Understanding the hidden costs of buying a property

When you’re saving to buy a home, it’s easy to focus on the two biggest numbers: the deposit and the final purchase price. But many first-time buyers are caught off guard by the other expenses that come up during the buying process. Being prepared for these costs is the key to a smooth and stress-free journey to ownership.

In New Zealand, these additional upfront costs typically total between $8,000 and $15,000 on top of your deposit. This guide breaks down exactly what those costs are, so you can budget with confidence and avoid any surprises.

Upfront costs before you move in

These are the one-off fees you’ll need to budget for to get the purchase over the line. They cover the essential legal work, property checks, and the logistics of moving.

• Legal fees: You will need a solicitor or conveyancer to handle the legal side of the purchase. This includes reviewing the Sale and Purchase Agreement, checking the property title, and managing the transfer of funds on settlement day.Typical cost: $1,500 to $2,500
• Builder’s report: This is a critical step. An independent building inspector will check the property for any structural issues, moisture problems, or potential costly repairs. It’s a small investment that can protect you from buying a home with expensive hidden problems. An inspection might cost $600, but it could save you from $50,000 in unexpected repairs.Typical cost: $500 to $900
• LIM report: A Land Information Memorandum (LIM) is a report from the local council. It provides a summary of what the council knows about the property, including building consents, zoning information, public drainage, and any known hazards.Typical cost: $300 to $450
• Registered valuation: Your bank may require a registered valuation to confirm the property’s worth before they approve your home loan. This is especially common if you have a deposit of less than 20%. Your lender will need to order this through their approved platform, but you will typically pay the fee.Typical cost: $600 to $800
• Moving costs: Whether you hire a professional moving company or do it yourself with a rental truck, there will be costs involved in getting your belongings from your old place to your new home.Typical cost: $1,500 to $2,500 for professional movers
• Initial insurance premium: You must have home insurance in place from the day the property becomes yours (settlement day). Lenders require it as a condition of the mortgage, and you’ll usually need to pay the first year’s premium upfront.Typical cost: $1,000 to $2,500 annually

Ongoing costs of home ownership

Once you have the keys, the costs of running a home begin. It’s important to factor these into your new household budget alongside your mortgage repayments.

• Council rates: These are taxes paid to the local council to fund community services like parks, libraries, rubbish collection, and road maintenance. They are usually paid annually or in quarterly instalments.Typical cost: $2,000 to $4,000 annually
• Utilities: Just like when you were renting, you’ll be responsible for paying for your power, water, gas, and internet connections.
• Maintenance and repairs: From a leaky tap to bigger jobs, every home needs ongoing maintenance. It’s a smart idea to set up a separate savings account for maintenance and aim to put aside a small amount each month. This creates an emergency fund for any unexpected repairs.
• Body corporate fees: If you buy an apartment, townhouse, or unit on a cross-lease, you will likely need to pay body corporate or residents’ association fees. These fees cover the maintenance of common areas, shared utilities, and building insurance.