Stamp Duty Killing Me!

[azzae89]

Hi guys,

I'm a first home buyer looking to get into the market for a PPOR. I've busted my a$$ to pay down all my debts (about 10K) + already saved a 5% deposit for a property within my price range.

I've been to 2 of the big 4 banks to discuss pre-approval and they're willing to lend me 80K more than what I even want to borrow, yet they still want me to come up with 10K up front for stamp duty?

My question is, if they are throwing more money at me than I even want, why can't they just add the stamp duty to the loan? I have no issue paying stamp duty but does it have to be up-front? With every lender? Because barring this, I'm all set to buy.

Thanks.

 

[Jake D]

How much cash do you have?
What purchase price are you looking at?

 

[Ausprop]

write to your local MP and express your disgust at this abhorrent tax

 

[Terry_w]

Hi guys,

I'm a first home buyer looking to get into the market for a PPOR. I've busted my a$$ to pay down all my debts (about 10K) + already saved a 5% deposit for a property within my price range.

I've been to 2 of the big 4 banks to discuss pre-approval and they're willing to lend me 80K more than what I even want to borrow, yet they still want me to come up with 10K up front for stamp duty?

My question is, if they are throwing more money at me than I even want, why can't they just add the stamp duty to the loan? I have no issue paying stamp duty but does it have to be up-front? With every lender? Because barring this, I'm all set to buy.

Thanks.

Because they can only lend you x% of the loan. Usually 90 to 95%.

 

[ok180]

If your a fist home owner your exempt anyway:

http://www.osr.nsw.gov.au/benefits/first_home/general/fhplus/

 

[mumbai]

If your a fist home owner your exempt anyway:

http://www.osr.nsw.gov.au/benefits/first_home/general/fhplus/

Not really. Its only valid for new homes:

http://www.osr.nsw.gov.au/benefits/first_home/first_home_new_home/

 

[ok180]

Not really. Its only valid for new homes:

http://www.osr.nsw.gov.au/benefits/first_home/first_home_new_home/

Your right, I missed that, when your not a first home buyer you don't give much thought to all that stuff!

azzae89, buy a new home, problem solved!

 

[azzae89]

Because they can only lend you x% of the loan. Usually 90 to 95%.

OK well here's my scenario. St George are offering 95% lend to me up to 380K.

I only want to buy a 300K unit. I have 17K saved. If stamp duty and LMI were added into the loan this would make the total loan approx 315K.

5% of 315K is $15,750?

As I said my borrowing capacity is 80K over what I want, and I can still afford 5% of purchase price + additional costs. So why can't they roll this into the loan and make it happen?

Thanks for your help!

 

[alexlee]

I've been to 2 of the big 4 banks to discuss pre-approval

With every lender? Because barring this, I'm all set to buy.

You haven't talked to every lender out there.

But let's say they all require stamp duty up front. Are you going to just give up?

Suck it up and play the game. You don't always get to change the rules.

 

[alexlee]

OK well here's my scenario. St George are offering 95% lend to me up to 380K.

I only want to buy a 300K unit. I have 17K saved. If stamp duty and LMI were added into the loan this would make the total loan approx 315K.

5% of 315K is $15,750?

As I said my borrowing capacity is 80K over what I want, and I can still afford 5% of purchase price + additional costs. So why can't they roll this into the loan and make it happen?

Thanks for your help!

Because they would be lending you more than 95% of the value of the property. They'd be lending you about 300k on a 300k property, which is 100%.

This is independent of your borrowing capacity, because the loan is only secured against the property.

 

[alexlee]

I'm a first home buyer looking to get into the market for a PPOR. I've busted my a$$ to pay down all my debts (about 10K) + already saved a 5% deposit for a property within my price range.

The banks don't care if you had to sell a kidney. Which can work for you or against you.

 

[ok180]

I only want to buy a 300K unit.

What is the price of a new unit in the same area? by the time you factor in the stamp duty exemption and first home owners grant for new build you might be better off just buying new.

Also don't forget you will need another 3K for legals and pest/building inspection.

 

[azzae89]

You haven't talked to every lender out there.

But let's say they all require stamp duty up front. Are you going to just give up?

Suck it up and play the game. You don't always get to change the rules.

1. I never said I'd give up.
2. No one's playing any games.
3. I never said I was "changing any rules" - I am seeking alternatives.
4. I can't be bothered replying to your other 2 posts you've left because they're just as useless as this one.

 

[sanj]

1. I never said I'd give up.
2. No one's playing any games.
3. I never said I was "changing any rules" - I am seeking alternatives.
4. I can't be bothered replying to your other 2 posts you've left because they're just as useless as this one.

Personally you would be a bit silly to ignore this post.

Because they would be lending you more than 95% of the value of the property. They'd be lending you about 300k on a 300k property, which is 100%.

