The Hidden Costs of Buying Property: What You Need to Know

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Buying a property is an exciting milestone, but it’s easy to focus on the purchase price and overlook the many additional costs that come with it. These hidden expenses can add tens of thousands of dollars to your budget, and failing to account for them early on can lead to financial strain. As a seasoned Buyers Agent in Sydney, I’ve seen many buyers caught off guard by these unexpected costs, often stretching their budget further than anticipated.

Understanding these hidden expenses before you begin your property search is crucial to making informed decisions. From government charges and legal fees to ongoing ownership costs, knowing what to expect ensures you are financially prepared and can move forward with confidence. Whether you're a first-time buyer or a seasoned investor, taking the time to factor in these costs will help you avoid surprises and set yourself up for long-term success.

Let’s explore the key expenses beyond the purchase price that every buyer should be aware of before stepping into the property market.

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Stamp Duty: A Significant Upfront Cost

One of the largest and most unavoidable costs when purchasing property in New South Wales is stamp duty. This government-imposed tax can significantly impact your budget, yet many buyers underestimate just how much they’ll need to set aside for it. Unlike some other upfront expenses, stamp duty is non-negotiable and must be paid before the property title can be transferred into your name.

The amount of stamp duty you’ll pay depends on the purchase price of the property. In NSW, this cost is calculated on a sliding scale, meaning the more expensive the property, the higher the duty. For instance, a property valued at $800,000 could attract a stamp duty cost of over $30,000, which is a substantial addition to your upfront expenses.

There are, however, concessions and exemptions available for eligible buyers. The First Home Buyer Assistance Scheme offers reductions or complete exemptions for those purchasing their first home under a certain price threshold. Additionally, buyers purchasing a brand-new home or vacant land may also be entitled to concessions under specific government schemes. It’s always advisable to check the latest eligibility criteria through the NSW Revenue Office to see if you qualify for any savings.

Given its financial impact, it’s crucial to factor stamp duty into your budget as early as possible. Many buyers focus on saving for their deposit but fail to consider how much stamp duty will add to their costs. Without proper planning, this can lead to last-minute financial stress or even force buyers to reconsider their purchasing options.

A good strategy is to use an online stamp duty calculator or consult with a buyers agent or conveyancer before committing to a property. This ensures you have a clear understanding of the total upfront cost and can budget accordingly, avoiding any nasty surprises when it comes time to settle.

Stamp duty may not be the most exciting part of purchasing a property, but being aware of its impact from the start allows you to plan effectively and move forward with confidence in your investment.

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Legal Fees: Protecting Your Investment

Buying a property is a legally complex process, and having the right professional support is essential to safeguard your investment. A conveyancer or solicitor plays a crucial role in ensuring that every legal aspect of your purchase is handled correctly. However, many buyers overlook or underestimate the cost of legal fees, which can vary significantly depending on the complexity of the transaction.

When you purchase a property, your legal representative will be responsible for:

• Reviewing the contract of sale to ensure there are no hidden clauses or unfavourable conditions that could put you at risk.
• Conducting title searches to confirm the property has no outstanding debts, restrictions, or encumbrances that could affect ownership.
• Handling the settlement process, which involves liaising with the seller’s legal team, your lender, and government authorities to ensure a smooth transfer of ownership.
• Checking for zoning and planning restrictions, which could impact your ability to renovate or develop the property in the future.
• Calculating adjustments for council rates and water levies, ensuring that you don’t end up paying for the previous owner’s liabilities.

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How Much Do Legal Fees Cost?

The cost of engaging a conveyancer or solicitor can range from $1,500 to $2,500, depending on the complexity of the transaction and whether you require additional services, such as negotiating contract terms or resolving legal disputes. While some conveyancers offer a fixed-fee service, others charge on an hourly basis, meaning legal costs can increase if unexpected complications arise.

Although it may be tempting to go with the cheapest option, choosing an experienced professional can save you thousands in the long run. Errors or oversights in the legal process can lead to serious financial and legal consequences, such as buying a property with hidden liabilities or restrictive covenants that could impact its future value.

