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Stamp Duty Holiday / How Can an Adviser Help Get Mortgages Completed in Time to Benefit

We are going to look at what stamp duty holiday is, how it works, and advice on completing your mortgage in time to benefit.

What is stamp duty?

Stamp Duty is a tax that the government charges, it stands for stamp duty, land tax and applies for ourselves in England and Northern Ireland for when you purchase a property. Depending on the purchase price of the property, depends on how much you pay.

What is the current stamp duty holiday and when is that coming to an end?

Due to everything that is going on at the moment to try and keep the housing market going, the chancellor agreed to put a stamp duty incentive in place. That came in place around July time.

Currently, if you purchase a home of up to five hundred thousand pounds, you don’t pay stamp duty. This depends on the purchase price previously to what you pay, but some people out there could be saving up to fifteen thousand pounds.

This is a huge saving and why people are trying to complete house sales in time.

What happens after the 31st of March 2021?

We will go back to what it was beforehand. Previously, if you were a first-time buyer, you both had to be first-time buyers and you didn’t pay up to a purchase price up to three hundred thousand.

Now, by April 1st, that will still stand for first-time buyers, but up to the five hundred thousand. It is coming back in, unfortunately for home movers.

Even if somebody’s had a home in the past and they’ve moved back to their parents, they haven’t currently got a property and they’re buying, they will be eligible for it. It’s triggered when your home is above one hundred and twenty-five thousand pounds.

Will the stamp duty deadline be extended?

Everybody in the housing market and home movers is asking the same question. Experts from the illegal side, mortgage lenders, and brokers have supposedly approached the chancellor and asked them to reconsider and to extend it, even just at least six months.

The fear is, if it’s not extended, there’ll be thousands of house purchases that may fall through because there’s no grey area. If you don’t complete it by March 31st, you’ve got to pay it after then.

How much stamp duty will I need to pay, if I don’t complete my house sale in time?

If you don’t complete your house sale on time, it’s on the purchase price. For example, typically up to two hundred and fifty thousand, it’s two percent and it changes. The figures give a slight indication of the big sale.

Using an example of a five hundred thousand pounds purchase, you would therefore pay fifteen thousand pounds. At the moment, however, if you complete before March 31st you don’t pay anything.

Or, at the smaller end of the scale, using an example of a two hundred thousand pound purchase. By March 31st you would be incurred with one thousand five hundred pounds.

How can a mortgage broker help me complete on time, to benefit from the stamp duty holiday?

People should always be encouraged to approach their mortgage broker, regardless of what stage they are thinking of buying. Especially when it’s early days. It’s surprising how many people tell themselves, “I’m not going to move until next year” but once they start to look into it, they find out they’re in a better position than they first thought.

Key Tip: If you’re buying the property, try to arrange for a mortgage promise through your broker beforehand. You will then know exactly what you can borrow and you’ll have a ballpark figure. It also shows, when you are looking at properties, that you are serious about buying and you are eligible for the mortgage. Hopefully then, once you’ve got an offer accepted and with your mortgage promise in hand, you can proceed to the next stage and get the application going.

It’s also recommended to have a solicitor in mind and a solicitor instructed when you’re looking at properties. Many people seem to wait until they’ve found a buyer and accepted an offer on the sale of their property. The legal work can be lengthy and it’s also unpredictable. Delays could occur, so it’s always best to start thinking ahead.

If you are planning on selling, it’s a good idea to get the legal process started. For example, where to fill in the forms of what it is that’s in the property, and what you’ll be leaving behind.

It’s about getting as much as you can ready beforehand. At the moment, everyone is inundated and everybody wants to complete on time. Leaving this until the very last minute is added pressure.

If you are thinking of moving, act now rather than leaving it later. Looking ahead to the new year, unless we get this extension, there is a high chance you’re likely going to miss out on the discount.