Can stamp duty be added to my mortgage?
Stamp duty can be a major addition to the cost of buying a property, but how is it paid for and can it be added to the overall cost of a mortgage?
When buying a property, the cost of the house itself is only part of the picture. It is important to remember that in addition to the purchase price of your property and the interest on your home loan, you are likely to pay additional costs in the form of fees, taxes and other levies, and stamp duty may be an important one these.
What is stamp duty?
Stamp duty, sometimes also called transfer duty, is a tax levied by each Australian state and territory on the purchase of property. Depending on the circumstances, it can be paid as a flat rate or as a percentage of the transaction. Although it’s sometimes overlooked by buyers when estimating the overall cost of a home, it can significantly increase the overall cost you’ll end up paying.
Can you add stamp duty to your mortgage?
Stamp duty is usually an upfront cost that must be paid when you buy a property, within a certain time frame, usually one to three months. This means that when saving for a property, you need to consider how much you will need to pay in stamp duty on top of the cost of the property, as well as any other pre-purchase expenses such as conveyancing, building and pest reporting. and other fees.
Although you cannot add stamp duty to your mortgage as such, you can ask your lender if they are willing to increase the amount of your mortgage to cover the cost of stamp duty. This could offset the amount you will have to pay out of your savings.
How to estimate stamp duty?
There are a number of factors that go into the overall stamp duty calculation. If you’re curious, Canstar has a stamp duty calculator that will help you estimate how much you might expect to pay on a property, and you’ll need to answer questions such as:
- Is the property a principal residence or an investment? Generally speaking, investment properties can attract more stamp duty than the houses you plan to live in as your primary residence.
- Are you a first-time home buyer? Depending on the state or territory you are in and the value of the property, first-time home buyers can sometimes qualify for concessions, grants, or stamp duty exemptions.
- In which state or territory is the property located? The amount of stamp duty you will pay for a property, as well as the time frame in which you must pay it, will vary depending on the location and applicable local laws.
- How much does the property cost? In some cases stamp duty is calculated as a percentage of the overall cost or market value of a property, meaning it can be higher the more expensive a property is.
Other factors may also influence the amount you pay in stamp duty, for example if you are buying both a house and land, or if you are buying land and planning to build a house. There may also be concessions available for certain property transfers that may occur due to events such as death or divorce.
How much should you save for stamp duty?
How much you’ll need to save for stamp duty depends on your location and circumstances, but we’ve considered the hypothetical example of a homebuyer buying property in Queensland for $800,000. Assuming the buyer plans to use the property as their primary residence and this isn’t their first home purchase, Canstar’s stamp duty calculator estimates they should pay around $24,538 in stamp duty.
This hypothetical buyer would therefore need to have this amount saved in addition to the amount he has already saved for a down payment.
What stamp duty exemptions and concessions are available?
There are various state and territory programs for stamp duty concessions, which can alleviate some of the stamp duty costs for people such as first-time home buyers. For more detailed information on how stamp duty is calculated in each state and territory, and what concessions may be available, you can review the list below for information on:
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