Mortgage News

It is reported that the Chancellor of the Exchequer, Rishi Sunak will announce this week changes to the levels of stamp duty paid on property in England. The announcement is expected to remove stamp duty on properties up to a value of £500,000 for between six months to one year. First-time buyers already enjoy stamp duty relief and do not need to pay stamp duty on their first property purchase up to £300,000 (£500,000 in London).

This new reduction aims to get the people of England moving again, following three months of house market stagnation due to the Coronavirus lockdown. However, factors such as a lack of mortgages at higher loan-to-values (LTV) and a backlog of valuations also need to improve to help unlock the housing market.
It is not yet clear if those purchasing a holiday let or a buy-to-let property will also receive a reduction in stamp duty. Currently, property landlords pay stamp duty on properties from £40,000 plus an additional 3% on each stamp duty tax band. A further saving on stamp duty could help those savers considering buy-to-let, due to it potentially generating better returns than the historically low rates currently available on standard savings accounts.

Mortgage borrowers financially struggling due to the Coronavirus pandemic and considering switching to an interest-only mortgage will find that the majority of deals offer an interest-only repayment option.

Research carried out by Moneyfacts.co.uk found that currently, 61% of all mortgage deals have an interest-only option, an increase from 48% in March 2020. In addition to this, the percentage of all deals offering a pure interest-only product has increased from 2% in March to 3% in July.

Product counts exclude Standard Variable Rate mortgages, pure interest-only figures also exclude RIOs

As more of us are expected to holiday in the UK this Summer and potentially into 2021, those looking at options to improve the returns on their savings might consider a switch to managing a holiday let property.

Income tax-relief benefits are no longer available to landlords, meaning that income tax at the applicable rate is due on any profits generated from the property. However, the current low interest rates make the potential of greater actual returns possible from property more attractive and a holiday let can offer specific advantages for the retired when compared to a buy-to-let property.

This week, the Nationwide House Price Index revealed that house price growth has turned negative for the first time since 2012. Although the housing market is facing a challenging time at the moment, the mortgage market remains highly competitive among the lower loan-to-values (LTVs). For homeowners looking to remortgage or those with a substantial deposit, this means that there are some highly competitive deals available in the charts at the moment.

While the mortgage rate is important when choosing a deal, borrowers need to consider more than just the initial rate when looking for a mortgage. Factors such as fees, interest rate type and flexibility in a mortgage should also form part of the decision-making process. Borrowers who need help in deciding which mortgage is right for them should consult a mortgage broker.