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How to Choose the Right Legal Professional

When selecting a conveyancer or solicitor, look for someone with strong local experience in the Sydney property market. A professional with knowledge of the area can provide insight into council regulations, zoning laws, and common legal pitfalls that buyers may encounter. It’s also advisable to check their reviews and credentials, ensuring they have a solid track record of handling property transactions efficiently.

Before committing, ask for a detailed breakdown of costs so you know exactly what you’re paying for. Some legal professionals may offer additional services, such as strata report reviews or off-the-plan contract assessments, which can provide further protection during your purchase.

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Building and Pest Inspections: Avoiding Costly Surprises

A property may look perfect at first glance, but hidden structural issues and pest infestations can turn your dream home into a financial nightmare. Investing in building and pest inspections before committing to a purchase is a critical step in protecting yourself from unexpected repair costs and potential safety hazards.

A professional building inspection assesses the structural integrity of the property, identifying issues such as:

• Foundation problems that could lead to subsidence or costly underpinning work.
• Roof damage, including leaks, missing tiles, or poor drainage that could result in major water damage.
• Dampness and mould, which not only weaken the building but can also cause serious health issues.
• Non-compliant renovations that could lead to council fines or require expensive rectification work.

A pest inspection is equally important, as termite infestations are a major issue in Australia. Termites can cause extensive damage to timber structures, often going unnoticed until the problem becomes severe. Other pests, such as borers or rodents, can also lead to long-term structural and hygiene concerns.

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How Much Do Inspections Cost?

A combined building and pest inspection typically costs between $300 and $800, depending on the size and location of the property. While this may seem like an additional expense, it is a small price to pay compared to the thousands—or even tens of thousands—of dollars you could be forced to spend on unexpected repairs.

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What Happens If Issues Are Found?

If the inspection report reveals problems, this doesn’t necessarily mean you should walk away from the purchase. Instead, you can:

• Negotiate the price with the seller to reflect the cost of repairs.
• Request that repairs be completed before settlement at the seller’s expense.
• Proceed with caution and factor in additional funds for necessary fixes.

It’s always advisable to have a qualified professional review the inspection report to help you make an informed decision. A small issue may be manageable, but extensive structural damage or an active termite infestation could make the property a risky investment.

Being thorough at this stage ensures that you go into your purchase with a clear understanding of the property's condition, preventing costly surprises down the line.

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Lenders Mortgage Insurance (LMI): An Added Cost for Low Deposits

For many buyers, saving a 20% deposit can be challenging, especially in Sydney’s competitive property market. However, purchasing a home with a deposit below this threshold often comes with an extra expense—Lenders Mortgage Insurance (LMI). This insurance is designed to protect the lender, not the borrower, in case of loan default.

LMI allows buyers to secure a loan with a smaller deposit, sometimes as low as 5% of the property’s value. While this can help you get into the market sooner, it adds a significant cost to your mortgage. The amount you’ll pay depends on several factors, including the loan amount, deposit size, and lender’s policies.

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How Much Does LMI Cost?

LMI is calculated as a percentage of the loan amount, and the cost increases as the deposit decreases. For example:

• A $700,000 property with a 10% deposit ($70,000) could attract LMI fees of around $14,000–$18,000.
• A $900,000 property with a 5% deposit ($45,000) could see LMI costs exceeding $30,000.

In most cases, LMI is added to your home loan, meaning you’ll also be paying interest on it over time. While this allows buyers to enter the market sooner, it increases the overall cost of the mortgage.

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Ways to Avoid or Reduce LMI

• Saving a 20% deposit: The simplest way to avoid LMI is by reaching the 20% deposit threshold.
• Looking for LMI waivers: Some professions, such as doctors, lawyers, and accountants, may be eligible for LMI exemptions with certain lenders.
• Using a guarantor loan: If a close family member owns a property, they may be able to act as a guarantor, reducing or eliminating the need for LMI.
• Considering government schemes: Programs such as the First Home Guarantee (FHBG) allow eligible first-home buyers to purchase with a 5% deposit without paying LMI.

