When you are thinking about a budget for a house you’re going to buy, there are 2 main money questions to think about.

The first question is “How much?” and the second is “When?”.

Basically what I am saying is not only the amount matters, but also the time frame – when you have to pay it. Why? Because you may not have the whole amount up front on the day you’re signing the contract, but if you’ll be saving for 3 more months, you will come up with the money.

This is why it is important to understand the whole procedure of buying a house in terms of time – when you pay a deposit and how much (typically 5%-10% of the price), then when the next payment is and so on, until the day that you pay the balance and finally own the house. Using this information you can plan so that you don’t borrow too much – and save on interest.

Let’s take the stamp duty for example – on a house that’s worth 300,000 the stamp duty is over 11,000. So if you had to pay it on the settlement date, you would have to borrow the price of the house plus stamp duty.

In Victoria you have 90 days from the settlement date to pay the stamp duty – which means that you can save as much as possible in those 3 months and borrow only the rest, if needed.   However in NSW, stamp duty must be paid before settlement if you are obtaining finance for the purchase, and in all other respects within 3 months of the date of the contract (‘exchange’) to avoid the interest penalty.

The Stamp Duty payable on the contract is calculated on the “dutiable value” of the property, being the higher of:
(a) the purchase price, and
(b) the current market value of the property.

Click here to calculate Stamp Duty on your property purchase in NSW.