Buying a House in Australia - Money and Finance
First Home Owner Grant - A Gift from the GovernmentAnyone who buys a house in Australia for the first time (including migrants with permanent residence) is eligible for the First Home Owner Grant of $7,000. This sum is paid directly to the buyer of a house. The grant is not payable for land purchases.
Welcome as it is, $7,000 will not buy you a house in Australia. Unless you have substantial savings, you will need to get a mortgage from an Australian Bank.
How Much Can You Borrow?
The amount of money you can borrow for a mortgage depends on the lender. Lenders typically use your salary to decide the maximum amount they will lend you. On average, lenders allow couples to borrow 5 times their joint pre-tax income. Some will lend more, some less. If you need a mortgage, many lenders prefer you to be settled into a job for a few months before offering you a mortgage.
Stamp Duty on the Purchase - A Major Cost for Many Buyers
When you buy a house, you will have to pay tax on the purchase price. This is called Stamp Duty. First time buyers, especially of lower priced properties, may get a discount on stamp duty - these are highest in New South Wales where, provided the property sells for less than $500,000, no stamp duty is paid by first time buyers. The rate of stamp duty you pay depends on the house price. The more expensive the house, the higher the rate of tax. Each Australian state levies stamp duty at different rates.
For example, a buyer in 2006 would pay Stamp Duty on a $400,000 property as follows:
Stamp Duty on $400,000 House
| Location | Normal Stamp Duty | Stamp Duty Paid by First Time Buyers |
| Sydney (New South Wales) | $13,490 | $0 |
| Melbourne (Victoria) | $19,660 | $16,660 (First Home Bonus) |
| Perth (Western Australia) | $15,700 | $15,700 |
| Brisbane (Queensland) | $6,000 | $4,400 |
| Adelaide (South Australia) | $16,330 | $16,330 |
| Hobart (Tasmania) | $13,550 | $13,550 |
(In Queensland and South Australia, if you have previously owned a home anywhere in the world, you are not entitled to first time buyer help with stamp duty.)
For a $250,000 property, stamp duty is as follows:
Stamp Duty on $250,000 House
| Location | Normal Stamp Duty | Stamp Duty Paid by First Time Buyers |
| Sydney (New South Wales) | $7,240 | $0 |
| Melbourne (Victoria) | $10,660 | $7,660 (First Home Bonus) |
| Perth (Western Australia) | $8,200 | $0 |
| Brisbane (Queensland) | $2,500 | $0 |
| Adelaide (South Australia) | $8,955 | $8,940 |
| Hobart (Tasmania) | $7,550 | $3,550 |
Stamp Duty on your Mortgage
When you raise a mortgage, most Australian states levy a tax on the amount you borrow. This is called Mortgage Stamp Duty. (There is no mortgage stamp duty in the states of Victoria or South Australia.)
For example, a borrower in 2006 would pay Stamp Duty on a $300,000 loan as follows:
Mortgage Stamp Duty on $300,000 Loan
| Location | Mortgage Stamp Duty |
| Sydney (New South Wales) | $1,141 |
| Melbourne (Victoria) | $0 |
| Perth (Western Australia) | $750 |
| Brisbane (Queensland) | $920 |
| Adelaide (South Australia) | $0 |
| Hobart (Tasmania) | $1,040 |
For a $100,000 loan, stamp duty is as follows:
Mortgage Stamp Duty on $100,000 Loan
| Location | Mortgage Stamp Duty |
| Sydney (New South Wales) | $341 |
| Melbourne (Victoria) | $0 |
| Perth (Western Australia) | $250 |
| Brisbane (Queensland) | $120 |
| Adelaide (South Australia) | $0 |
| Hobart (Tasmania) | $340 |