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Is LMI Worth It?

For buyers struggling to reach a 20% deposit, LMI can be a worthwhile trade-off to secure a home sooner, particularly in a rising market where property prices may increase faster than savings. However, it’s important to factor in the additional cost and understand how it affects your loan repayments over time.

Before committing to a mortgage with LMI, speak with a mortgage broker or financial advisor to explore your options and determine the best approach for your financial situation.

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Moving Costs: The Often Overlooked Expense

Once you’ve secured your property, the next challenge is physically relocating. Moving costs are often underestimated, yet they can add up quickly, especially for those relocating long distances or requiring professional assistance. From hiring removalists to purchasing packing supplies, failing to budget for these expenses can leave you with unexpected financial strain at a time when you’re already making significant outlays.

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Professional vs DIY Moving: Weighing the Costs

The cost of moving largely depends on whether you choose a professional removalist service or handle the move yourself.

• Hiring professional removalists: Costs can range from $500 to over $3,000, depending on the size of your home, distance, and level of service. Some companies offer full-service packages, including packing, loading, and unpacking, which come at a higher cost but significantly reduce the stress of moving.
• DIY moving with a rental truck: Renting a truck or trailer can be a more affordable option, with prices starting from $100 to $300 per day. However, this requires more effort and may involve additional costs such as fuel, insurance, and equipment hire.

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Additional Moving Costs to Consider

Beyond the cost of transporting your belongings, there are several other expenses that can catch buyers off guard:

• Packing materials: Boxes, tape, bubble wrap, and protective coverings can add up, particularly for large households. Budget at least $200 to $500 for supplies.
• Storage fees: If your move-in date doesn’t align with your settlement date, you may need to store your belongings temporarily. Storage unit costs range from $100 to $400 per month, depending on size and location.
• Cleaning costs: Whether moving out of a rental or selling a previous home, professional cleaning services may be required, costing between $200 and $800.
• Connection and disconnection fees: Setting up utilities in your new home may come with reconnection fees for services like electricity, gas, and internet. These fees can range from $50 to $150 per service.

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How to Minimise Moving Costs

Planning ahead can help reduce expenses:

• Compare multiple quotes from removalists to secure the best rate.
• Declutter before the move to avoid transporting unnecessary items, reducing both cost and effort.
• Look for free packing materials from local businesses, online marketplaces, or friends and family.
• Move on a weekday if using a professional service, as weekend and peak-period moves often attract higher rates.

While moving costs may not seem like a major concern compared to the purchase price of a property, failing to budget for them can add unnecessary stress to an already busy transition. Factoring these expenses into your overall budget ensures a smoother, more organised move into your new home.

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Strata Fees: The Ongoing Cost of Apartment and Townhouse Living

If you're purchasing an apartment, townhouse, or any property within a strata scheme, you’ll be required to pay strata fees. These fees contribute to the maintenance and management of shared areas and facilities, ensuring that the property remains well-kept and compliant with regulations. While many buyers focus solely on their mortgage repayments, strata fees can be a significant ongoing expense that impacts the affordability of a property.

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What Do Strata Fees Cover?

Strata fees are determined by the owners' corporation (body corporate) and are used to fund the upkeep of common areas, including:

• Building maintenance – Covers repairs to external walls, roofing, elevators, and shared facilities such as pools, gyms, and gardens.
• Cleaning and landscaping – Ensures common areas such as hallways, lobbies, and outdoor spaces remain tidy and well-maintained.
• Building insurance – While you’ll still need contents insurance, strata fees cover the building’s structural insurance.
• Administration and management – Covers expenses for managing the strata scheme, including legal fees, compliance costs, and insurance.
• Sinking fund contributions – A portion of the fees is set aside for major future repairs or renovations, such as repainting the building, replacing lifts, or fixing structural issues.

