You must pay transfer duty – once known as stamp duty – in NSW when you buy:

  • property, including your home or holiday home
  • an investment property
  • vacant land or a farming property
  • commercial or industrial properties, or
  • a business, which includes land.

You must also pay transfer duty when you acquire land, or an interest in land, without buying it. For example:

  • a declaration of trust
  • a gift, or
  • a transaction effecting a change in the beneficial ownership of a property.

In some circumstances, you may be eligible for a concession or exemption from transfer duty, such as:


Guide to Purchasing Your Sydney Home

 Disclaimer This document is for information purposes only, and must not be relied on as a substitute for legal advice.

Before you start

Buying a home will probably be the most expensive and important purchase you will ever make. You need to research, plan and have patience to make a successful purchase. Most people need to borrow finance to buy a home. You should:
• ask lending bodies (ie. banks, building societies, credit unions, cooperative housing societies, mortgage originators/managers and insurance companies) how much you can borrow, and when
• calculate what you can afford to spend by adding the amount you have saved with the amount you can borrow
• allow for lender fees, duty, legal and moving costs.
For more detailed information about borrowing, please refer to the booklet Financing Your Home Purchase and A Guide to the Costs of Home Purchase.

Choosing what to buy

You should buy your home on the basis of what you can afford, your current and future needs, and your lifestyle. If you are single, have a demanding job or spend a lot of time away from home, then a unit or townhouse may be more suitable than a house and garden. If you live with very young children, elderly people or people with disabilities, you should avoid a steep site with many stairs.For a large family, the number of bedrooms is important.  

Buying land and building a home

Many people prefer to buy land and build a home rather than buying an existing house or unit. You can buy land and build a house or you can buy a house and land package from a developer or Landcom. The actual building of the house may be by a project home builder, or a custom builder. Refer to the booklet Buying Land and Building a Home or contact the Office of Fair Trading which also publishes booklets on building.

Buying an existing home

When you buy an existing home, remember that the seller does not have to admit any quality defects. There is no comeback if, after purchase, you find faults. Refer to the Home Buyer’s Checklist for things to look for when inspecting properties.

Buying a house

When looking at houses, do not reject a property because it needs minor repairs or regular maintenance if it suits you. You may be able to do the work yourself. If you are thinking of making any additions or alterations, consider the costs.

Buying a home unit

When buying a home unit, you should check the layout of adjoining units for noise levels. For example, it will be noisy if your bedroom is directly below or above someone else’s kitchen or living room.
Check whether there is a car space and whether it is a lock-up garage or a carport. Don’t assume that unit numbers correspond to car spaces or garage numbers, or that any free space is available for your visitors.
Check that the unit meets your needs, such as near reliable transport, an internal laundry, balcony, lock- up garage, or adequate security. Beyond your front door, upkeep is less of a worry than a house.

Buying a villa or townhouse

Villas and townhouses are built on smaller individual blocks of land which can mean substantial savings, or make it possible to live in a more convenient location closer to facilities. They may have common walls but can also be detached. They retain a small private outdoor area or garden space.

Buying off a plan

Buying off a plan means buying a property, usually a unit or townhouse, before construction is completed. When buying off a plan, have the terms and conditions of the contract checked by your conveyancer or solicitor to ensure that what is stated on the plan is what you will be buying.
The contract should be examined thoroughly to see:
• who holds the deposit
• what happens if the property is not completed on time
• how can you get your money back if there are problems.

When buying off a plan, be careful about:
• sales taking place before the local council has consented to the development application
• the standard of workmanship as properties may not live up to advertised claims for quality
• plans being changed by the builder before building commences
• signing the contract and paying the deposit with a waiting period before completion and settlement.
There may be a two to three-year wait.


Ways to buy

Private treaty

Private treaty is when you buy:
• through a real estate agent or
• directly from the owner.
In both cases, the agent or owner will try to ‘sell’ you the property, emphasising its benefits and minimising its faults. DO NOT be rushed, pushed or persuaded by what is said. Remember, when it comes to signing a contract, you may be asked by the seller to state in the contract that you were not persuaded to sign as a result of anything you were told about the property. So take your time. Ask questions and, if you feel you require it, do not hesitate to ask to look at the property for a second or third time. When you are being shown through properties, take notes to allow you to compare properties. Use the Homebuyer’s Checklist to help you.


Most auctions of property have a reserve price. A reserve price is the lowest amount the seller is prepared to accept for the property. The reserve price, however, is not made available to the purchasers. An auctioneer or agent is not bound to accept the highest bid, if this is below the reserve price, or accept any bid until the fall of the hammer.
Advantages of auction
• You can inspect the property with an agent who knows certain features of the property which may not at first be obvious, and usually knows facilities in the surrounding area. The viewing times are specified, giving everyone equal opportunity to inspect.
• The process of bidding may result in a realistic price being set by the buyers and not by the seller. The final price could be lower than anticipated.
• The successful bid is known at the fall of the hammer. If the highest bid is not accepted then the property is ‘passed in’ and the reserve price may be revealed.
• If the reserve price is not reached, the highest bidder usually has first opportunity to negotiate with the seller through his/her agent.
• If a bid is accepted the contracts are exchanged on the spot. This ensures that neither the seller’s nor the purchaser’s time is wasted.

Things to be aware
• You need to have your finance formally approved before attending the auction. Remember that on exchange of contracts you are legally bound to purchase the property. There is no cooling-off period.
• Remember your finance limit at all times. Do not bid above your limit.
• Remain calm and bid only FOR the property not AGAINST another bidder.
• The seller has the right to one bid, which can be made by the seller or the agent or auctioneer. The auctioneer must announce the seller’s bid
when it is made.
• Make sure you have a copy of the contract and any certificates and have had your solicitor or legal representative check the terms and conditions.
• Make sure you understand exactly what is included in the sale. All fittings to be included should be clearly listed.
• You should have a pre-purchase property inspection and a pest inspection to ensure the property is structurally sound and free of pests.
• You should arrange for a strata records inspection if purchasing a unit.
• You may wish to have a valuation done on the property if you are unsure of an appropriate price for the area. You may be able to establish a realistic estimate value by analysing recent sales information in newspapers or local estate agents’ notices.

