If you are about to embark on your homebuying adventure, it's highly likely you will not complete the transaction in time to benefit from stamp duty holiday. But, as Peter Joseph explains, there may be other ways to save money on your property purchase…
As we continue to move forward during this uncertain time, the property market progresses too.
With all eyes firmly focused on the imminent deadline of the stamp duty holiday, professionals and individuals alike anticipate what the future holds for the market.
The House of Commons has held a debate on the topic of extending the stamp duty holiday, but it looks like we will have to wait until the budget in early March to see if an extension, tapering or no change at all will go ahead.
Despite all this, it can be easy to forget that there are other ways to benefit during this unprecedented time.
Some positive news to come at the end of 2020, was the return of high loan-to-value (LTV) mortgage deals to the market.
Indeed, most recently, Santander announced the return of a 90% LTV deal – which is for borrowers with a 10% deposit. After a decline in products over the last 12 months, the welcome return of these deals has brought fresh energy to the market.
The increase in products is a reaction from lenders to the release of pent-up demand following the first national lockdown.
Borrowers have been propelled back to the market after re-evaluating what they want from their homes, and the desire to benefit from savings afforded by the stamp duty holiday.
How can high loan-to-value mortgage deals help when the stamp duty holiday is over?
The stamp duty holiday succeeded in stimulating the market during a challenging time, but it is not the only way of saving money when purchasing a property.
The return of high LTV mortgage products to the market can be a way to balance the additional tax.
At present, the average house price in the UK is £245,000. With a 90% LTV mortgage you can borrow £220,500, with the extra accommodating the stamp duty land tax. By borrowing more money at a lower rate, you can still have money left over to decorate or furnish your new home.
Previously, when mostly lower rates were available, an 80% rate on a property of average market value would require a deposit of £49,000.
A higher loan-to-value deal of 85% would mean a deposit of £36,750. A 90% rate would mean an even lesser deposit of £24,500.
The difference in deposit between an 80% and a 90% LTV is a staggering £24,500. High loan-to-value deals like this make buying a property more accessible to purchasers with smaller deposits.
But they can also help to offset the additional costs incurred by the stamp duty tax by putting up less money upfront.
The stamp duty holiday is not the only way to save
By taking a step back to look at the market from a different perspective, you can find new opportunities. Even without an extension of the stamp duty holiday, there are still ways you can benefit.
With more high loan-to-value mortgage deals on the market, more buyers will be able to return to the market and realise their property dreams. Now is the time to remain calm and think outside the box at all the options available, before starting your property journey.
How can Home Legal Direct help?
Home Legal Direct facilitates fast and efficient home transfer solutions for our customers throughout the United Kingdom. From purchases to remortgages, and everything in between, we are here to support you every step of the way. Get a free online conveyancing or survey quotation in seconds and embark on your property journey today!
Peter Joseph is CEO at Home Legal Direct
