Frequent questions

Mortgage

General

How is mortgage duty charged?

Mortgage duty is charged on the amount of advances secured by the mortgage.

What is the rate of mortgage duty?

Duty of $5 is payable on the first $16 000 of advances secured and then $4 for every $1000 thereafter. For more information, use the mortgage duty calculator.

When will mortgage duty be abolished?

Mortgage duty will be abolished on all advances on 1 July 2016.

Electronic mortgages

What is an Electronic Mortgage?

An electronic mortgage is a mortgage that can be lodged electronically with Land and Property Information (LPI) under the Electronic Conveyancing National Law (NSW).

An electronic mortgage lodged via the Property Exchange Australia (PEXA) platform consists of two counterparts:

  • an electronic counterpart, known as a Mortgage (Electronic Counterpart) Instrument, prepared and signed by the subscriber representing the mortgagee

  • a paper counterpart on the same terms as the electronic mortgage signed by or on behalf of the mortgagor.

Both counterparts are required to form the legal mortgage instrument.

Which Counterpart is Lodged for Registration?

Only the electronic counterpart is lodged for registration with LPI. The paper counterpart must be held by the mortgagee as specified in the NSW Participation Rules for Electronic Conveyancing.

How do I stamp an Electronic Mortgage?

If an electronic mortgage secures an advance liable to duty in NSW, an OSR assessment must be made. Your Duties Notice of Assessment contains an OSR reference number. To lodge the electronic counterpart through PEXA, you must enter the OSR reference number in the PEXA workspace.

The electronic counterpart is taken to be duly stamped only when the instrument is digitally signed in accordance with the Electronic Conveyancing Law (NSW). See section 290 of the Duties Act 1997.

Do I need to stamp the paper counterpart?

The paper counterpart must be endorsed to reflect all liable advances (initial and further advances). If you are an EDR approved person, endorse the paper counterpart as if it were the mortgage (e.g. prime).

If you engage an EDR agent to process your mortgage transactions you must instruct them to stamp the paper counterpart, as if it were the mortgage (see Section 228A (3) of the Duties Act 1997).

What if the advance under an Electronic Mortgage is not chargeable?

If an electronic mortgage secures an advance for owner occupied housing (Section 221B of the Duties Act 1997) or investment housing (Section 221C of the Duties Act 1997) duty is not chargeable and the electronic counterpart does not require an OSR reference number.

Can I pay my mortgage duty through PEXA?

No. Duty on mortgage assessments must be made in advance of settlement or included as part of your EDR weekly remittance.

Duty on Mortgages for the purposes of Investment or Owner Occupied Housing

Is mortgage duty payable on owner occupied housing loans?

No duty is payable on owner occupied housing loans provided the borrowers are natural persons. See section 221B of the Duties Act 1997.

Is mortgage duty payable on investment housing loans?

No duty is payable on investment housing loans provided the borrowers are natural persons. See section 221C of the Duties Act 1997.

Can the mortgagor be a company for section 221B or 221C of the Duties Act 1997 to apply?

Yes provided that advance is made to borrower/s who is/are natural person/s.

Do separate loan contracts mean separate advances?

Yes, and for the purposes of section 221B and 221C of the Duties Act 1997 exemption, the predominant purpose test applies to each advance.

If the advance is to repay an earlier owner occupied advance, must the earlier advance be 'predominantly' for that purpose?

Yes the earlier advances secured must be wholly or predominantly for the purpose of owner occupied housing and the earlier borrowers must also be natural persons.

Does a mortgage which falls under section 221B or 221C of the Duties Act 1997 need to be stamped?

Generally, these mortgages can be registered without having to be stamped. However if the mortgagor is a company, the mortgage will need to be stamped.

A stamped mortgage dated prior to 1 September 2007 secures a further advance after 1 September for owner occupied housing. Does it need to be upstamped?

No, this mortgage does not need to be upstamped in respect of the further advance.

Does section 221B of the Duties Act 1997 apply to all advances made on or after 1 September 2007 for the acquisition of vacant land, irrespective of what the land will be used for?

Yes, provided the land is residential land and the borrowers are natural persons.

Does an advance made to acquire a farm fall under section 221B of the Duties Act 1997?

Yes, provided the borrowers are natural persons and the advance is predominantly made to acquire a residence in which one of the borrowers will reside.

However if the advance is predominantly to acquire a primary production business which includes a residence, or the advance is classified as an investment or business loan, duty would be payable.

Does section 221B of the Duties Act 1997 apply to a refinancing loan?

Yes, provided the advance secured by the new mortgage is wholly or predominantly for the purpose of repaying an earlier owner occupied advance to natural persons.

On 1 September 2014 an advance is made to repay an earlier owner occupied housing loan. A new mortgage is executed to secure such advance.

No duty is payable on the mortgage and no stamping required.