This is independent of your borrowing capacity, because the loan is only secured against the property.

Alex is explaining to you why the bank is not lending you any more. It would effectively mean they are lending you 100% of value of property, if you defaulted and they had to sell things would get pretty tight for them, after admin and selling costs they would actually lose money on the deal.

 

[mikezen]

1. I never said I'd give up.
2. No one's playing any games.
3. I never said I was "changing any rules" - I am seeking alternatives.
4. I can't be bothered replying to your other 2 posts you've left because they're just as useless as this one.

hi mate, sounds like your fustrated, i dont want to add to it, but why dont you chop and change your game plan around a bit.

If your looking at a unit for 300k then why dont you consider something cheaper further out for 220-250 and add a reno to help with the equity and cg growth, then you can get in quicker and buy again sooner (perhaps).

have u spoken to a broker? sounds like you dont understand fully the upfront cash required to obtain a loan, they will help u with this

i remember when i was saving for my second ip and it was hard when i had only 18k and i needed 23k and this was fustrating but i got there in the end. also i was seeing lots of deals and i felt like i was missing out, but then when i had enough cash new deals came up and i bought and was stoked

also u should have a buffer as well (on top of your depsit) in case the unexpected comes up ....so try not cut it to fine with your bank balance and just be patient and save hard

 

[oracle]

OK well here's my scenario. St George are offering 95% lend to me up to 380K.

My question is, if they are throwing more money at me than I even want, why can't they just add the stamp duty to the loan?

You first need to understand what the above statement really means. The bank is basically telling you provided you buy a property worth (based on the banks valuation) $400K then based on your income you may qualify for a loan of upto $380K (95% lend). I have omitted LMI costs for simplicity. But in your case it would matter.

Hence, you asking for the bank to just add the stamp duty on top of your loan doesn't make sense because the bank ain't lending you any money unless they get to hold security which is alteast 5% more than the loan amount.

Hope that makes sense.

Cheers,
Oracle.

 

[Shahin_Afarin]

Ok here it is plain and simple - if you want to purchase a property (assuming its not a new property) in NSW for $300,000 then you will need a minimum deposit of approx $26,000.

If you have $17k deposit then your maximum budget is $205,000.

Another option (other than the buy new or go further out and find something cheaper) is to purchase at $300,000 with $17k deposit and ask for a delayed settlement of lets for argument sake say 6 months to give you the time to save for the approx $9k.

Hope that helps.

Regards

Shahin

 

[Spectre]

family guarantee / ABL product may fit as well

 

[Peter_Tersteeg]

Borrowing money bascially comes down to two primary components:

1. Affordability - the bank has told you that you can afford $20k more than the property is worth. Whilst I'd prefer the margin was larger, you've qualified for this part.

2. Money you put in - Banks will lend you a maximum percentage of the properties value. You have to put the rest in yourself. In this case, they'll lend you 95% of the property value maximum. You have to contribute the other 5% plus purchase costs (which includes the stamp duty).

You have to be able to meet both of these criteria to qualify for a loan and the property purchase.

There are ways around the second problem. You can get a gift from family if you've already saved some of the money. In many states the first home owners grant can help a lot (but not so much in NSW anymore).

A family guarantee can also work very well as in that case the bank is lending you a percentage of the value of the property you're purchasing plus a percentage of the property your family puts up as a security guarantee. It does entail some risk for your family but in most cases it works very well.

 

[Mick C]

OK well here's my scenario. St George are offering 95% lend to me up to 380K.

I only want to buy a 300K unit. I have 17K saved. If stamp duty and LMI were added into the loan this would make the total loan approx 315K.

5% of 315K is $15,750?

As I said my borrowing capacity is 80K over what I want, and I can still afford 5% of purchase price + additional costs. So why can't they roll this into the loan and make it happen?

Thanks for your help!

Most lenders have a MAX lvr of 95% -meaning the loan in total can not be higher than 95% of the property value ( stamp duty adds no value....you can't really "sell" stamp duty)

Depending on how strong your file is, there are options;

1. there are lenders that will lend 95% of the property price and provide a side loan of $20,000 on top after settlement, so yes you still need to have the stamp duty money ready

2. Go for a non-genuine savings lender that will accept a personal loan as part of the deposit or stamp duty cost ( your file needs to be PERFECT for this to happen and this is def not for everyone)--

- Personal loan enough to cover stamp duty
- 5% deposit ( can be made up of FHOG and gift)
- 95% + LMI non-genuine savings lender
- Personal protection and income Insurance.

azzae89 - if you have 2 pre-approval already done with 2 banks , your file will be consider slightly active now and most likely won't be able to apply for option 2 at 95% + LMI ( as it's no longer a perfect file).

Regards
Michael