Budget Boost For Home Buyers
When the chancellor, Rishi Sunak, announced his budget he gave details of the government’s goal to turn generation rent into generation buy and he listed the measures he was taking to make that happen
For potential home buyers Rishi Sunak’s budget brought a few good things including an extension to the stamp duty holiday that was launched last year, plus a new scheme to bring back 95 per cent mortgages.
The temporary stamp duty holiday is being extended until 30th June with the first £500,000 spent on a property being tax-free, giving a saving of up to £15,000. The threshold then drops to £250,000 until 30th September when the usual level of £125,000 returns.
For someone who owns their own home and is planning to pay £450,000 for a new home, moving in before the end of June will see a saving of £12,500. If they complete in July, they must pay £10,000 with a saving of £2,500 so the saving is significantly reduced.
So, how will the 95 per cent mortgage scheme work? The pandemic has more or less led to the disappearance of mortgages that only require a five per cent deposit, so this new initiative has the sole aim of encouraging banks and building societies to once again offer 95 per cent mortgages. This will work by giving them the chance to buy a guarantee on a portion of the mortgage and if a borrower gets into financial difficulty and their property is repossessed, the government will cover that chunk of the lender’s losses. The scheme is set to be activated and open for new mortgage applications in April and will run until the end of 2022.
Several of the country’s largest lenders will be offering these mortgages with others due to follow. Any creditworthy household, which may be struggling to save for a higher deposit, will be eligible for such mortgages which are standard residential mortgages. That means no buy-to-lets or second homes and the property that is being mortgaged has to cost £600,000 or less.
So, get moving and take advantages of these schemes whilst you can.