On Wednesday this week, Chancellor of the Exchequer Rishi Sunak raised the Stamp Duty Land Tax threshold from £125,000 to £500,000. The measure, which was effective immediately, will be in place until March 31, 2021.
- Stamp duty holiday: Rishi Sunak raises SDLT threshold in announcement
With the housing market back up and running in England and amid the SDLT changes, some may be looking to make a purchase in the near future. For many, buying property is something they will do by getting a mortgage.
And, following this week’s announcement, Katie Brain, Consumer Banking Expert at financial information business Defaqto, has shared some insight into different mortgage options.
Ms Brain said: “The stamp duty holiday is great news for those looking to move, although there are fewer mortgage products available at the moment and so borrowers may have to work harder to get a loan.
“Building societies are still lending to those with small deposits and it is worth checking if there are any deals available to local buyers.”
The Consumer Banking Expert went on to highlight some different offers from lenders at this present time.
“The Furness Building Society is the only lender offering a mortgage to those with five percent deposits but this is only available to local customers in the region,” she said.
“There are a few mortgages for those with a 10 percent deposit and First Direct is the only bank still offering one but several building societies are, including Penrith Building Society and Cumberland with rates starting at 2.09 percent.
“Alternatively, buyers with family who are open to using their savings to guarantee a loan may be able to get an intergenerational loan, known as a security deposit mortgage.
“With a security deposit mortgage, the friend or family member helping (helper) only guarantees the deposit or a set amount and is not liable for the whole mortgage.
“For example, they could guarantee £20,000 for a 10 percent deposit on a property worth £200,000.
“If the borrower does not keep up the mortgage repayments and the debt is called in, the family member is only liable for the £20,000 deposit and not the remaining £180,000 loan.
“The savings rates on these can often be more attractive than mainstream savings products and so this arrangement can benefit both parties.
- Mortgage free: The best ways homeowners can achieve loan-free success
“The best rate at the moment is with Barclays who are offering a 100 percent loan fixed for five years at 3.05 percent.”
Ms Brain went on to highlight a particular scheme first-time buyers may want to consider.
“There is still time to take advantage of the Help To Buy scheme too,” she said.
“For those who are eligible and can contribute a five percent deposit, they can take advantage of a 20 percent deposit loan from the government which they will not have to repay for five years.
“There aren’t as many mortgages available to First-time Buyers at the moment and by having a 25 percent deposit, homebuyers will have more options to borrow.
“The best buy two year fixed rate is currently being offered by Natwest at 1.51 percent.”
“Buying a home is a huge investment and not without risk, anyone who is looking to take out a mortgage should speak to a professional adviser before committing.”
Source: Read Full Article