The Hidden Costs of Buying a House (Beyond the Deposit)

When people start planning to buy a home, the main focus is usually saving for the deposit. While the deposit is a huge part of the process, it is not the only cost you need to plan for.

There are several upfront and ongoing expenses involved in buying a house, and understanding these early can make the process far less stressful.

Upfront Costs When Buying a Home

In addition to your deposit, there are a number of costs that can come up before you even get the keys.

Building Report

A building report helps identify any structural issues or maintenance concerns with the property. It is strongly recommended that you get a building report done, and in some cases, the bank will request one. The cost will vary, but it is an important step to avoid unexpected surprises later.

LIM Report

A LIM report provides information from the local council about the property. This can include things like consents, drainage, flooding risks, and zoning information.

Legal Fees

You will need a lawyer to handle the legal side of buying a property. This includes reviewing the sale and purchase agreement, carrying out title checks, and managing settlement. Your lawyer will also withdraw your Kiwi Saver for you if you are using this as your deposit. Legal fees can vary, so it is worth discussing costs with your lawyer early on.

Registered Valuation

A registered valuation is not required for every purchase. It is more commonly needed if you have less than a 20% deposit, you are buying a new build, or the purchase is a private sale.

But keep in mind that if the bank requests a registered valuation, it will be required to proceed with lending. Typically, your mortgage adviser will need to order this for you. The cost depends on the property type and location, and your mortgage adviser can guide you on when this is needed.

How Much Should You Have Saved?

Alongside your deposit, it is a good idea to have at least a few thousand dollars set aside to help cover these upfront costs. This gives you flexibility and helps avoid last minute stress if something is required during the buying process.

It is recommended to do research on these costs beforehand or talk to your mortgage adviser to get further clarification.

Ongoing Costs After You Buy

Once you own the property, there are ongoing expenses to factor into your budget.

Insurance

Home insurance is required by the bank to settlement. You can request insurance quotes on specific properties before you buy, which helps you understand the ongoing cost and avoid surprises.

Council Rates

Council rates are an ongoing cost that vary by property and location. To get an indication of rates, you can visit your local council website and use the rates search to look up a specific property.

Why These Costs Matter

Understanding the full cost of buying a house helps you plan properly, make informed decisions, and avoid feeling financially stretched. While the deposit is a major milestone, being prepared for these additional expenses puts you in a much stronger position when it comes time to buy.

If you are thinking about purchasing a home and want help planning for all the costs involved, getting advice early can make a big difference.