Beat the Stamp Duty rush and save money with a bridging loan

We’re currently seeing one of the busiest housing markets in over a decade as people rush to beat the Stamp Duty Land Tax (SDLT) deadline.  It’s not too late to take advantage of the incentive though, with other lending options available, which could get your property purchase over the line before the end of the SDLT holiday.

On average, house prices have increased by 3.5% over the past 12 months, and the first quarter of 2021 is set to record a property uplift of 100,000 additional sales before the end of March. Nottingham, Manchester and Leeds appear to be the most buoyant cities, with house prices increasing over the past year by 5.3%, 5.2% an 4.9% respectively.

Despite the Covid-19 pandemic, these figures show now is perhaps one of the best periods in recent times to move home.

The current SDLT incentive means you don’t have to pay any Stamp Duty when you buy a new main residential property as long as it’s valued under £500,000, allowing you to potentially save thousands in fees when buying a new property.

Different rates apply to investment properties, such as Buy to Let or additional homes, but there are still savings to be made.

This period isn’t going to last for much longer though. The current holiday on Stamp Duty is scheduled to end on 31st March 2021, so if you’re thinking about moving home it’s best to do it sooner rather than later.

In fact, it’s estimated that only half of the mortgages applied for in January will be completed before the deadline, making it even more vital to get things moving now. This is due to the large increases the market is seeing in both demand and volume of moves.

So what happens if you want to move home but are seeing a delay, stuck in a chain that’s not moving, or lost a buyer and worried about missing the SDLT deadline?

How a Bridging loan can help

Bridging loans can provide quick funds to bridge the gap whilst you’re waiting for your transaction to complete. They work by allowing you to borrow funds to buy the new property, before selling your current one (you can read more here).  This could allow you to buy your new property, save the stamp duty and then transfer your mortgage to a more traditional one once you’ve sold.

Kevin Blount, Director at Clever Mortgages, said: “Beating the deadline on Stamp Duty could save you thousands of pounds, so if you’re considering moving then it really is a smart move to do so before the deadline of 31st March of next year.

“A bridging loan can help you by offering short-term finance that drastically speeds up the process and allows you to move to offer more quickly. This is opposed to moving home the traditional way, which could take months to complete due to the boom in demand we’re seeing.

“As such, we’d advise anyone thinking about moving to seriously consider a bridging loan in order to beat the Stamp Duty deadline and to get in touch with us if this is something you’re interested in.”

To find out more about how a bridging loan could help save you money on your move, give us a call on 0800 187 0504 or arrange a call back at a time that suits you.

*Data taken from Hometrack’s UK House Price Index Report for October 2020

Why now is a great time to move home

Why now is a great time to move home

Recent industry figures have shown that 1.09 million people with adverse credit scores might be looking to buy a new property in the next 12 months. This is a decrease of around 250,000 compared to the 1.34m people with bad credit scores who said they were looking to move in February, prior to the UK’s first lockdown*. 

Of those looking to move, seven out of ten of them are worried that their credit score might hold them back because it’ll cause their mortgage application to be declined – is this something you’re concerned about too?

If it is, then don’t worry – even with a bad credit score there are a wide range of competitive options available, meaning you can still realise your dream move or remortgage your current property at a rate that’s fair and affordable. What’s more, now is a great time to move!

Kevin Blount, Director at Clever Mortgages, said: “There are a few reasons as to why the current period is a good time to move home.

“The property market is really buoyant at the moment, and many people are taking advantage of the fact that there’s no Stamp Duty to pay if you move home before 31 March 2021, representing a fantastic saving to the consumer.

“This means that now could actually be an opportune moment to move home, even if you have got an adverse credit score.”

Sophie Attwood
Thank you so much to Laura at Clever Mortgages
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I can't thank Laura at Clever Mortgages enough for everything she's done. We were so worried that we weren't eligible for a mortgage having been told 'no' by numerous mortgage brokers. Laura had so much positivity and I trusted her from the word go. We were able to achieve a great mortgage with a great interest rate and secure our dream house. We couldn't have done this without Clever Mortgages - that's a fact.

