Frequent questions
General
- Can the mortgagor be a company?
Yes it is the borrowers which have to be natural persons, not the mortgagor.
- Does section 221B apply to a First Home Plus mortgage?
Yes the section would apply in preference to any First Home Plus mortgage exemption or concession.
- When would the First Home Plus mortgage section apply?
It would apply for example where one of the borrowers is a company, such as in an equity partner arrangement.
- What is the position if the advance is classified as investment because the borrowers are going to rent the property out for a period, but they intend to live there?
Mortgage duty is payable. An advance for investment purposes is not exempt if made before 1 July 2008. The First Home Plus mortgage section (221) may apply.
- If the advance is to repay an earlier owner occupied advance, must the earlier advance be 'predominantly' for that purpose and must the borrowers of such advance be natural persons.
Yes the earlier advances secured must be wholly or predominantly for the purpose of owner occupied housing and the earlier borrowers must be natural persons.
- Does a mortgage which falls under section 221B need to be stamped?
Generally, this mortgage can be registered without having to be stamped. However if the mortgagor is a company it 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 apply to all advances made on or after 1 September 2007for 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.
- Is there a residency test, such as with First Home Plus or FHOG?
The requirement is that the residence is used and occupied or intended to be used by the borrower, or by any of the borrowers, as a place of residence.
- Do separate loan contracts equal separate advances?
Yes, and the predominant purpose test applies to each advance.
- Does an advance made to acquire a farm fall under section 221B?
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 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 2007 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 2008 an advance is made to repay the 1 September 2007 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 2007 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.
