Deposit Costs, Calculators
Deposit Costs for Australian property investors. Part of the Calculators hub on Shelby Limited, AI strategy, calculators and expert matching.
Deposit and upfront costs, the number that is always larger than people expect
The cash needed to buy is the deposit plus acquisition costs: stamp duty, transfer and registration fees, conveyancing, building and pest inspection, loan establishment and lenders mortgage insurance if the deposit is under 20%. On a typical purchase these costs add several per cent to the price.
Almost everyone saving for a property saves for the deposit. The deposit is not the number that stops the purchase, the costs on top of it are.
Stamp duty is the largest of them and it scales with price, so the more expensive the property the worse the surprise. Add conveyancing, a building and pest inspection, loan establishment and mortgage registration fees, and the total lands well above the deposit alone. For investors there is no first-home concession to soften it, and in several states investors pay a higher duty scale or surcharge than owner-occupiers.
Lenders mortgage insurance is the other line that changes the arithmetic entirely. Below a 20% deposit, LMI is charged as a one-off premium that is usually capitalised into the loan, which means you pay interest on it for the life of the mortgage. The premium rises steeply as the deposit falls, so the gap between an 15% and a 10% deposit is far more expensive than the 5% suggests.
The number worth calculating before you start looking is total cash to complete, not the deposit. Then add a contingency for the things settlement statements always contain, council and water adjustments, and the first insurance premium.
Frequently asked questions
How much cash do I need beyond the deposit?
Budget for stamp duty, transfer and registration fees, conveyancing, building and pest inspection, loan establishment fees and settlement adjustments. Together these commonly add several per cent of the purchase price.
When do I pay lenders mortgage insurance?
Generally when your deposit is below 20% of the property value. It is a one-off premium, usually capitalised into the loan, and it protects the lender rather than you.
Do investors pay more stamp duty?
In several jurisdictions yes, investors are excluded from first-home and owner-occupier concessions, and foreign purchasers face additional surcharges. Rates and thresholds differ by state and territory.
Can the deposit come from equity?
Yes. Equity in an existing property can be released to fund a deposit, subject to valuation and serviceability. This increases total borrowings and the tax treatment depends on the purpose of the funds.
What's commonly forgotten in the budget?
Council and water rate adjustments at settlement, the first building insurance premium, immediate repairs and, for an investment property, the holding cost of any vacancy before the first tenant.