What the spring budget means for homebuyers
Spring Budget 2021: What it means for you and your mortgage
Yesterday the Chancellor, Rishi Sunak, released the finer details of the spring budget in parliament. The spring budget is the government’s way of outlining their spending and taxation plans for the year ahead. So, how does it affect you? Well, there were two key announcements that have big implications for first-time buyers and existing homeowners. Here’s what you need to know.
95% mortgages are returning
Since the start of the covid-19 pandemic, many lenders removed their lower deposit mortgage deals, considering them too risky in the current climate. This required homebuyers to have a much bigger deposit if they wanted to buy or move property, pricing many first-time buyers out of the market altogether.
Yesterday, the Chancellor announced that the government will be backing lenders to offer 95% loan-to-value (LTV) mortgages. This means that you’ll be able to apply for a mortgage with just a 5% deposit, making the property market far more accessible if you’re trying to get on the property ladder.
When can I apply for a 95% mortgage?
You should start seeing 95% mortgage deals making an appearance from April 2021. They’ll be available on all property types worth up to £600,000. However, not all the details about the scheme have been released yet, meaning eligibility criteria my differ from lender to lender. So, if you’re thinking 2021 is the year you’ll be moving home or getting on the property ladder, keep an eye out for extra information in the coming months.
Stamp duty holiday extended
Last year, the Chancellor introduced a stamp duty holiday which meant homebuyers wouldn’t need to pay property purchase tax (stamp duty) on homes worth up to £500,000 used for a main residence. This was due to end on the 31st March, but has now been extended until 30th June.
The Chancellor also announced that there will be stamp duty relief from 1st July to 30th September 2021, but only on properties worth up to £250,000. For properties worth more than this, stamp duty will apply.
Full stamp duty rates will be reinstated from 1st October 2021 on all properties worth over £125,000. First-time buyers however are exempt from paying stamp duty on the first £300,000 of their new property. If you’re a second-homebuyer or a buy-to-let landlord, you’ll need to pay 3%+ tax after 30th June 2021.
Will I be able to take advantage?
If you’re already in the process of buying a property, you may be able to complete your purchase within the stamp duty holiday window. If you’ve not yet started, it depends how quickly you can apply for a mortgage, raise your deposit and, if you need to, sell your existing property. Covid-19 has made moving home trickier to navigate and slowed down the process, so it’s worth making sure you have enough available cash to cover the stamp duty costs should your house move take longer than expected.
Want to find out your mortgage options? Our team at Freedom Mortgages has access to over 12,000 mortgage products and exclusive deals that you can’t access direct from a lender. Get in touch with them today and they’ll run you through your options.
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