Can Stamp duty be added to my Mortgage?

Table of Contents

• What is Stamp Duty?
• Including Stamp Duty in Your Loan
• Benefits of Borrowing for Stamp Duty
  • Considerations
• Stamp Duty in Victoria
• First Home Buyers Grant and Stamp Duty Concessions
• Conclusion

What is Stamp Duty?

Stamp duty is a tax imposed by state governments on property purchases. The amount varies based on the property’s value and location. In Victoria, the State Revenue Office (SRO) handles the calculation and payment of stamp duty.

Including Stamp Duty in Your Loan

Lenders often allow borrowers to include stamp duty in the principal amount of their home loan. Here’s how it works:

1. Loan Principal: The total loan amount includes both the property price and the stamp duty.
2. Down Payment: The stamp duty is covered by the cash used for the down payment.
3. Repayments: Your monthly loan repayments will cover both the property cost and the stamp duty over the life of the loan.

Benefits of Borrowing for Stamp Duty

• Reduced Upfront Costs: Including stamp duty in your loan can lower the initial out-of-pocket expenses.
• Simplified Budgeting: This approach simplifies budgeting by consolidating all costs into a single loan repayment.

Considerations

While borrowing for stamp duty has its benefits, consider the following:

• Loan-to-Value Ratio (LVR): Adding stamp duty increases the total loan amount, affecting your LVR. A higher LVR might incur lenders mortgage insurance (LMI) if it exceeds 80%.
• Interest Costs: Borrowing more increases the total interest payable over the loan term.
• Lender Policies: Not all lenders offer this option, and eligibility depends on individual financial situations. Consult with your mortgage broker or lender to understand your options.

Stamp Duty in Victoria

In Victoria, stamp duty rates vary based on the property value and whether you are a first-time homebuyer. The SRO Victoria provides detailed information and resources to help calculate the stamp duty payable. You can find more about it on their website.

First Home Buyers Grant and Stamp Duty Concessions

Victoria offers various concessions and exemptions on stamp duty, especially for first home buyers. These include:

• First Home Buyers Grant Vic Stamp Duty: Eligible first-time buyers may receive grants to offset the cost.
• Vic Stamp Duty Concession: Discounts on stamp duty for eligible buyers.
• Vic Stamp Duty Exemption: Full exemption from stamp duty for qualifying buyers.

Conclusion

Borrowing money for stamp duty can be a practical solution for managing upfront costs when purchasing a home. However, it’s crucial to understand the implications on your overall loan and long-term financial health. Always seek advice from a mortgage broker or financial advisor to explore the best options tailored to your needs.

For more information and personalised assistance, visit Bluestar Finance. Our team of experts is here to help you navigate the complexities of home financing. Follow our newsletter for more up-to-date information. Feel free to give us a call or book a quick meeting to discuss your situation.