Use stamp duty axe to cut mortgage
FIRST-TIME buyers south of the Border are cashing in on stamp duty cuts by slashing hundreds of pounds off mortgage bills.
Mortgage brokers say they have received a flood of calls since the Chancellor axed the duty for first-time buyers on homes worth up to £300,000 in England and Wales, in last week’s Budget. Those purchasing homes worth up to £500,000 will pay the tax on only the first £300,000.
Many are choosing to use the money they had earmarked to pay this tax bill to put down a bigger deposit on their new home.
By doing this, some can save more than £1,300 a year by getting a better mortgage rate. For example, the best rate available for borrowers with a 5pc deposit is Yorkshire Building Society’s 3.39pc two-year fixed deal. On a £150,000 mortgage the payments work out at £742 a month.
By putting down an extra 5 pc of the property price the same buyer would be able to apply for Yorkshire BS’s top 1.89 pc two-year fixed rate for borrowers with a 10 pc deposit. On a £150,000 mortgage it costs £628 a month. This would save them £114 a month.
Jade Branigan, 22, and her partner James Shipton, 24, are considering whether to use some of the £5,000 they’ll save in stamp duty to bring down their mortgage costs.
The couple, who currently live with their parents, are looking to buy their first home together near Potters Bar, in Hertfordshire, for around £350,000.
The Chancellor’s tax cut means they now have to find just £2,500 to pay stamp duty instead of £7,500. Jade, a merchandiser for a London jeweller, says: ‘It means we can top up our deposit, buy things for the house and start looking right away.’