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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Remortgage – time to review
As we enter Autumn, lender focus turns to the end of year and building pipeline business for the New Year. Those that have perhaps not managed as large a volume of business as they would like will be eyeing their year end target nervously.
Not all lenders’ financial year will be the calendar year but those that are eager to get more business on the books before Christmas need to act now. As a result it’s not unusual to see lenders make a final push to attract customers.
There is often particular attention on remortgage business as that can typically be quicker to reach completion than new purchases. This year is showing no signs of bucking that trend and many lenders have been repricing their mortgage rates recently.
The market remains very competitive and cutting rates is a good way to grab the attention of borrower’s. That has also been helped by a calming in funding costs as the threat of an imminent rate hike has eased. As a result rates have dropped back after having nudged up a little in recent months.
It’s therefore a very good time for borrowers to review their mortgage and see if there could be an opportunity to cut their monthly cost. The headline interest rate is only part of the picture though and borrowers need to be sure to consider overall value.
Some of the lowest rates can carry big set up fees which can quickly erode the savings. However, most lenders will offer a variety of options with different rate/fee combinations.
In addition, many deals will come with incentives such as free valuation and legal work or a cashback to help deal with switching costs. It can therefore pay to opt for a product with a slightly higher interest rate but low set up fees.
What certainly doesn’t pay is apathy and failing to review your deal could be costly.
Guild Mortgage Service, Provided by London & Country Mortgages
YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
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