If yours is the successful bid you will be required to pay the deposit (usually 10% of the purchase price) on the spot. This is handed over to the agent immediately on signing the contracts.
Finally, be prepared that your bid may not be successful. You may have incurred some costs all the same – solicitor’s/conveyancer’s fees, inspection fees and valuation fees, and possibly fees from your lending body.

Options for legal work

The transfer of property ownership from the seller’s name to the buyer’s name is called conveyancing.
To do the conveyancing, you can:
• engage a solicitor
• engage a licensed conveyancer or
• do it yourself.
If you engage a solicitor or conveyancer, choose one who will act solely in your interest and not also act for the seller.


All solicitors carry professional indemnity insurance and contribute to a fidelity fund.
Solicitors charge a negotiable fee with disbursements usually charged separately. Disbursements include such things as search fees charged by government authorities. A solicitor will often, but not always, charge for preparing the contract of sale and for advising on the mortgage document if this is needed.
You can find out about specialist property solicitors from:
Solicitor Referral Service
Law Society of NSW
170 Phillip Street, Sydney
Telephone: (02) 9926 0300 Freecall: 1800 422 713


Conveyancers specialise in conveyancing only. They charge a negotiable fee and disbursements are charged separately.
Under the Conveyancers Licensing Act , all licensed conveyancers carry professional indemnity insurance and are covered by fidelity insurance.
Conveyancers are listed under ‘Conveyancing’ in the Yellow Pages or you can make enquiries through:
• Australian Institute of Conveyancers – Telephone (02) 9633 1355

Do-it-yourself conveyancing

There is a do-it-yourself conveyancing kit available from:
• Law Consumers’ Association – Telephone (02) 9564 6933 (you will be required to join the Association to obtain a kit)
• Australian Property Law Kits – Telephone: 1800 252 808
In addition to the cost of the kits, you will need to pay disbursements.
The Land and Property Information Inquiry Service (1300 052 637) simplifies the conveyancing process by providing a central point for lodging property inquiry forms. A single form and payment may be lodged with the Land and Property Information NSW, which will distribute the inquiry to the relevant authorities on your behalf.

A word of caution : If you do your own conveyancing all responsibility rests with you should you make a mistake. Although conveyancing is fairly routine, there are potential pitfalls into which a solicitor or conveyancer is less likely to fall. The professional’s indemnity and fidelity cover is an important security for you to consider.

Steps of Buying

Step 1: Looking for property

Real estate agents advertise through journals, such as Homes Pictorial and The Realtor which are published regularly. They are available from real estate agents and contain photographs and illustrations of properties available. Landcom and other developers also publish brochures about their estates and land and housing packages.
Many newspapers carry advertisements for properties for sale. If you have decided on a specific area or suburb, local newspapers will be helpful as they usually contain illustrated real estate sections for the area.
If you have access to the Internet, there are websites available which carry details of properties for sale.
If you give details of your requirements and price range to real estate agents, they will be able to help you by showing you a number of suitable properties in the area you are looking.
An ‘Open House’ is a good opportunity to visit a property at the advertised time.
Make sure you are very specific about the type, location and price of home you are looking for as some agents may show you properties which they are finding difficult to sell. You should view a large number of properties to compare value for money. This will also help you to realise your own requirements and what your money can buy.
There are many points to consider when inspecting properties. Remember to ask yourself:
• Does it suit my needs?
• What are its faults?
• What are its features?
• How does the price compare with other properties seen? Use the Homebuyer’s Checklist when inspecting properties.

Step 2: Checking the contract of sale

A seller must have the Contract of Sale ready before offering a property for sale. The seller must also provide with the contract:
• a Section 149 certificate from the local council, detailing zoning and other information
• a sewerage diagram
• a copy of the title folio from the Land and Property Information NSW
• copies of all documents creating easements or restrictive covenants
• a cooling-off statement
• a notice directing parties to the Conveyancing Act 1919 (Section 52A) and the Conveyancing (Sale of Land) Regulation 2000
• if it is a strata unit, copies of the folio of the Register for the lot and common property and a copy of the strata plan.

If the information is not attached, you may be entitled to cancel the contract within 14 days of exchanging the contract. You may also reserve the right to cancel if the seller breaches certain warranties required by the Vendor Disclosure and Warranty Regulation.

Step 3:Expressing an interest in a property

Once you have found the property you intend to buy, give a copy of the Contract of Sale to your solicitor or conveyancer to check.

Once you make an offer, most real estate agents will ask you to pay an initial or part deposit as a sign of good faith. If you haven’t signed and exchanged contracts this payment does not ‘hold’ the property. It is refundable if you change your mind. You can still miss out if another buyer exchanges contracts before you.

You can make arrangements through your solicitor or conveyancer with the agent to exchange contracts with a five day cooling-off period in order to secure the property. It is unwise to enter into any contract without first obtaining legal advice.

Beware of gazumping
Gazumping can take two forms.
1. The intending buyer believes that the property has been secured by payment of an initial or part deposit, then proceeds to arrange finance, legal and other matters. When ready to exchange contracts, the intending buyer finds that another buyer has exchanged contracts on the property. Or
2. The seller or the real estate agent accepts two or more initial deposits and then tells the intending buyers that the price has gone up. The intending purchasers are then left to outbid each other as if it were an auction. This is unfortunate for the buyer, but the seller is entitled to get the best price for the property.

