- Salli Anstey
It’s fair to say that the housing market has defied logic during the pandemic, so the much-anticipated budget announcements on the 3rd of March were possibly the most important in history for homeowners, buyers, and sellers.
The 2020 house price rebound, following the impact of Covid-19 was seen by many as unprecedented, yet it now seems obvious that a ‘stamp duty holiday’ would give anyone considering a move a big incentive to get on with it. An increased demand for mortgage advice has certainly been something we’ve experienced recently, so highlighting the two main budget plans announced by the Chancellor last week around property and mortgages, we’ve explained what they could mean for you.
Stamp Duty Holiday Extension
Confirming speculation, the ‘stamp duty holiday’ has been extended for another 3 months, now ending 30th June 2021. Due to expire at the end of this month after coming into effect last July, the measure means that homeowners don’t pay stamp duty on the first £500,000 of a property’s value, saving up to £15,000. From 1st July, the scheme will taper back to its original position to sustain demand, where stamp duty will not be paid on the first £250,000 of the property’s value until 30th September, before dropping to £125,000 on 1st October 2021.
The decision to extend will be welcome news to those who had been in danger of missing the previous 31st March deadline, however for those beginning the process, timing will be tight. Transactions are taking longer than normal to complete, there is increased competition with more buyers than sellers on the market and stamp duty is due on completion, not exchange. This all results in the month of March 2021 being the critical time to have an offer agreed.
It is also worth considering that although the stamp duty holiday provides a big saving, the increase in house prices generally may in some circumstances wipe out any gains.
Every situation, of course, will be subject to personal circumstances, so it’s a good idea to give one of our experienced mortgage advisers a free no-obligation call before actioning anything. The team are on the usual number and are all safely working remotely. We can help you work out what stamp duty costs you will save with the holiday extended and whether it’s something suited to you.
New Mortgage Guarantee Scheme
From April 2021, there will be a return of 95% mortgages with the government’s new Mortgage Guarantee Scheme. Available to anyone (including existing homeowners) buying a home worth up to £600,000, the scheme incentivises lenders to offer mortgages to people who only have small deposits, specifically 5% of the property value. For new mortgages up to 31st December 2022, the scheme is designed to widen access to home ownership and, particularly for first-time buyers, this could be a lifeline.
It’s worth noting some considerations, however. Although the deposit required to be eligible for the mortgage will be low, homebuyers will still need to tick the usual stringent boxes around good credit ratings and having a high enough regular income to afford the monthly mortgage repayments. In some areas of the country where high house prices are a barrier to being able to afford a 95% mortgage, the scheme will have less of an impact.
It’s also crucial to explore all possible financial options to secure the best possible rate. Whilst a lower percentage deposit may save you money in the short term, a higher percentage deposit may save you money in the long term. Again, get in touch with one of our knowledgeable advisers who can help with your plans and consider whether a 95% mortgage is the best choice based on your circumstances.
In other homeowner news, we were pleased that the widely speculated decision on the pulling of the Green Homes Grant 2021 was not announced and that the scheme will continue to run until 31st March 2022. However, due to it not being open to new applicants beyond the end of March this year, homeowners will need to apply for vouchers now if they want to benefit from the savings on offer.
When it comes to buying property, making sure the choices you make are smart can take time and research. Representing your interests and supporting you through the whole process, at Private Wealth Mortgages we can help you select the mortgage that is best for you. Our team are working safely, remotely. We offer a free, no-obligation initial consultation, so give us a call on 01403 270 006 or email: info@privatewealthmortgages.co.uk