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How Much Are Strata Fees?

Strata fees can vary significantly based on the type of property and the facilities available. Strata fees generally range from 0.3% to 1.2% of a property's total value, with properties offering more amenities falling toward the higher end of this range. As a rough guide:

• Basic apartment buildings (no lifts, gym, or pool) – Fees typically range from $500 to $1,500 per quarter.
• Mid-range buildings with standard amenities – Fees generally sit between $1,500 and $3,000 per quarter.
• Luxury buildings with pools, gyms, and concierge services – Expect to pay $3,000 to $10,000+ per quarter.

These costs can fluctuate over time, particularly if major repairs or upgrades are required. If the strata committee decides additional funds are needed for unexpected expenses, they may issue a special levy, which is an extra payment on top of regular fees.

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How to Assess Strata Fees Before Purchasing

Before committing to a strata property, it’s crucial to review the strata report. This document provides insight into:

• The financial health of the strata scheme and whether it has sufficient reserves for maintenance.
• Any past or upcoming special levies that could increase your costs unexpectedly.
• Existing disputes or legal issues within the building, which could indicate management or maintenance problems.

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Strata Fees vs. Freehold Ownership

Unlike freehold properties, where owners are responsible for their own maintenance, strata properties involve shared financial responsibility. While strata fees may seem like an added expense, they cover services that individual homeowners would otherwise pay for separately—such as exterior maintenance, insurance, and landscaping.

Understanding the true cost of strata fees before purchasing will help ensure that your new home remains affordable in the long run, without unexpected financial pressure.

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Council Rates and Utility Costs: The Ongoing Expenses of Homeownership

Owning a property comes with a range of ongoing expenses beyond mortgage repayments. Council rates and utility bills are two of the most important costs to consider, as they are essential for maintaining services and infrastructure. These expenses vary based on location, property type, and usage, and failing to factor them into your budget can leave you financially stretched.

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Understanding Council Rates

Council rates are local government taxes that help fund public services such as waste collection, road maintenance, and community facilities. The amount you pay is determined by:

• The value of your property, with rates often calculated based on land valuation.
• The local council area, as different councils set different rates.
• Whether the property is a residential, investment, or commercial property, as some councils charge different rates based on property use.

In NSW, annual council rates can range from $700 up to $2,000, depending on the location and size of the property. Before purchasing, it's a good idea to check with the local council to understand how much you'll be required to pay each year.

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Utility Costs: Keeping Your Home Running

Utility bills are another ongoing expense that homeowners must budget for. These include:

• Water rates – Unlike renters, property owners must pay for water usage and supply charges. In Sydney, expect to pay around $500 to $1,500 per year, depending on consumption.
• Electricity and gas – Energy costs vary based on the size of your home, usage, and provider. The average Australian household spends between $1,500 and $3,000 per year on electricity and gas.
• Internet and phone services – Setting up and maintaining internet and phone connections can add another $600 to $1,200 per year to your household expenses.

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How to Minimise These Costs

While these expenses are unavoidable, there are ways to reduce their impact:

• Check the council rates of different suburbs before buying to ensure ongoing costs are manageable.
• Look for properties with energy-efficient features such as solar panels, insulation, and water-saving fixtures to reduce electricity and water bills.
• Compare energy and internet providers regularly to ensure you're getting the best deal.
• Monitor water and electricity usage, and adopt energy-efficient habits to lower consumption.

Although council rates and utilities may not seem like a major concern at the time of purchase, they add up over time and should be considered when determining the affordability of a property. Understanding these costs in advance ensures that you’re financially prepared for homeownership beyond the initial purchase price.

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Home Insurance: Protecting Your Investment

Once you’ve secured your property, safeguarding it against unforeseen events is essential. Home insurance provides financial protection against damage, theft, and natural disasters, ensuring that unexpected repairs or losses don’t leave you in financial distress. While some buyers view insurance as an optional extra, it is a critical safeguard that every homeowner should have in place from the day of settlement.