Step 4: Applying for a loan

You should submit a formal application to your lending body for a loan on the property as soon as possible. You should not exchange contracts for the property (with or without the cooling-off period) before finance has been approved in writing. With your formal application you will usually have to pay fees to the lending body, such as establishment and valuation fees. The lending body will value the property to determine whether the property is adequate security for the amount of the loan.
The lending body lends a percentage of the valuation of a property, not a percentage of the purchase price.

Step 5: Arranging inspections

Building inspection
A building inspection checks structural soundness, including:
• foundations
• the condition of all structural timber (ie. floor joists, rafters)
• all load bearing walls and members
• the outer skin of the building (may be brick, stone, timber, fibro)
• plumbing and electrical wiring
• kitchen and bathrooms (to update can be expensive).
Before engaging a consultant, confirm exactly what the inspection entails and what further inspections, if any, may be required. A consultant should have sufficient knowledge to enable her/him to identify any areas of concern.
Building inspections are conducted by companies listed in the Yellow Pages under ‘Building Inspection Services’.

Pest inspection
You should also have the property inspected for pests before buying it. The lending authority may require this. Check that the company carrying out the inspection carries professional indemnity insurance. This will cover the company and therefore your costs, should the company make a mistake.

Strata inspection
The seller’s solicitor will supply a certificate under Section 109 which should show some relevant information about the management committee, insurances, cost of levies, deeds, and books. The prospective purchaser can also arrange for a pre-purchase strata inspection, covering other written records. This inspection, although optional, is recommended as there can be problems that might otherwise go undetected. It would need to be carried out before the exchange of contracts.
Strata inspections are conducted by some of the companies listed in the Yellow Pages under ‘Title Searchers’.
As strata inspections cover written records only, a separate building inspection is recommended.

Step 6: Deciding on type of ownership

If you are buying the property with someone else, you will need to decide the type of ownership you will have. There are two types of shared ownership:
• Joint Tenants, where the property is held by two or more people in equal shares. If one dies, his/ her share goes to the survivors and
• Tenants in Common, where the property is held by two or more people in equal or unequal shares. If one dies, his/her share goes to a person named in his/her will.

Step 7: Exchanging contracts

When all the reports are in order and the loan is formally approved, your solicitor or conveyancer will organise the exchange of contracts.
The contract is a legal agreement between the seller and the purchaser. It sets out the terms and conditions of the sale. Any fittings you are purchasing with the property, such as curtains, blinds, light fittings, awnings, air conditioner or TV antenna, should be listed in the contract to avoid disputes at or after settlement.
The contract is prepared in duplicate by the seller’s solicitor or conveyancer. The original is forwarded to the seller for signature. The copy is forwarded to the purchaser’s solicitor or conveyancer for approval and then signed by the purchaser. The exchange of contracts is then carried out.

Step 8: Paying the deposit

On the date that the contracts are exchanged, the agent will request that you pay the agreed deposit stated in the contract. While the amount is usually 10%, it can vary by agreement.
Your solicitor or conveyancer will normally pay this deposit to the real estate agent, and it will be held in the agent’s trust account. Alternatively, the parties may agree to invest the deposit and receive interest. It is very unwise for the purchaser to hand the deposit over directly to the seller on exchange or to release the deposit to the seller to use as a deposit in a separate purchase of their own.
Five day cooling-off period
After the exchange of contracts, there is provision for a five day cooling-off period. This means you can change your mind and cancel the contract.
If you decide not to proceed during the five day cooling-off period you will forfeit 0.25% of the purchase price to the seller (eg. on a $250,000 property you would forfeit $625). There is no cooling-off period if:
• you instruct your solicitor or conveyancer to sign a Section 66W Certificate which waives your cooling-off rights or
• you are a successful bidder at an auction.

Step 9: Paying the stamp duty

You will need to pay stamp duty which is calculated on the purchase price of the property. It must be paid within three months of signing the contract, unless you are eligible for the First Home Plus Scheme.
First Home Plus provides full or partial exemptions on duty to first home buyers who are buying property or land up to certain values. First Home Plus is not means tested. For information about First Home Plus, contact the Office of State Revenue on 1300 130 624.

Step 10: After exchanging contracts

It takes four to eight weeks from exchange of contracts until settlement. During this time, enquiries and searches are made and documents prepared by your solicitor or conveyancer.
• The Transfer document is prepared and taken to the Office of State Revenue for stamping together with the original Contract of Sale. The transfer is then sent to the seller or his representative. Once signed by the seller, it will be returned to you at settlement.
• If the seller does not have a recent survey attached to the contract, your solicitor or conveyancer may obtain a survey report, which shows buildings and fences, the correct boundaries and any encroachments onto the land or on the neighbouring property.
• All relevant enquiries relating to your land are made, including electricity, water and local government authorities. This will show council and water rates, arrears and if the land is subject to a land tax charge in the hands of the seller.
• Your lender will prepare the mortgage document which sets out the terms and conditions of the loan. Make sure you fully understand your mortgage document before signing it. Know exactly what you are contracted to pay: how, when and for how long.
• Requisitions on title are sent to the seller or the seller’s representative for completion. Requisitions obtain information from the seller which may not have been previously disclosed or discovered during inspection of the property. An example is whether there are any disputes with neighbours relating to fences.
• Close to settlement, a settlement statement is sent to the seller for completion. This details the final amount owing, including the adjustments for rates and taxes as at the date of settlement. The seller will inform your solicitor or conveyancer how the cheques are to be drawn.

Step 11: Organising insurance

From settlement, when the property becomes yours, you are responsible for damage. However, you may wish to insure the property before settlement if you are not aware that the seller has a current insurance policy.
If you are buying a home unit, a Certificate of Currency should be obtained from the insurer of the owners’ corporation to make sure the property is adequately insured. Your lender will require details and proof of this on or before settlement.
If you move into the property before settlement, the seller would probably want to make a special arrangement whereby you are responsible for insurance from the time you take possession.