As a specialist mortgage broker, Clever Mortgages is an expert in helping people with bad or adverse credit get access to competitive rates on mortgage deals. By going through a broker, you actually get access to better, more competitive rates that potential buyers miss out on when choosing to go direct to their mortgage provider.

When you combine these competitive rates with the current Stamp Duty holiday and burgeoning housing market, the result is a fantastic environment in which to apply for a mortgage.

Kevin said: “Whatever the reason for your adverse credit score, whether it be due to things like arrears, CCJs or missed payments in the past, there will always be options available to you at Clever Mortgages.

“You don’t need to worry about your application being declined at the first instance either – we’re happy to discuss your personal circumstances first before you make an application.

“This helps us to understand your situation, and lets us know what options are available to you before you apply for anything.

“I’d urge anyone considering getting a new mortgage or remortgaging to get in touch – now is a great time to move, so don’t let your credit score hold you back!”

Clever Mortgages has access to over 100 different lenders who specialise in lending to people with adverse credit scores, and 1000s of different mortgage products. This means that regardless of your credit score, you’ll still be able to find a competitive mortgage that suits your situation, so why give Clever a call to see what your choices are? 

To find out more about what mortgage options might be available to you, simply call the Clever Mortgages team on 0800 197 0504 or arrange a call back at a time that suits you.

*According to research from Pepper Money Adverse Credit Study Autumn 2020

Monopoly houses and hotels on stacked pound coins to show the change in stamp duty for first time buyers

What the new stamp duty cuts can mean for you

As of the 22nd November, stamp duty will be abolished for the majority of first-time buyers.  This saving will be available in England, Northern Ireland and Wales until the end of March 2018. This is part of the 2017 budget by the chancellor Philip Hammond and aims to help fix the housing market.

Any first-time buyer looking to purchase a property under the cost of £300,000 will be exempt from paying the tax. Additionally, anyone paying up to £500,000 will only have to pay on the purchase over the threshold.

Mr Hammond has stated that 80% of first-time buyers will now pay no stamp duty when purchasing a property.

What is stamp duty?

Stamp duty land tax (SDLT) is a lump-sum tax applicable to anyone buying land or property over a certain price in England, Wales and Northern Ireland.

Under the previous system all home buyers, including first-time buyers, would pay stamp duty up to 12% on properties over £125,000. In the same way, home movers will continue to pay no stamp duty on properties up to £125,00.

The changes do not apply in Scotland which has an independent system of land tax. Stamp duty will devolve to Wales from March 2018.

How much can you save?

The below table can help you work out how much you could save as a first-time buyer on a property up to £300,000:

Property priceStamp duty saving
Up to £125,000£0
£126,000 – £150,000£20 – £500
£151,000 – £200,000£520 – £1,500
£201,000 – £250,000£1,520 – £2,500
£251,000 – £300,000£2,550 – £5,000

Any first-time buyer paying between £300,000 and £500,000 will pay stamp duty at 5% of the purchase price in excess of £300,000. Those purchasing a property over the cost of £500,000 will not receive any relief. However, as the typical first-time buyer pays around £208,000* the average saving will be roughly £1,660.

How Clever Mortgages can help

At Clever Mortgages, we have experience helping first-time buyers from all types of situations get on the property ladder. We work with a long list of lenders to help you find the right mortgage to go with your new home.

*Source: The Guardian, 2017

Small stacks of money on a desk with a red house, pen, bank statement and calculator

Stamp duty on a second home

From April 2016, the government put in place a stamp duty surcharge of 3% on any second home. This applies to any additional house you purchase other than the one you live in. This also includes any second property under the £125,000 threshold that were previously exempt from stamp duty on second home purchases. Because of this, lower price houses were popular for investors as buy to let properties. The additional stamp duty charges were introduced to help first time buyers get easier access to the affordable housing market.

If you’re looking to buy a second home, whether this is to use yourself, or as a buy to let or holiday let then you should make sure you’re aware of the additional stamp duty charges you could face.

What is stamp duty?

Stamp duty land tax (SDLT) is a lump-sum tax that anyone buying land or a property has to pay. In Scotland, they have a slightly different policy known as Land and Buildings Transaction Tax.

