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First home buyers are paying an average of $6,353 in unexpected costs

Acacia Gardens, North-West Sydney, Aerial Photography

First home buyers across the country are being hit with thousands of dollars worth of unexpected upfront costs, according to new research by Finder.

According to Finder's First Home Buyers Report 2021, which surveyed 1,028 first home buyers, more than half (57%) are having to pay unexpected upfront costs.

The average amount they're forking out is $6,353.

Sarah Megginson, home loans expert at Finder, said fees and expenses can quickly pile up.

"Paying for government charges, lender fees and other moving costs can easily stack up to $10,000 or even $20,000, depending on the state.

"That's a sizable price for home buyers to pay if they aren't expecting it.

"Do the research before you buy to avoid any surprising bills. Head to Finder for a list and estimate of how much you'll pay in additional costs," Megginson said.

The research also revealed that Victorians have paid substantially more in unanticipated costs ($9,107) than those from New South Wales ($5,886) and Queensland ($4,724).

Owner occupiers (58%) were more likely to have paid unexpected costs than investors (49%), but, on average, they reported paying less than half of what investors had to pay ($5,647 and $12,573 respectively).

Megginson said that the hidden costs that come with buying a home – professional advice, travel costs and information costs such as property reports – aren't always taken into account.

"It's important buyers do their research beforehand. While many states offer concessions on stamp duty for first home buyers, there are still costs for conveyancing, loan application fees, and home and contents insurance, to name a few.

"Lenders mortgage insurance also applies to those borrowing more than 80% of the property's value, potentially costing you thousands of dollars," Megginson said.

As for which generation is being hit the hardest by unexpected costs, gen X comes out on top ($6,792). Millennial first home buyers are paying $6,486 on average, while gen Z pay $5,177.

Average unexpected costState
South Australia$6,396
New South Wales$5,886
Western Australia$4,974

How to avoid unexpected costs when buying a property:

  • Do your due diligence. Beyond the cost of your deposit and home loan, there are a number of expenses associated with buying a home. Take the time to research how much money you'll need for all the upfront fees and costs, such as stamp duty, title transfer fees, lender fees and more.
  • Don't forget the hidden fees. Beyond the upfront costs there are plenty of extras you might not have considered. These include information costs, professional advice and travel costs.
  • Compare mortgages to get the best deal. Keep the costs of your mortgage as low as possible by finding a low-fee, low-interest home loan.

Hoping to enter the market? Check out our tips for first home buyers or compare home loans for low deposit borrowers.

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