Step 12: Making a final check

On the day of settlement, it is important that a final search of the title is obtained from the Land and Property Information NSW. This is to ensure that the property is clear from any interests or restrictions which may have been recorded between the date of exchange and settlement.
You should carry out a final inspection of the property to ensure that it has not been damaged and all fixtures and fittings listed in the contract are intact.

Step 13: Day of settlement

Settlement is the completion of the transaction. A date is arranged by both parties and your lender for settlement. This is usually at the seller’s lending body. Representatives of the seller and the purchaser attend, together with a representative from the lending bodies of the seller and purchaser.
• The lending body pays the loan moneys and the purchaser pays the balance.
• Your solicitor or conveyancer authorises the seller’s representative to collect the deposit from the real estate agent.
• Your solicitor or conveyancer will receive a signed transfer and the title deed, and the lender will arrange for the Land and Property Information NSW to register the transfer and the mortgage on title. The title documents and mortgage will be held by the lending body until the term of the mortgage is completed.
• You pay the duty on the contract.
• You are responsible for insuring the property from settlement. You should have arranged this before settlement whether or not it was a requirement of your lender.
• Remember to budget for your moving costs and ongoing costs such as council rates, water rates and insurance. Your solicitor or conveyancer will advise you to pay all rates at settlement.
• The key to the property is handed over at settlement or you can pick it up from the estate agent immediately after settlement.


Types of Home Ownership titles

Torrens Title

Torrens Title is the name given to the Government system of recording ownership of land. It is by far the most common land title, and the cheapest to buy and sell. Once you are registered on the title, you are the guaranteed owner.

Strata Title

Strata Title is the common method of unit ownership. The Strata Schemes (Freehold Development) Act makes possible the sub-division of the airspace above the surface of the land, and the issue of a Certificate of Title to part or parts of a building. This enables the purchaser to buy the actual space enclosed by the unit and then sell, lease, mortgage or otherwise deal with the unit as any other owner of property.
The individual owners in a block of Strata Title units are compelled by law to form an owners’ corporation, which controls the general administration and necessary funding of common property.
All unit owners are required to contribute towards the costs associated with the common property areas (eg. lighting of entrances and hallways, gardening, maintenance). Facilities, such as lifts, swimming pools and saunas, will increase the contributions markedly.
As a unit owner your involvement can vary from paying the levy and abiding by the rules to participating in the executive committee of the owners’ corporation.
For more details see the booklet, STRATA LIVING – What You Should Know about Residential, Commercial and Other Strata Schemes , available from the Office of Fair Trading.

Common Law Title

Also known as Old System Title, this consists of a series of title documents called ‘a chain of title’. Following a sale, Common Law Title will be converted to a qualified Torrens Title. Action may be taken at a later date to convert that to a full Torrens Title.

Community Title

Community Title is a form of sub-division which allows common property areas to be incorporated into a land sub-division. On registration of a community style plan, an association will be established similar to an owners’ corporation under strata schemes legislation. People purchasing into such a scheme will receive a Torrens Title for the lot they own and membership of the association. They will also share ownership of the common facilities.

Company Title

Company Title is where unit owners are actually shareholders in a private company. Buying a certain number of shares entitles the shareholder to exclusive possession of a particular unit, and perhaps space for a car. Shareholders vote to decide company rules governing occupation, such as rights to lease, sell or transfer shareholdings. You must have the company’s approval to alter in any way the occupancy of a Company Title unit. Because you do not actually gain a title to the property but shares in a company, lending bodies are more reluctant to lend for this sort of property.