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Types of Home Insurance

There are two primary types of home insurance, and many homeowners choose to bundle them together for comprehensive coverage:

• Building Insurance – Covers structural damage to the home caused by fire, storms, floods, vandalism, or other unexpected events. This is particularly important for freestanding homes, where owners are solely responsible for repair and reconstruction costs.
• Contents Insurance – Protects personal belongings such as furniture, appliances, electronics, and valuables from theft, fire, or accidental damage. While strata properties typically include building insurance within strata fees, owners still need contents insurance to cover their personal possessions.

For those purchasing an investment property, landlord insurance is also highly recommended. This type of policy provides additional protection against tenant-related risks, such as unpaid rent, malicious damage, and legal liability.

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How Much Does Home Insurance Cost?

The cost of home insurance varies depending on:

• The location of the property (homes in flood or bushfire-prone areas will have higher premiums).
• The value of the home and its contents (higher-value properties require higher coverage).
• The level of coverage and excess amount (lower excess typically results in higher premiums).

On average, building insurance costs range from $800 to $3,000 per year, while contents insurance can add another $300 to $1,500 annually. Combined home and contents policies may offer better value, so it’s worth comparing providers to find the most suitable option.

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Why Home Insurance Is Essential

While insurance is an ongoing cost, the financial consequences of going without it can be severe. A single unexpected event—such as a fire, severe storm, or major break-in—can result in tens or even hundreds of thousands of dollars in losses. Without adequate coverage, homeowners are left to bear the full financial burden of repairs or replacements.

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What to Consider When Choosing a Policy

When selecting home insurance, it’s important to:

• Check what’s covered and excluded – Some policies exclude flood damage, accidental damage, or certain types of theft.
• Ensure coverage is sufficient – Underinsuring your property or contents could leave you out of pocket in the event of a claim.
• Compare multiple insurers – Premiums and coverage levels vary widely, so it’s worth shopping around for the best deal.

Home insurance provides peace of mind and financial security, ensuring that your property and belongings are protected from life’s unexpected events. Factoring this cost into your budget from the start will ensure you’re not left vulnerable after making such a significant investment.

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Ongoing Maintenance and Repairs: The Hidden Costs of Homeownership

Owning a home isn’t just about paying the mortgage—ongoing maintenance and repairs are an unavoidable part of property ownership. Unlike renting, where landlords cover repair costs, homeowners are responsible for keeping their property in good condition, and these expenses can quickly add up. Failing to budget for maintenance can lead to financial strain, especially when unexpected issues arise.

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Common Maintenance and Repair Costs

While some costs can be planned for, others come as an unwelcome surprise. Some of the most common maintenance and repair expenses include:

• Plumbing issues – Blocked drains, leaking taps, burst pipes, and hot water system failures can cost anywhere from $150 for a minor fix to several thousand dollars for major repairs.
• Roof repairs – Damaged tiles, leaking gutters, and deteriorating flashing can lead to costly water damage. Basic repairs may cost a few hundred dollars, while a full roof replacement can exceed $10,000.
• Electrical repairs – Faulty wiring, power surges, or broken circuit breakers often require an electrician. Costs vary, but even minor electrical work can start at $200+ per callout.
• Heating and cooling maintenance – Air conditioners and heating systems need regular servicing to ensure efficiency and longevity, with servicing costs ranging from $150 to $500 per year.
• General upkeep – Repainting, fixing fences, replacing worn carpets, or repairing appliances are all ongoing costs that need to be factored in.

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Ways to Reduce Maintenance Costs

• Conduct regular inspections – Checking for leaks, cracks, and wear-and-tear can help catch issues before they escalate.
• Perform basic DIY repairs – Simple tasks like cleaning gutters, repainting, and minor landscaping can save on professional labour costs.
• Invest in quality materials and workmanship – While cheaper options may seem appealing upfront, poor-quality work often leads to more frequent repairs.
• Consider a home warranty or insurance add-ons – Some policies offer additional protection for appliances, heating systems, or structural components.

