Stamp Duty holiday

Benefits of the recently extended Stamp Duty holiday

On Wednesday 3rd March the Chancellor announced an extension of the Stamp Duty holiday to the 30th of June.

Stamp Duty holiday
Stamp Duty holiday

How will this extension benefit you?

Benefit from substantial savings – In England and Northern Ireland, if you are considering moving home and complete by June 30th, you can benefit from the biggest cuts in property purchase tax on properties up to the price of £500,000. In Scotland, the holiday comes to an end at the end of this month but those in Wales will benefit from the tax cut on properties up to the price of £250,000.

Zoopla data indicates that at least 740,000 buyers will have benefited from the Stamp Duty holiday by the time it ends across the UK.

Getting the purchase completed – For those in Scotland there is little time left to take advantage of the scheme, but for the rest of those moving home, the extension to the tax holiday will allow more time for property purchases to reach completion. Without the extension, thousands of deals may have fallen through because buyers may have been forced to find extra savings to meet an increased tax bill.

Buyers have benefited by making substantial tax savings. The biggest cuts are on offer to those in England and Northern Ireland. Spending £500,000 or more on a new home or buy to let investment, you could save up to the maximum in tax of £15,000.

Whilst the Stamp Duty holiday has resulted in greater demand it has also led to higher house prices. Figures from the Land Registry show an 8.5% year-on-year rise in December, defying predictions earlier, in the year that the pandemic would create a reduction in the cost of a home.

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Mortgage guarantee scheme

Mortgage guarantee scheme – 5% deposits for home buyers.

During the Spring Budget, Chancellor Rishi Sunak stated that the Government is introducing a mortgage guarantee scheme to help first time buyers and existing homeowners.

 mortgage guarantee scheme
mortgage guarantee scheme

For many, it may not be easy to save for a 15% or 20% deposit for a home and this is where the new scheme will be beneficial to those looking to buy their first or next property.

How does the scheme work?
The new scheme will begin in April and both first time buyers and existing homeowners will be able to purchase homes worth up to £600,000 with a deposit of just 5% – enabling the majority of homebuyers to be eligible for the scheme.

Data from property portal, Rightmove, has revealed that 86% of properties currently listed for sale on their site have an asking price of £600,000 or less.

For the scheme to work, the Government will compensate lenders for some of their losses should a buyer default on their mortgage repayments for any reason. In return for this guarantee, lenders provide mortgages worth up to 95% of a home’s valuation or purchase price, so that borrowers can proceed with a deposit of 5%.

As many 95% of mortgages have been unavailable over the past year, the new scheme could be a real game changer, particularly for first time buyers.

Is the scheme only for first time buyers?
The Government has confirmed that the mortgage scheme will be open to all buyers, providing the home you’re buying is worth less than £600,000. Whether you are a first time buyer or looking for your next property, you can benefit from this new scheme.

How to apply for a 95% mortgage under the scheme.
Some of the nation’s biggest banks have committed to the scheme, including Santander, Lloyds, Barclays and HSBC. The usual mortgage affordability checks will still apply.

First time buyers and existing homeowners will need to prove to their lender that they can comfortably afford the monthly repayments after other essential spending has been covered.

If you or someone you know might be able to benefit from this scheme, fill in the form at the bottom of this article and get in touch. We are here to answer any questions you may have.

How does this scheme differ from Help to Buy? 
Under the current Help to Buy Equity Loan scheme, the Government will lend up to 20% of the cost of a newly built home from an approved developer and then shares in any increase (or decrease) of the property’s value.

To be eligible for the scheme the property must be your only property and your permanent residence. The maximum purchase price under the scheme is £600,000.

You will need a cash deposit of at least 5% and then a mortgage of up to 75% to make up the rest. You will not be charged loan fees on the 20% loan within the first five years of owning your home.

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UK Budget 2021 Government Announcement

UK Budget 2021 Government Announcement

As your mortgage adviser, we thought it may be of interest to see the latest announcements made as part of the UK Budget 2021, announced today by Chancellor Rishi Sunak.
New Mortgage Guarantee scheme As announced in the UK Budget 2021, a new mortgage guarantee scheme will enable all UK homebuyers to secure a mortgage up to £600,000 with a 5% deposit.  This provides many with the opportunity to buy a home without a large deposit. The 95% mortgages will be available from a wide range of lenders and High Street Banks including Lloyds, NatWest, Santander, Barclays and HSBC.
Extension to the cut in Stamp Duty The temporary cut in Stamp Duty Land Tax for the housing market in England and Northern Ireland remains until September 2021 – the current limit of £500k remains in place till the end of June, followed by a reduction in the allowance to £250k for the final three months.
Financial Support for the Self-Employed Grants are being made available for the self-employed, to claim up to 80% of three-month trading profits up to a value of £7.5k. A further grant is to follow later this year.
Covid-19 Response An extra £1.65 billion is being invested to roll out vaccinations across the UK, alongside studying the effectiveness of a third dose of vaccine to improve response rates against future variants. Extension of the Government Furlough Scheme The Government Furlough scheme is being extended until September 2021. Under the scheme, the government pays furloughed employees 80 per cent of their wages, up to £2,500 a month. Employers must pay 10 per cent of these wages in July and 20 per cent in August and September.
Hospitality & Leisure Industry Support £5 billion has been set aside for Restart Grants for businesses in the hospitality, accommodation, leisure, personal care and gym industries in England, and a new UK-wide Recovery Loan Scheme set up to give loans to businesses to help them through the next stage of recovery, upto a value of £10m. The 5% rate of Value Added Tax (VAT) for hospitality, accommodation and attractions is being extended until 30 September 2021. Investment is taking place in sport, with £25m pledged towards growing grassroots sport in the UK, and £2.8m set aside to support the UK & Ireland bid to host the 2030 football World Cup. 
Taxation Updates Income tax personal allowances will be maintained from April 2022 to April 2026, however Corporation Tax will increase to 25%, from 2023 onwards. Larger businesses will be taxed higher, with those reporting profits greater than £250k a year facing the largest rises. Fuel duty and alcohol duty will also be frozen again for this year too. Talk to us We hope that you find these announcements of interest, and please do let us know if you have any queries around your existing mortgage or are interested in talking further about new opportunities arising from today’s announcement on the new mortgage guarantee programme. The above details are extracted from the UK Government website and correct as of 3 March 2021. Further detail can be found at https://www.gov.uk/government/news/budget-2021.
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UK budget 2021
UK budget 2021