Common Home PurchaseTerms

AGENT : A person authorised to act on behalf of another person in the sale, purchase, letting or management of property. A real estate agent must be licensed by the Office of Fair Trading.
AMENITY : Denotes a characteristic or feature of a neighbourhood.
ALLOTMENT : When a larger area of land is sub- divided into smaller pieces, these smaller parcels of land are known as allotments. Also referred to as ‘lot’, ‘building block’ or ‘block of land’.
APARTMENT : See ‘Home Unit’.
APPRECIATION : The increase in the value of property caused by economic factors, such as inflation, supply and demand etc.
AUCTION : A public sale in which a property (or an article) is sold to the highest bidder.
ARCHITRAVE : A moulding surrounding a door or window opening.
BEAM : A horizontal load bearing structural member.
BEARER : A sub-floor timber supporting the floor joists.
BOUNDARY : A line separating adjoining properties.
BREACH OF CONTRACT : Breaking the conditions of a contract.
BRICK VENEER CONSTRUCTION : In housing, a system in which a structural timber frame is tied to a single brick external wall.
BRIDGING FINANCE : Finance obtained over a short period as a prelude to long-term funding. Higher interest rates are usually charged for this form of finance.
BUILDING REGULATIONS : Rules of a legal or statutory nature by which local councils control the manner and quality of the building. They are designed to ensure public safety, health and minimum acceptable standards of construction.
CAVEAT : If a caveat is lodged upon a title to land, it indicates that a third person (the person who lodged the caveat) has some right or interest in the property.
CAVEAT EMPTOR : ‘Let the buyer beware’. This principle of law puts onus onto the buyer to be satisfied with the item before buying.
CERTIFICATE OF TITLE : A document identifying the ownership of land; it shows who owns the land and whether there are any mortgages or other encumbrances on it etc. This document is usually held by the lender as security for a loan. Details can be obtained through a search of records at the Land and Property Information NSW.
CHATTELS : Property other than real estate, movable possessions which may be included in a sale (ie. furniture etc).
CLEAR TITLE : A seller has a clear title when there are no restrictions (such as an outstanding mortgage) preventing a sale, and title of the seller is established.
CLUSTER HOUSING : Detached group of houses which shares open space. COMMISSION : The fee or payment made to a real estate agent for services rendered (eg. someone who engages an agent to sell their home pays the agent a commission).
COMMON PROPERTY : An area which is available for the use by more than one person (eg. home units have common areas such as stairs, driveways, storerooms etc).
COMPANY TITLE : See above.
COMPULSORY ACQUISITION : (resumption) : The power of a government authority to purchase property from an owner who does not wish to sell.
CONTRACT OF SALE : (referred to as the ‘contract’): A legal document which sets out the terms and conditions the seller and the buyer enter into when a sale is to take place – the contract contains a description of the property.
CONVEYANCE : The transfer of ownership of property from the seller’s name to the buyer’s name.
COOLING-OFF : The period of five business days allowed after exchange of contracts during which time the contract may be cancelled.
COVENANT : An agreement by one party to adhere to certain terms, conditions or restrictions regarding a property. A covenant is not usually valid unless noted on the title to the land. The nature of the covenant should always be established and the question asked: What effect will this covenant have upon the future plans for the property?
DEPOSIT : A deposit is normally paid by the buyer at the time of exchanging contracts; normally 10% of the total purchase price. Any amount paid earlier as an initial or part deposit will usually form part of the 10%.
DEPOSIT GUARANTEE BOND : A written guarantee from an insurance company to the seller for payment of all or part of the deposit.
DISBURSEMENTS : Miscellaneous fees and charges incurred during the conveyancing process, including search fees charges by government authorities.
DUTY : A state government tax on financial transactions. For the sale of real estate, it is calculated according to the sale value.
FITTINGS : Goods or articles that can be removed from a property without causing damage to it.
FIXTURES : Items, such as built-in cupboards, bath, toilet or stove, that cannot be removed from a property without causing damage.
FREE STANDING : A dwelling which stands independently of others.
HOME UNIT : A residential dwelling grouped with others, sharing common property and registered under Strata Title or Company Title.
INTEREST ONLY LOAN : See ‘Mortgage (fixed)’
INVENTORY : A list of items included with a property, usually furniture, furnishings, movable items etc.
JOINT TENANTS : Joint tenancy is the holding of property by two or more persons in equal shares. If one person dies, his/her share passes to the survivor.
MORTGAGE : A legal document which expresses the terms and conditions applying to the lending of money secured over real estate.
MORTGAGE (fixed) or interest-only loan : The amount borrowed is not repaid until the end of the term of the loan. Repayments made are only payments of interest.
MORTGAGE (amortising or reducing) : The principal and interest type loan which is the most common form of housing loan. The repayments through the term of the loan include both interest and principal.
MORTGAGEE : The person(s) who lends the money.
MORTGAGOR : The person(s) who borrow the money.
OPTION TO BUY : A legal document giving a person the right to buy. In the document the price and period are specified. A fee is paid and if the person proceeds to buy the property the amount comes off the purchase price. When the person does not proceed to buy the property the fee is forfeited.
OWNERS’ CORPORATION : All the owners collectively of a block of units. The executive committee, which is elected by the members, meets regularly to discuss various matters relating to the administration of the building (eg. upkeep of common property).
PRINCIPAL : The amount of money owed to a lending authority.
PRIVATE SALE : The seller does not engage an estate agent but acts for himself or herself. The seller deals directly with the buyer.
PRIVATE TREATY SALE : Sale of property through an estate agent by private negotiation and contract.
REAL PROPERTY : Land with or without improvements thereon.
RESERVE PRICE : The minimum a seller has specified he/she will accept at auction.
RIGHT OF WAY : A right which gives a person access across certain land.
SEARCH (TITLE) : The process of investigating or examining title to land to ascertain if the vendor has the right to transfer ownership. A title search reveals the names of the owners and the other precise details of the property, such as the existence of any restrictive covenant, mortgage or caveat on the title.
SEMI-DETACHED : Two houses joined together with a common wall or walls; usually registered under Torrens Title.
STRATA TITLE : See above.
TENANTS IN COMMON : This is the holding of property by two or more persons in equal or unequal shares. If one person dies, his/her share passes to the person named in his/her will.
TERRACE : One row of houses joined together with common walls, usually registered under Torrens Title.
TORRENS TITLE : See above.
TOWNHOUSE : Two-storey attached dwellings registered under Strata Title.
TRANSFER : A document registered in the Land and Property Information NSW acknowledging the change of ownership of a property, to be noted on the Certificate of Title.
UNENCUMBERED : Describes a property free of mortgages, covenants, restrictions etc.
VENDOR : A person who offers a property for sale. VILLA : Single-storey attached dwelling registered under Strata Title.
ZONING : Statutory description of the allowable uses of land as set out by local councils or planning authorities.


Useful Telephone Numbers

ARCHICENTRE 1300 134 513

Customer Service Enquiries 13 32 20
Real Estate Matters (02) 9895 0297
Strata Schemes (02) 9338 7900
1800 451 431

(02) 8878 8400

LAND & PROPERTY INFORMATION NSW (02) 9228 6666; 1300 052 637

LAW ACCESS NSW 1300 888 529

LANDCOM - SALES OFFICE (02) 9629 2999

MASTER BUILDERS’ ASSOCIATION (02) 8586 3555; 1800 451 393

(02) 9685 2187; 1300 130 624
SYDNEY BUILDING INFORMATION CENTRE (02) 8303 0545; 1300 884 876

Further information If you have any questions about the information in this brochure, please contact the Home Purchase Advisory Service : Telephone: 1300 HOUSING (1300 468 746) TTY users phone 133 677 then ask for 1300 468 746 Email: Housing NSW’s website has current information on home purchase issues and services, including all the Home Purchase Advisory Service publications. Website: The information contained in this brochure was current as at May 2010.
Interpreter Services If you need help with interpreting or translation because English is not your first language, phone All Graduates Interpreting and Translation Services on 1300 652 488. They will phone the housing organisation and interpret for you for free. Housing NSW May 2010, Reprint 2013. May 2014


Financing your Home Purchase

Disclaimer This booklet is for information purposes only, and must not be relied on as a substitute for legal advice.

