Beating the Stamp Duty holiday deadline
With the extended Stamp Duty holiday deadline fast approaching, if you want to benefit from the large discount on offer until 30th June (no Stamp Duty to pay for the first £500k of the property value, which equals a £15k discount on properties valued £500k +), you will need to move quickly. There is a further discount that runs from 1st July to 30th September, which is no Stamp Duty to pay for the first £250,000 of the property value (which equates to a £2,500 discount on properties £250k +), but after that time, Stamp Duty will apply in full after that date (you can see the rates here). So lets see what you’ll need to consider if you want to take advantage of the stamp duty holiday.
Speed of the lender
A general relationship in the mortgage world is – The lower the mortgage rates on offer = the slower the lender – The reason is obvious, if a lender is market leading, they will of course have the most applications to process. In a post-lockdown/Covid world, that means applications cannot be processed as fast as they were, so lenders tend to seize up. Therefore, sometimes going one or two products off the top means you can get an offer in a week (or less) compared to it taking 6-8 weeks if you go with a ‘cheaper’ lender. If it takes 8 weeks to get a mortgage offer now, that could cost you up to £15,000 in extra stamp duty charges. To us, it seems common sense to pay £5-10 more a month on your mortgage (as that is all the difference really is) in order to hit the 30th June deadline. If you want to buy before this point, that is a dynamic you are going to have to accept.
This was the biggest issue in the original lockdown, that then created a bottleneck which we are still dealing with in some areas. As a bit of a lockdown legacy, some lenders are still using online valuations where possible. In these instances, lenders will use their ‘Automated Valuation Models’ or AVMs for short. All lenders slightly differ in how they use AVMs but the principal is the same – they use data from the Land Registry, their own experience, and other sources to obtain an online valuation. Most of these models work up to a value of around £1.5m for houses, but that can be much less for flats. Knowing which lenders do what is crucial, so we have all the tools we need to make these decisions plus our own experience from last year. Without a survey, you simply can’t get a mortgage agreed, so understanding this area and showing the right level of expertise is vital when considering how to get a mortgage as quickly as possible before the Stamp Duty holiday deadline.
GET A GOOD SOLICITOR!
No, my Caps Lock did not get stuck, I just wanted to emphasize just how important this part of the process is. Even if you pick the right lender, everything can be undone if your solicitor drags their heels. To this day, we still experience solicitors who send letters, work off faxes and are next to impossible to talk too. Yes, you can find a very cheap online option but exactly as per the above, is it worth it? There are very real challenges in parts of the legal process currently – local authority searches are taking an age to return, even if your solicitor is great, you are reliant on the other side’s firm etc. So our simple advice is – PAY FOR A GOOD FIRM and get a recommendation where possible. Google reviews are a great way to sense check a firm you want to instruct as are taking recommendations from your estate agent or broker as they will know the good local firms.
Access to products
This is where good brokers really earn their stripes as many arrangements are only accessible via brokers currently as lenders struggle to cope with demand. As brokers take the risk of the advice and also expertly package the case up, lenders are very happy outsourcing certain products to control the level of business and reduce processing burden. These areas are typically:
- Smaller deposits – 5/10/15% deposit deals
- As a broker we have access to cheaper rates and higher loan amounts in this area. Especially valuable when you are looking to move.
- More generous affordability calculations
- This means that we can get loans of up to 5.5x your income whereas the market average is around 4.5x your income.
- We have some lenders who purely take a ‘common sense’ approach to underwriting, so they have no formal rules but will just look at the merits of a case (and you don’t have to pay a large premium on the rate).
- Remortgage Packages
- We can speed up the process and keep costs down as many lenders offer lower rates, free surveys and free legal work when you come to remortgage.
- Buy To Let
We have access to many lenders who do not deal with the public so we can achieve larger loans, or get lower rates for that reason. Also if you are looking at more specialist areas such as having a large portfolio or owning via a Ltd Company, we have great options for that.
As ever, getting a mortgage is a very disjointed affair and therefore can be time consuming and frustrating. So let us take on the burden for you, so you can focus your valuable time and energy on other things that require your attention.
If you would like to speak to any of our team regarding the Stamp Duty holiday deadline or your mortgage goals, we would be delighted to help. You can find the contact details of the team here.
Should you wish to speak to one of our mortage brokers or protection advisers, Click Here and you will find everyone’s contact details.
Your property may be repossessed if you do not keep up repayments on your mortgage.
This firm usually charges a fee for mortgage advice. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.
Rose Capital Partners Limited is an appointed representative of PRIMIS Mortgage Network, a trading name of Advance Mortgage Funding Limited which is authorised and regulated by the Financial Conduct Authority.