On 1 May 2015 an advance is made to repay (refinance) the 1 September 2014 advance. Again a new mortgage is executed to secure such advance.

The latest advance fits under section 221B(4)(e) Duties Act 1997. Hence no duty payable and no stamping required.

A mortgage dated 1 November 2013 is stamped $741 to secure a business loan of $200,000. Later, it secures an owner occupied advance of $100,000 and no duty is payable. The borrower then refinances the mortgage for $350,000. What amount of credit is available?

Section 221B Duties Act 1997 does not apply as the prior advances are not wholly or predominantly for owner occupied housing.

Under section 220 (refinancing) the new mortgage is considered stamped up to the amount on which the previous mortgage is stamped (up to $1 million). In this case that is $200,000. Hence no credit would be given for owner occupied loan secured by the earlier mortgage and duty of $600 would be payable on the extra $150,000.

An advance of $100 000 is made for the purpose of assisting a third party buy a home (such as a parent assisting a child). The parent’s home is used as security for the loan. Is the advance liable to duty?

Yes, the advance does not fall within either section 221B or 221C.

An advance of $200 000 is made for the purpose of purchasing a house boat or motor home to be used as a residence. A mortgage over a NSW property is used as security for the loan. Is this advance liable to duty?

Yes, the purpose of the advance is not to buy a ‘private dwelling house’ as is required by section 221B and 221C.

Mortgage Refinancing

What is a refinancing mortgage?

A refinancing mortgage means a mortgage that:

  1. secures the amount of the balance outstanding under an earlier mortgage that is discharged or to be discharged as part of the arrangements for the new mortgage

  2. is created to secure an advance to the same borrower as under the earlier mortgage

  3. is over the same or substantially the same property or part of the property as the earlier mortgage.

How is duty calculated on a refinancing mortgage?

Generally a refinancing mortgage is taken to have been stamped with ad valorem duty in respect of the duty free re-financing amount.

Duty of $4 per $1000 is payable on any excess.

What is the duty-free refinancing amount?

The duty-free refinancing amount is the lesser of:

  1. The amount secured by the earlier mortgage on which duty has been paid under the Duties Act 1997 or in relation to which an exemption has been obtained

  2. $1,000,000.

What evidence do I need to stamp a refinancing mortgage?

An Application for Exemption from Mortgage Duty: Refinancing of Loans Form (ODA 011) must be completed. This form details the evidence required.

Mortgage Packages

What is a Mortgage Package?

A mortgage package comprises a mortgage (over NSW property) and other instruments of security which secure or partly secure the same money.

Note: there may be more than one NSW mortgage in a mortgage package.

How do I calculate duty on a Mortgage Package?

If all the mortgages in the package are over property in NSW one of the mortgages is stamped with ad valorem duty on the amount secured and the other mortgages are stamped with duty on $50.

If the package contains one or more instruments of security over property outside NSW duty is payable on the dutiable proportion of the amount secured. This is the proportion of the value of NSW property secured compared to the total value of property secured.

What evidence do I need for a Mortgage Package?

Where the property secured is both in and outside NSW a Multi-jurisdictional Mortgage Statement Form (ODA 033) must be completed.

When is a Mortgage Package liable in NSW?

Generally a liability is triggered each time a NSW mortgage is executed or a new liable advance is made.

Duty on Mortgages for the Purpose of Farm Machinery

Is mortgage duty payable on advances to acquire farm machinery or a commercial vehicle?

Mortgage duty is not chargeable on so much of an advance to a natural person or a strata corporation for the acquisition of farm machinery or a commercial vehicle as is secured by the mortgage.

What does 'commercial vehicle' mean?

A commercial vehicle includes:

  • a motor vehicle or trailer within the meaning of the Road Transport Act 2013 constructed or adapted principally for the carriage of goods but does not include a motor vehicle of the kind known as a utility, a station wagon or a panel van

  • a vehicle without motive power of its own and constructed or adapted principally for the carriage of goods and for being drawn by a motor vehicle within the meaning of that Act.

What is farm machinery?

The definition of farm machinery is:

  • harvester, binder, tractor, plough or other agricultural implement

  • a boat within the meaning of the Fisheries Management Act 1994 or fishing gear

  • any other goods of a class commonly used for the purposes of a farming undertaking to be farm machinery

  • where the goods are acquired for the purposes of a farming undertaking.

What does farming include?

Farming undertaking includes:

  • any agricultural, apicultural, dairy farming, horticultural, orcharding, pastoral, poultry keeping, viticultural or other business involving the cultivation of the soil, the gathering of crops or the rearing of livestock

  • the business of taking fish, crustacea, oysters or any other marine, estuarine or fresh-water animal life

  • the cutting of timber for sale

  • any class of business determined to be a farming undertaking.

Last updated: 18 May 2016