How Much Can You Afford?

Before you buy or build a home, find out about your financing options. Ask banks and other financial institutions:
• if you are eligible for a loan • how much you need for a deposit
• if funds are always available and
• how much you can borrow.

The amount you can borrow will normally depend on:
• your income
• the interest rate
• the term of the loan
• your other commitments, such as credit cards and personal loans.

You may be eligible for a loan if you:
• have enough to pay a deposit on a property and sufficient funds for additional costs and
• are in regular employment and receive sufficient
income to service the loan and
• meet the requirements of the lender.

Consumer Credit Code
The Consumer Credit Code is a set of rules to ensure borrowers are aware of their obligations in credit transactions. Institutions providing home loans are required to truthfully divulge all relevant information about the loan in a written contract. The contract should include information on interest rates, credit fees and charges, and commissions. For further information on the Consumer Credit Code, contact the Office of Fair Trading.

Other loan commitments

A housing loan is a long-term commitment and the home it provides will be important to your health and wellbeing. You should not jeopardise this by over-committing yourself with other credit. Other credit reduces the amount you can borrow and whether you are able to make your home loan repayments. The most common reason borrowers get into difficulties repaying their mortgage is over commitment to other credit.


The larger your deposit, the easier it will be to buy a home. You will not need to borrow as much. Generally, you will need between 5% and 20% of the purchase price of the property as a deposit. However, some lenders will lend 100% of the value of the property provided the borrower meets certain strict conditions. You will also need to budget for other costs, such as:
• legal expenses
• lender’s fees
• government charges and
• inspection costs.
Refer to the brochure A Guide to the Costs of Home Purchase for further information on home purchase costs.

Interest charges

Interest is charged to the borrower by the lender for the use of the lender’s money. The interest rate is the annual percentage of a loan amount that is charged as interest. The interest rate can and will fluctuate with changes in economic conditions. Rates of interest may be fixed or capped for a period of time, or alternatively may vary during the term of the loan in line with general interest rates.

What is a mortgage?

The mortgage is the legal document for the loan on a property, with the terms and conditions. Generally, if repayments are not maintained or the borrower otherwise breaches the mortgage conditions, the lender has the right to sell the property to recover the outstanding debt. Second mortgages may be obtained if additional funds are needed to complete the purchase of a home, or for other reasons. The first lender has to agree. Generally, lenders prefer to lend all of the money and hold first and second mortgages.

 Mortgage insurance

This is needed if you borrow more than a set proportion of the valuation. The mortgage insurance premium is a once only payment. Mortgage insurance protects the lender if you default on the loan and the property is sold for less than the outstanding loan amount. You, as the borrower, can take additional insurance such as income protection insurance to cover the mortgage repayment in the event of illness, accident, unemployment or death.

Types of Lenders

There are many different types of home lenders. Each has different interest rates, terms, conditions and lending criteria. The most common types of lenders are outlined below.


Banks have the primary share of the owner occupied home loan market in Australia. Banks can provide their customers with integrated banking packages (eg. lending products, financial services, transaction and savings accounts). Banks lend funds for housing up to a 30-year term. The deposit required can vary from 5% to 25%.

Building societies

Building societies are cooperative organisations whose members are shareholders. Building societies are often referred to as mutual societies.
Building societies operate in much the same manner as banks, offering integrated financial services (eg. home loans, saving accounts, cheque accounts, credit card access and financial planning and investment services).

Credit unions

Most credit unions lend funds for housing to members. Credit unions can be a good source of finance when additional funds are required.

Mortgage managers

Mortgage managers organise funding for homebuyers from a variety of funding sources. The owner of the mortgage is not the mortgage manager but the provider of the funds, who operates through a trustee.

Mortgage brokers

Mortgage brokers act as agents between borrowers and prospective lenders. The task of the mortgage broker is to find and arrange the most suitable loan for the borrower. They do not lend money or manage loans.

Cooperative housing societies

Cooperative housing societies provide housing loans predominantly to low-to-moderate income earners. Customers of cooperative housing societies become members of the society by purchasing a share.

Superannuation funds

Housing loans are sometimes available to people who contribute to certain superannuation schemes. Borrowers usually must meet membership and/or qualifying criteria.


Some solicitors have clients’ funds available for housing loans. Normally, these loans are for two or three years only and, at the end of this time, finance has to be obtained from another source. These loans can often be ‘rolled over’ for another set period of time before the loan has to be repaid. Interest only is paid on these loans, meaning the amount borrowed is not reduced.

Finance companies

Loans from finance companies have higher interest rates than from other lenders so they are generally not suitable as first mortgage housing loans.

Vendor finance

Sometimes the vendor (the seller) is prepared to lend part of the purchase funds to the buyer, usually over a two-or three-year term. Interest only is paid, meaning the amount borrowed is not reduced. At the end of the term, finance has to be obtained from another source.

Types of Loans

Standard variable interest rate loan

This is the usual loan offered by home loan lenders and the most popular type of home loan. The interest rate can go up or down throughout the term of the loan. Repayments, usually monthly, are the same throughout the term of the loan, changing only with the rise and fall of interest rates. Normally, in the early years of the loan, each repayment is mostly paying interest charges and less of the loan principal. In later years, the opposite occurs. Features, such as added flexibility in making repayments and a redraw facility, are often included in this type of loan.

Basic variable interest rate loan

This type of loan offers a lower interest rate and repayment than a standard variable interest rate loan but has fewer or none of the features of standard variable loans.

