Simple hacks to buy a townhouse in Camberwell

How Much Do You Need to Buy a Camberwell Townhouse?

You can purchase a townhouse in Camberwell with as little as a 5% deposit through the Australian Government 5% Deposit Scheme. No LMI is payable under this scheme, which removes one of the larger upfront costs. The property price cap for the scheme is $950,000 in Victoria for capital city and regional centres.

Camberwell sits in the Boroondara local government area, an established, well-regarded inner-eastern suburb where proximity to schools, parkland, and public transport tends to maintain demand. Townhouses in Camberwell often appeal to buyers who want space without the full maintenance commitment of a freestanding home, particularly those near Burke Road or within walking distance of Camberwell Junction.

Consider a buyer who has saved $55,000. At a 5% deposit, that allows access to properties up to the scheme cap without needing LMI. The same buyer using a 10% deposit outside the scheme would face LMI on most purchases, unless they increased their deposit or reduced their purchase budget. The difference in approach changes both what you can afford and what you pay upfront.

You apply for the scheme through a participating lender, not directly through Housing Australia. Not all lenders offer the same loan features under the scheme. Some allow offset accounts, others do not. Some offer splits between fixed and variable rates, others limit you to one or the other. Confirm what is available before you commit to a lender.

First Home Buyer Duty Concessions in Victoria

Victoria provides a full stamp duty exemption on properties valued up to $600,000 and a sliding concession on properties between $600,001 and $750,000. Standard duty applies above $750,000. The concession applies to both new and established townhouses, provided you move in within 12 months of settlement and live there for at least 12 continuous months.

The concession can be used alongside the 5% Deposit Scheme. You do not need to choose between them. If you are purchasing a townhouse valued at $700,000, the duty concession will reduce your upfront costs by several thousand dollars, depending on where the property sits within the sliding scale.

For off-the-plan townhouse purchases, the temporary off-the-plan concession applies to contracts signed between 21 October 2024 and 20 April 2027. Duty is calculated on the land value at the contract date, not on the finished property value. This concession is available to all buyers during the eligible period, not just first home buyers. From 21 April 2027, the standard off-the-plan duty concession will apply instead.

If you are unsure whether a property qualifies as off-the-plan or whether you meet the residency requirement, check with your conveyancer before signing. Missing a requirement can mean paying full duty after settlement, which is difficult to reverse.

Fixed or Variable: Which Rate Structure Works for a Townhouse Purchase?

Your loan structure should reflect how long you plan to stay in the property and whether you expect your income to change in the short term. A fixed rate locks in your repayment amount for a set period, which can help with budgeting in the first few years. A variable rate generally offers more flexibility, including access to an offset account and the ability to make extra repayments without penalty.

In our experience, buyers purchasing a townhouse as a long-term home often prefer a split loan structure, with part of the loan fixed and part variable. The fixed portion provides certainty, while the variable portion allows you to offset a salary or savings balance and reduce interest over time. Not all lenders offer offset accounts under the 5% Deposit Scheme, so this is worth confirming early.

Consider a buyer who fixes 60% of their loan for three years and leaves 40% variable with an offset account. If they receive a bonus, inheritance, or tax return during that period, they can park the funds in the offset account and reduce interest on the variable portion immediately. The fixed portion continues at the agreed rate regardless of market movements. At the end of the fixed term, they can reassess and choose whether to fix again, move entirely to variable, or maintain a split.

If you are relying on dual income and one of you plans to take parental leave or reduce hours within the next few years, fixing at least a portion of your loan provides protection against rate increases during a period when your budget may be tighter. The trade-off is less flexibility during the fixed period.

What Happens If You Sell or Refinance Before the Residency Period Ends?

Both the Victorian duty concession and the 5% Deposit Scheme require you to live in the property as your principal place of residence for a minimum period. For the duty concession, you must move in within 12 months of settlement and remain for at least 12 continuous months. For the 5% Deposit Scheme, the residency requirement is set by the participating lender and typically aligns with the state concession.

If you sell or move out before meeting the residency requirement, you may be required to repay the duty concession and could face penalties under the guarantee scheme. The same applies if you convert the property to an investment before the required period ends.

Refinancing during the residency period is generally permitted, provided you continue to live in the property and meet all other conditions. If you want to refinance to access equity or move to a different lender, confirm with your current lender and the new lender that the refinance will not trigger a breach of the scheme conditions. Most lenders treat a refinance as a loan variation rather than a change of use, but the responsibility to confirm this sits with you.

If your circumstances change unexpectedly and you need to sell or move, seek advice from your conveyancer and lender before you act. Some exemptions exist for hardship or unforeseen circumstances, but these are assessed case by case and are not automatic.

How Do Lenders Assess Borrowing Capacity for a Townhouse Purchase?

Lenders assess your borrowing capacity based on your income, existing debts, living expenses, and the type of property you are purchasing. Townhouses are generally assessed the same way as apartments or houses, but strata properties with high body corporate fees can reduce your borrowing capacity because the fees are treated as an ongoing liability.

If the townhouse you want to purchase has body corporate fees of $2,000 per quarter, the lender will factor in $8,000 per year as a cost that reduces your available income. The higher the fees, the lower your assessed capacity. This can mean the difference between being approved for a property at the scheme cap or needing to reduce your budget by $50,000 or more.

Lenders also apply a serviceability buffer, typically 3%, to your interest rate when calculating whether you can afford the loan. Even if the actual rate is lower, the lender tests whether you could still make repayments if rates increased. This buffer protects you from rate rises but also means you may not be approved for the full amount you expected.

If you are on probation, self-employed, or earning income from commission or overtime, some lenders will reduce the amount of that income they include in their assessment. Others will not lend to you at all until you have completed probation or provided two years of tax returns. Understanding how your lender treats your income type is essential before you start looking at properties. You can assess your borrowing capacity before applying to understand where you sit.

Can You Use Gifted Funds for Your Deposit?

You can use gifted funds as part of your deposit, but the lender will require a signed statutory declaration from the person providing the gift. The declaration confirms that the funds are a genuine gift, not a loan, and that there is no expectation of repayment.

Some lenders require the entire deposit to come from genuine savings if you are borrowing more than 90% of the property value. Genuine savings are funds you have held in your own name for at least three months. If you are using the 5% Deposit Scheme, the lender's policy on gifted funds will vary. Some lenders allow the full deposit to be gifted, others require at least half to be genuine savings.

If you are relying on a gift to reach your 5% deposit, confirm with your lender before you request the funds. Receiving a large deposit into your account without a clear explanation can delay your application while the lender investigates the source.

The First Home Super Saver Scheme allows you to withdraw eligible super contributions to use toward your deposit. You can withdraw up to $50,000 in total, with a maximum of $15,000 from any one financial year. Concessional contributions are taxed at 15% rather than your marginal tax rate, which can help you build a deposit faster. You need to obtain a determination from the ATO before signing a contract, so start the process early if you plan to use this option. More information on first home buyer eligibility can help clarify whether this suits your situation.

Call one of our team or book an appointment at a time that works for you. We work with first home buyers in Camberwell regularly and can help you confirm which lenders, loan structures, and deposit options align with your circumstances and the type of townhouse you want to purchase.

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