Can stamp duty be added to your mortgage?

Whether you’re purchasing a property or land as a residence or for investment, you’ll need to pay stamp duty. Stamp duty (or transfer duty, or land duty) is a tax levied by each Australian state or territory. Stamp duty is calculated as a percentage of your property’s value but can vary depending on whether you plan to live in the home or use it as an investment. There are some situations in which stamp duty can be waived, for example, if you’re a first home buyer. Check your local state revenue website to check eligibility.

The stamp duty you need to pay can be significant, but you can estimate it using an online stamp duty calculator. Based on this estimate, you can ask your mortgage lender if you can include the stamp duty in the loan amount. You should remember that you have to pay the stamp duty upfront when buying the property. You should account for the stamp duty amount when saving up for the deposit as it’s an upfront cost. You can then ask for an increase in your loan amount to cover any shortfall in your savings, which you would’ve paid for the deposit. 

Can stamp duty automatically get added to your mortgage?

The short answer is no, it can't. When lenders approve a home loan, they calculate the amount as a percentage of your property’s value, often referred to as the loan-to-value ratio (LVR). Loans allowing you to borrow 80 per cent LVR are often the most common and competitive mortgages in the market. An 80 per cent LVR home loan would mean that your savings have to cover 20 per cent of the property’s value as the deposit, and any home-buying expenses. These expenses include the stamp duty, pre-purchase reports and any conveyancing charges you may incur. You may also need to pay for a home valuation or inspection if the lender requires it.

You may be able to save on stamp duty if you qualify for any of the concessions offered by your state. Some of the instances that Australian states and territories offer stamp duty concessions include first home buyers, retirees, deceased estates and off the plan purchases. These concessions or waivers differ between each state and territory. You can discuss your eligibility with your lender or a mortgage broker. You can also check each scheme’s details on your local state or territory revenue department’s website.

How do you estimate stamp duty?

 Your mortgage lender might offer a stamp duty calculator on their website. Most online stamp duty calculators base their estimates on the following information:

1. Is the home your residence or an investment? Stamp duty may be lower for the property’s being used as the principal place of residence. 
2. Have you owned any property before? If you’re a first-time homebuyer, you may qualify for a stamp duty exemption or deferment.
3. In which state or territory are you buying the home? Each state and territory government decides the amount of stamp duty homebuyers in that state or territory have to pay.
4. How much are you paying for the home? At least a part of the stamp duty is calculated as a percentage of the home’s value.
5. Is your property a new development? In some states, you may need to pay stamp duty on the land and the building separately. You may also be able to get a deferment for off-the-plan developments. 

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