Fixed interest rate loan

This type of loan offers a fixed interest rate for a specific period (eg. six months to five years). At the end of the fixed rate period, the loan is renegotiated for a further fixed term or reverts to the variable interest rate current at that time. It may not be possible to pay extra amounts off the principal without paying a penalty. A penalty usually applies if the borrower wishes to refinance the loan during the fixed interest rate period.

Part variable/part fixed interest rate loan

Often referred to as split or combination loans, this loan allows the borrower to pay a fixed interest rate on a portion of the loan while paying interest on the remaining portion at the standard variable interest rate. This gives the borrower flexibility and interest rate certainty.

Capped or introductory interest rate loan

Under this type of loan, the interest rate is fixed for the capped period, which is usually six to 12 months. During this period, the interest rate cannot go higher but it may go lower if the lender’s standard variable interest rate falls below the capped rate. These loans are commonly referred to as honeymoon rate loans. Often, these loans offer the lowest interest rates and this can assist a new borrower to adjust to mortgage repayments. However, the borrower also needs to be prepared for an increase in loan repayments once the capped period ends.

All-in-one loan

An all-in-one loan is usually a variable interest rate loan, which permits the borrower to place all their income into the one account, reducing the loan balance and the interest paid. The borrower can access the account to meet day-to-day expenses. Additional payments are permitted without attracting penalties. Due to its flexibility, there may be greater costs (eg. higher interest rate and/or higher monthly fees).

Home equity loan

A home equity loan allows a borrower to use the equity in the home (the portion of the property the borrower owns) to gain access to an immediate source of funds. There are two types of home equity loans. Under the first type of home equity loan a borrower may borrow an additional lump sum amount which acts like a second mortgage.
The second type is an equity overdraft or line of credit. A line of credit is like an overdraft secured by the equity in the borrower’s home. The interest rate on a line of credit is usually higher than for other home loans but less than the interest rate on a personal loan or credit card.

Consolidated loan

A consolidated loan permits the borrower to combine several loans, such as a home loan, credit card debt and personal loan into a single variable or fixed rate loan. This can result in a lower overall repayment and interest rate for the borrower.

Interest only loan

An interest only loan requires the interest to be paid during the loan term with the amount borrowed becoming due at the end of the loan. These loans are usually for one to five years and are often used by people buying investment properties.

Bridging loan

A bridging loan is often used to buy a property while waiting for the sale of your existing property. A bridging loan is a short-term housing loan where repayments meet the interest only. The amount borrowed becomes due at the end of the loan term. As higher interest rates are usually charged for bridging loans, it is best to keep the term as short as possible.

Other Loan Features

Fortnightly repayments
You can save money by making fortnightly rather than monthly repayments. This is done by dividing your monthly repayments in half and making these once a fortnight. This means that you will make one extra repayment a year. This is because there are 26 fortnights (or 13 sets of four weeks) in a year, and only 12 months. Making repayments fortnightly can reduce the term of your loan and save you a lot of money on interest repayments.

Extra repayments
Most variable and some fixed rate loans allow the borrower to make additional or lump sum repayments without penalty. If you can afford it, regularly adding a little bit extra to your repayments can significantly reduce the amount you end up paying over the term of the loan. If you can make a lump sum payment into your home loan account, this will also reduce the term of the loan and the total amount you repay.

Mortgage offset account
A mortgage offset account is a savings account combined with a home loan but as two separate accounts. Any interest earned on the savings account is applied to reduce the interest payable on the home loan.

Redraw facility
A redraw facility allows you to withdraw additional repayments, which have previously been made. Usually there is:
• a minimum redraw amount
• a maximum redraw amount
• a fee per redraw and
• an allowable number of redraws each year.

Going for the Home Loan Interview

You should make appointments at various lending bodies to speak to a loans officer about a possible home loan. Take information to help the lending body assess how much they will lend you (eg. current bank statements, payslips or other proof of income and documents showing ownership of any property). Be prepared to furnish details of any financial commitments you have (eg. personal loans, credit cards).
Go to several lenders and compare the interest rates and loan conditions offered. If you are a first homebuyer, ask about any special concessions that may be available.
Once you have selected a property to buy, make a formal application to your chosen lender. You will be required to complete an application form and provide the lender with details of the property.

Questions to ask lenders

When seeking information from lenders or attending a loan interview, it may be helpful to ask the loans officer the following questions:
Q. What fees apply to the loan application?
Q. Will any of the application fees be refunded if I don’t proceed?
Q. Do these fees apply to this application only or can they apply partly to a subsequent loan application?
Q. How much can I borrow?
Q. What percentage of my income will be committed to loan repayments?
Q. How much deposit will I need, including approximate associated costs?
Q. What conditions apply to fixed rate, capped and introductory loans?
Q. What are the monthly repayments and can I pay fortnightly?
Q. Will I need to pay mortgage insurance, and if so, how much will that cost? Can I add this to the loan or do I have to pay up front?
Q. Is the interest daily or monthly reducible?
Q. If the interest rate increases, will the term be lengthened or will I have to meet the increased repayments?
Q. Are there further charges or any ongoing charges/monthly fees?
Q. How do I make repayments? Is there a repayment book? Can repayments be taken directly from my salary or bank account?
Q How long will it take to receive formal loan approval?
Q. What legal fees will be charged for preparing documents, such as mortgages?
Q. Are there any penalties for repaying the whole loan before the full term or for making extra payments?
Q. Is there a mortgage offset facility?
Q. Is there a redraw facility?

