.

Building and pest inspection costs 

These two separate reports give you peace of mind that the property you’re purchasing is structurally sound and is free of any pests like termites. Building and pest inspection costs in Sydney will vary in the range of $300 - $700 (building inspection) to $200–$350 (pest inspection). 

Mortgage application fee

Some home loan providers in NSW charge a mortgage application fee when you sign up with them, though some will waive this as an incentive. You can expect to be charged a mortgage application fee of $500 - $800. 

Expect to be charged a mortgage application fee of $500 - $800. 

Valuation fee

Lenders want to get an idea of the true value of the property you’re planning on purchasing, because this determines the final loan amount. Expect a property valuation in NSW to cost in the region of $300, though some lenders will bundle this into your application fee. 

Registration of title

In NSW, the state requires you to register the property, also known as the NSW mortgage registration fee. This identifies that the property is held as security against your home loan. Since July 2020, this costs $146 in NSW, and also ensures this record can be located in a title search. 

A registration of title in NSW costs $146.

Home and contents insurance costs

Home and contents insurance covers your property and your possessions from accidental damage, theft, or a natural event like a storm. Expect to pay anywhere from $220 to $1,000 a year, depending on the value of your property and possessions. If you’re purchasing a unit in a strata, there’s no need to take out building insurance as this is covered by the strata corporation. 

Let’s now look at costs you may need to budget for after the purchase is complete and you move in. 

Understand the ongoing costs after buying a home

After purchasing your property, there are numerous ongoing, recurring costs you need to take into account. Depending on the item these could be due weekly, fortnightly, monthly, quarterly, or annually. 

A major ongoing cost will be your monthly repayments toward your home loan. You can use a mortgage repayment calculator to get an idea what these will be in advance, based on your home loan amount, mortgage term, and the interest rate you’re paying

For example, based on a home loan of $500,000 paying an interest of 2.42 per cent over 25 years, your monthly repayments would be $2,233 in NSW.

You may need to renovate or carry out some essential maintenance and repairs.

Depending on the condition of the property, you may also need to renovate or carry out some essential maintenance and repairs. Major renovations involving kitchens and bathrooms run into the tens of thousands of dollars, while minor repairs and maintenance could cost as much as $5,000 depending on the condition of the property. If you have a garden you will need to budget for the upkeep of your outdoor areas, particularly if it needs regular attention like lawn mowing, or if it has a swimming pool.

Quarterly strata fees or levies are a significant ongoing cost to budget for if you’re buying into an apartment complex.

If you’re buying into an apartment complex, quarterly strata fees or levies are a significant ongoing cost to budget for. These cover building maintenance, common area maintenance, cleaners, as well as building insurance. These fees can vary depending on the size of the complex, but expect to pay around 1.2 per cent of the property's value in NSW, or slightly less if the strata has fewer facilities. 

There are also a range of utilities to factor into your ongoing costs, including electricity, water rates, and internet. The average Sydney electricity bill is currently in the region of $1,253 per year, based on average usage in a 4 bedroom, 2 bathroom home. According to Canstar Blue research, the quarterly water rate in NSW is $204, while fixed charges for the water rate in Sydney are $24.30 per quarter (with a meter) or $119.77 per quarter (with no meter). Their research also found the average monthly cost for internet (NBN) in NSW to be $71.

After reading this guide, you should have a better idea of all the costs involved in buying a house in NSW. With this information, you can work out what you can afford to buy, and begin the process of planning and budgeting accordingly.

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