While maintenance and repairs may not be as obvious as mortgage repayments or council rates, they are an essential part of homeownership. Factoring these expenses into your budget from the outset ensures that your property remains in good condition, protecting its value and preventing costly surprises in the future.

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Potential Renovation Costs: Planning for Future Upgrades

Buying a property is often just the beginning—many homeowners have plans to renovate, upgrade, or customise their new home to better suit their needs. Whether it’s a simple refresh or a major structural overhaul, renovation costs can quickly add up, and failing to budget for them properly can lead to financial stress.

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Common Renovation Projects and Their Costs

The scope and cost of renovations vary depending on the type of work involved. Some of the most common home improvement projects include:

• Kitchen renovations – A basic kitchen update, including new cabinetry, benchtops, and appliances, can cost anywhere from $15,000 to $30,000. A high-end kitchen remodel can exceed $50,000.
• Bathroom upgrades – Installing new fixtures, tiling, and plumbing work can range from $10,000 to $30,000, depending on the materials and labour required.
• Flooring replacement – New carpets, timber, or tiles can cost $5,000 to $15,000, depending on the size of the home and choice of materials.
• Painting – A fresh coat of paint can make a big difference in appearance. Interior painting can cost $5,000 to $10,000, while exterior painting can exceed $15,000 for larger homes.
• Outdoor improvements – Adding a deck, pergola, or landscaping can range from a few thousand dollars to $50,000+, depending on the scale of the project.
• Structural renovations – If you’re planning to knock down walls, extend rooms, or change layouts, costs can skyrocket to $100,000 or more, particularly if plumbing or electrical work is required.

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Hidden Costs of Renovations

While renovation budgets often focus on materials and labour, there are several hidden costs that can catch homeowners off guard:

• Council permits and approvals – Major renovations often require approval, and fees can range from a few hundred to several thousand dollars, depending on the project.
• Temporary accommodation – If the renovation is extensive, you may need to rent alternative housing, adding to overall costs.
• Unexpected structural issues – Once renovations begin, hidden problems like asbestos, termite damage, or outdated wiring may be uncovered, requiring additional funds for repairs.
• Rising material costs – Prices for building materials fluctuate, and delays in supply chains can lead to unexpected price increases.

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How to Plan and Budget for Renovations

• Get multiple quotes – Compare at least three quotes from reputable contractors to ensure you're getting a fair price.
• Prioritise renovations – If budget constraints exist, focus on essential upgrades first, such as fixing structural issues or updating outdated plumbing and electrical systems.
• Set aside a contingency fund – Experts recommend allocating at least 10–20% extra for unexpected costs.
• Consider staged renovations – Rather than tackling everything at once, spreading projects over time can ease financial strain.

Renovating a home can be an exciting and rewarding process, but proper planning and budgeting are crucial to ensuring the upgrades add value rather than becoming a financial burden. Understanding the true costs of home improvements before committing to a purchase can help buyers make informed decisions about whether a property aligns with their long-term vision and budget.

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Buying a property is one of the biggest financial commitments you’ll ever make, and it’s easy to focus solely on the purchase price while overlooking the many additional costs involved. From stamp duty and legal fees to ongoing maintenance, insurance, and strata fees, these expenses can add up quickly and significantly impact your budget if not accounted for early on.

By understanding these hidden costs and planning accordingly, you can avoid financial surprises and make informed decisions about your purchase. Taking the time to budget for not only the upfront expenses but also the long-term costs of property ownership ensures that you can enjoy your new home without unnecessary financial strain.

At BMC Buyers Agency, we are committed to guiding our clients through the entire property purchasing process, ensuring they have a clear understanding of all potential costs before making a decision. A well-planned budget is key to a stress-free buying experience, and with the right knowledge and preparation, you can confidently secure a property that aligns with your financial goals.

Property ownership should be an exciting and rewarding journey—not a financial burden. By being proactive and well-informed, you’ll set yourself up for long-term success in the property market.