Useful Telephone Numbers

Archicentre 1300 134 513
Office of Fair Trading 133 220
Land and Property (02) 9228 6666 Information NSW 1300 052 637
Law Access NSW 1300 888 529 Landcom – Head Office (02) 9841 8600
Credit Ombudsman Service Limited 1800 138 422
Financial Ombudsman Services 1300 780 808
Office of State Revenue First Home Plus/First Home
Owner Grant Scheme 1300 130 624 Real Estate Institute of NSW (02) 9264 2343
Sydney Building Information (02) 8303 0545 Centre 1300 884 876

Further information

If you have any questions about the information in this brochure, please contact the Home Purchase Advisory Service : Telephone: 1300 HOUSING (1300 468 746) TTY users phone 133 677 then ask for 1300 468 746 Email: Housing NSW’s website has current information on home purchase issues and services, including all the Home Purchase Advisory Service publications. Website: The information contained in this brochure was current as at May 2010.

Interpreter Services

If you need help with interpreting or translation because English is not your first language, phone All Graduates Interpreting and Translation Services on 1300 652 488. They will phone the housing organisation and interpret for you for free.
Housing NSW
May 2014

A Guide to the Cost of Home Purchase


This brochure is a guide to some of the costs you will need to pay when you buy a home in NSW. The costs are approximate only and are subject to change. Home purchase costs vary considerably depending on such things as type, location and value of the property.

Home Loan Application Fee

This is the fee charged by a bank or other lending body when you apply for a loan.
Approximate cost: $Nil - $800
There may be additional costs preparing and registering the mortgage.

Valuation Fee

Your lender usually requires a formal valuation of the property you are buying. This fee may be included in the application fee charged by your lender.

Mortgage Insurance

Your lender will require you to take out mortgage insurance if you are borrowing more than a set proportion of the property’s valuation. This insurance protects the lender if you default on the loan and the property is sold for less than the outstanding loan amount. Premiums vary according to the loan amount, property price and the loan-to-value ratio. The mortgage insurance premium is a once-only payment.

Survey Report

A survey shows where the property is in relation to the boundaries of the land. Lenders often require a survey report.
Approximate cost: $400 - $700

Conveyancing Fees

Conveyancing is the process of transferring the property from the seller to the buyer. You can engage a solicitor or conveyancer to do this or you can do it yourself. There are no set fees charged for conveyancing. You should get a written estimate of the likely costs before engaging the solicitor or conveyancer.
Approximate cost: $700 - $2,500


Your solicitor/conveyancer will charge for some of these expenses paid on your behalf during the conveyancing process.
Title search $20–$80
Local council (S 149) $40–$100
Local council, building certificate (S 149D) $210 (Application must be lodged with survey report)
Sydney Water (S 66) $15 Drainage diagram $15
Department of Education and Training $13
Land tax (S 47) $15
Roads and Traffic Authority $26
Transgrid (electricity/power stations) $27
Council rate enquiry $60
State Rail Authority $28
Outstanding notices for council $40–$150

Stamp Duty

You must pay contract stamp duty on the purchase price of the property (or valuation in certain circumstances). Duty must be paid within three months of the date of exchanging contracts, unless buying ‘off the plan’ or a house and land package.

Contract Stamp Duty Scale
Purchase Price                  Rate

Up to $14,000                    $1.25 per $100 ($10 minimum)
$14,001 - $30,000             $175 plus $1.50 per $100
$30,001 - $80,000             $415 plus $1.75 per $100
Over $80,000                      $1,290 plus $3.50 per $100
Over $300,000                    $8,990 plus $4.50 per $100
Over $1,000,000                 $40,490 plus $5.50 per $100

Mortgage Stamp Duty for owner/occupiers was abolished on 1 September 2007. Mortgage duty on investment housing ceased on 1 July 2008.

First Home Plus: The NSW Government’s duty concession scheme for first home buyers provides exemptions or discounts on contract stamp duty for first home buyers in NSW. For further information about First Home Plus, enquire with the Office of State Revenue or your solicitor/conveyancer.

Inspection Fees

Building Inspection
A building inspection checks structural soundness and lists any visible defects and necessary repairs.
Approximate cost: $300–$700

Pest Inspection
A pest inspection checks for any signs of past or present pest infestation.
Approximate cost: $200–$350

Strata Inspection

A strata inspection examines and reports on the written records of the owners’ corporation. It is additional to the certificate that the seller supplies, providing relevant information about strata levies, insurances.
Approximate cost: $200–$350

Home Building Insurance

We suggest that you arrange home building insurance before completing the purchase. The cost of building insurance will depend on the age, size, location and type of construction of the property. Two types of insurance cover are available. Replacement cover: to reinstate your property to its former condition. It means, simply, new for old.
Indemnity cover: to repair or reinstate your property taking into account depreciation on the dwelling.
Approximate cost: $220–$1,000

Council and Water Rates Adjustment

The buyer and seller share these costs in proportion to the length of time each party owns the property during the rating period.

Electricity Reconnection

The electricity is usually disconnected when the ownership of the property changes. Approximate cost : $0 (existing customers of one year and Centrelink Concession Card holders with good credit history) $180–$200 (security deposit for new customers)

Telephone Reconnection

Telephone lines are usually disconnected when the property changes hands. Approximate cost: $59 (where phone connected previously) $299 (where phone not connected previously)

Removalist Cost

Removalist costs will depend on distance, how much furniture you have, and who is doing the packing. Approximate cost: $550 - $3,500

First Home Owner Grant Scheme

The First Home Owner Grant Scheme is a national scheme to assist first home buyers. For further information, please contact the Office of State Revenue.

Further information

If you have any questions about the information in this brochure, please contact the Home Purchase Advisory Service : Telephone: 1300 HOUSING (1300 468 746) TTY users phone 133 677 then ask for 1300 468 746 Email: Housing NSW’s website has current information on home purchase issues and services, including all the Home Purchase Advisory Service publications. Website: The information contained in this brochure was current as at May 2010.

  Interpreter Services If you need help with interpreting or translation because English is not your first language, phone All Graduates Interpreting and Translation Services on 1300 652 488. They will phone the housing organisation and interpret for you for free. Housing NSW May 2014



<a href="/images/HomeBuyersChecklist.pdf" download>