The cost of buying a home: What to consider

Co-author: Justine Davies

In addition to the home loan itself, there are plenty of upfront costs when buying a home. Costs which, particularly for first home buyers, may come as a shock. Here are nine of the more common upfront costs of buying a house.

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1. Building inspection

This is one of the most common, and borderline mandatory, upfront costs when buying a home. Before you buy, it’s definitely a great idea to get a building inspection to check for structural soundness and to ensure that, among other things, you’re not going to be up for building repairs in the near future.

A typical pre-purchase building inspection can cost around $400-$800 depending on the size of the house and how in depth you wish the inspection to be.  If the property is in a regional area, you may have to pay more.

Find out more here.

2. Loan establishment fee

Lenders may charge you a fee for the approval of the home application which is charged once the loan is put into your account. The fee usually tends to be up to $400 but try to get the fee waived, if possible!

Our home loans comparison table lists the upfront fees for each loan on the ‘features’ tab. Compare your loan application options:

3. Lenders mortgage insurance

If you have less than a 20% deposit – or 30% in Auckland – against the value of your property, your financial institution may charge you lenders mortgage insurance. This doesn’t protect you at all, but it does protect the lender in the event that you default on your home loan. The cost of lenders mortgage insurance can be thousands of dollars and your financial institution will be able to give you an idea of cost.

4. Solicitor/conveyance fees

This is the cost of having the sale contract, mortgage document and any other legal documents prepared (by either a solicitor or a conveyancer). While you can DIY your contracts, small legal mistakes can end up costing you a lot of money, and it’s better to pay hundreds now rather than thousands later when the loop holes in the contract appear. Here’s more on why you need to hire a conveyancer when buying a house.

5. Home and contents insurance

Home and contents insurance is self-explanatory, an insurance that covers the cost – or a fraction of the cost – to fix or replace damage to your house and contents. Home and contents insurance is a vitally important cost that you should have in place as soon as (or slightly before) settlement occurs. The cost of home and contents insurance varies from property to property. Compare reviews and ratings on our website:

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6. Moving costs

Buying a house means moving and moving doesn’t always come cheap. Depending on how far you are moving (and how much stuff you have to move) removalist fees can also add a few thousand dollars to your upfront costs when buying a home. So, make sure you get a quote and consider this in your finances when looking to buy a house so you’re not caught out with another unexpected expense. Check out our moving house checklist here.

7. Connection costs

Gas connection, power connection and internet connections are all extra costs to take into account when buying a house. In terms of dollar figures, they are not in the vicinity of the above costs, but these various utility connection fees can give your cashflow a temporary kick in the pants. Find value for money by comparing your options on the Canstar Blue website:

8. Renovating costs

Unless your home is picture-perfect from the moment you take possession, you may also be up for some renovating costs. How much? The sky (and your spending capacity) is the limit. However, you should definitely be mindful of the pros and cons of buying a home with renovation in mind.

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Once you’ve mastered the above expenses, then congratulations – you are likely to now be the proud owner of a 25- or 30-year mortgage, and hopefully a lovely home.

Learn more about Home Loans

• What types of mortgages are there?
• What type of home loan is best for a first home buyer?
• A guide to how home loans work