The Chancellor has announced that stamp duty is to be abolished for all first time buyers on properties bought up to £300,000, effective from today. In addition, first time buyers purchasing properties up to £500,000 will pay no stamp duty on the first £300,000.
In his Budget, Philip Hammond announced that 80% of first time buyers would pay no stamp duty at all. With 358,000 first time buyers in the last year, this means that at least 24% of all sales in the UK’s housing market are set to be charged 0% tax. Once other exempt sales under £125,000 are taken into account, this figure will be even higher.
Two thirds of properties bought so far this year across the country have been under the new threshold but there are large regional variations. In Wales and the North East, over 90% of sales in the last year have been over £300,000 while just 17% of sales in London were for less than £300,000.
While good news for first-time buyers, this will further squeeze investors in the sub-£500,000 market who are already suffering from increased taxes. What's more, it does not, give any encouragement to owners higher up the chain to downsize.
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With the tougher mortgage rules in place since 2014 getting a mortgage perhaps seems to be a more complex process than ever.
Lenders are focused on establishing that a mortgage will be affordable for the borrower, not only now but also in the future. As a result they will ask questions not only about your level of income but also about your outgoings.
That will include expenditure on other credit commitments like loans and credit cards but will also look at other items like regular travel costs, utilities and childcare. This helps the lender calculate how much you can borrow so it makes sense to sit down and map out your monthly budget.
This will mean that you have all the figures to hand and help you to gauge the amount you might be able to borrow more accurately. It might also help you see where you might be able to make savings.
You will also need to be able to prove your income to the lender, so be prepared to come up with plenty of paperwork to back up your application. They might typically require payslips, accounts for the self employed, P60 plus bank statements, proof of address and ID as well. It’s not possible to predict everything a lender may request but gathering together what you can in preparation could help the process run more smoothly and quickly.
If you have any concerns about your credit history, either because of a possible blip in the past or because you have been previously declined, then you can get a copy of your credit record. This could help identify any issues and if there are errors then you can get those rectified before you make an application.
It’s important to remember that just because you can’t meet one lender’s criteria that another will not be able to help. Shopping around can help match your circumstances to the right lender as well as help identify better rates.
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