How the NSW stamp duty discounts can get you into your home sooner

First home buyers may be able to buy a home sooner after the NSW government has slashed stamp duty for new homes and land.

In an effort to help the construction sector through the coronavirus crisis, the NSW government has abolished stamp duty for first homebuyers for newly-built houses up to $800,000. They have also introduced discounts for properties between $800,000 and $1 million.

It can mean big savings.

A new home worth $800,000 attracts stamp duty of over $31,355, but the first homebuyer won’t have to pay any duty.

A $900,000 new home will now require a stamp duty payment of around $20,168, compared with close to $35,835 previously – a saving of $15,668.

For some first homebuyers who have been saving for a deposit, the changes could mean their deposit is already large enough to get into a home, says UNO mortgage advisor Kym Moore.

“It just means that they ultimately can get into a home much quicker,” says Kym.

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Big savings on home deposits

The deposit required by a bank on a newly-built home worth $800,000 is usually about 5% of the purchase price plus mortgage insurance – around $66,000. Add the $31,000 stamp duty and the total savings needed by first homebuyers is close to $100,000.

Take the $31,000 away and it’s a lot more manageable. For some savers, that could take months or even a year off the time they have to spend saving.

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“Some buyers may already have enough of the deposit saved not having to factor in that stamp duty,” says Kym. First homebuyers should contact their mortgage advisor to see how much the changes could help them.

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The NSW government has also abolished stamp duty for vacant land up to $400,000 – previously it was $7793 on a $400,000 block. There are also stamp duty reductions for blocks up to $500,000.

If you’re building your own home, you don’t pay any stamp duty on the house, so this could be an attractive option for some people.

Concessions last for only 12 months

First homebuyers should consider whether they could take advantage of these concessions and start house hunting.

In big cities like Sydney and Melbourne, many of the new housing developments can be in the outer suburbs and these might not suit everyone, but it’s still worth a look to see what’s on offer.

In regional areas, it’s probably a much more attractive option. A home on the “outskirts” of town is probably only an extra few minutes away.

The changes came into effect on August 1 and will last for only 12 months, so if you want to get into your new home sooner rather than later, it pays not to wait.

Whether you want to know how much you can borrow, get advice about your options, compare rates or even start your application, click here to get started.