How much stamp duty will I pay?

The amount of stamp duty you will need to pay depends on the purchase price of the property you’re buying. The higher the cost of the property, the more stamp duty you will need to pay. However, you will only pay the proportion of the purchase price that is above the threshold.

The extra 3% stamp duty is applied to all house prices on top of the banding structure already in place.

Purchase priceRate on first propertyRate on additional properties
Up to £125,0000%3%
£125,000.01 – £250,0002%5%
£250,000.01 – £925,0005%8%
£925,000.01 – £1,500,00010%13%

The Money Saving Experts stamp duty calculator can help you to work out how much you will need to pay in stamp duty.

Moving house

If you’re moving house then you won’t have to pay the higher rates, but you will need to sell your main home on the same day as you buy your new home. If you sell your main home later on then you will need to pay the higher rate as you will essentially own two homes. You can claim a refund if you sell your old home within 3 years of buying your new home.

A teddy bear in a box after moving house

The cost of moving house

Although your mortgage is likely your biggest expense when buying a house, there are other costs that you’ll need to consider. Some of these you might not be aware of, so we’ve provided a list of the additional costs to expect. This will help to avoid any nasty surprises down the line and allow you to budget for these charges.

1. Mortgage fees

On top of the interest you pay, there are also mortgage fees you’ll need to make to your lender. This is the cost for securing and setting up your mortgage, known as a booking and arrangement fee. Before taking out a mortgage you should look at these fees and make sure you can afford them.

Booking fee

A booking fee – also known as an application or reservation fee – is a charge to your lender made to secure your mortgage deal. This charge is non-refundable and you’ll need to pay it upfront when you’ve made your application.

The cost of this is likely to be between £100-£200.

Arrangement fee

The biggest mortgage fee you will have to pay is the arrangement fee. This is the cost of the lender setting up your mortgage. You will usually be given the option to pay this amount in full or to add it onto your mortgage.

This cost can vary but on average, this is somewhere in the region of £1,000-£2,000.

2. Valuation fee

A mortgage valuation is a requirement of the lender to allow them to check whether the property is safe to lend on. They will want to make sure that if you default on the mortgage, they will be able to repossess the property in order to get back any money lost.

On average, valuations cost around £300 – £400 and you will be expected to pay this upfront.

3. Survey fee

A survey is a more thorough version of the valuation and can help you to confirm that the property’s condition is as you expect. Although surveys are optional, they are strongly advised. This is because if you choose not to get a survey and it turns out that there is something wrong with the property, then you won’t have any protection.

You will usually have a survey done when mortgage offer is in place but before the exchange of contracts. It can sometimes be worth asking your lender how much it will cost to upgrade the valuation to a full survey, in theory making the process cheaper.

You will be looking to pay around £400-£700 for a survey depending which type you choose.

4. Legal fees

You will need a solicitor or licensed conveyor to carry out the legal work associated with buying your new home. This is to take care of the conveyancing (the transfer of home ownership) as well as checking paperwork and carrying out legal searches. You can choose your own solicitor but this will need to be agreed on by the lender. These fees will usually need to be paid in instalments through the buying process.

The cost of a solicitor will usually cost in the region of £1,000 – £1,500. However, this could be a lot more depending on the value of your property.

5. Stamp duty

Stamp duty land tax (SDLT) is the tax that you pay to the government for buying a property in the UK which has a value of more than £125,000. The percentage of tax you pay depends on the property value. You will only pay stamp duty on that portion of the purchase price.

Purchase priceStamp duty rate
Up to £125,000Zero
£125,000.01 to £250,0002%
£250,000.01 to £925,0005%
£925,000.01 to £1,500,00010%

Although it’s your responsibility to pay the stamp duty tax, your solicitor will likely organise this payment for you.

6. Land registry fee

The Land Registry charges a fee to register your property in your name. The fee calculator on the Land Registry website can help you to work out exactly how much you will pay for this. Again, your solicitor will usually help to arrange this payment on your behalf.

This fee is dependent on the value of your property but is likely to be somewhere between £200 to £500.