If I miss the cut-off I’ll lose my dream flat
AMY WILLIAMS is rushing to buy her first home and save £4,000 before the stamp duty holiday ends in March. She says she will not be able to afford the deal if it is not completed in time.
Amy, 28 ( left), had an offer accepted on a one-bedroom flat in Camberwell, South London, in July, but is still waiting to exchange contracts. She hopes to wrap things up by the end of November.
Amy adds: ‘I had an offer accepted on the flat at the time the stamp duty holiday was announced. The timing couldn’t have been better.
‘ The process has taken much longer than I’d expected but I’m on the precipice of exchanging. We’re waiting on one final piece of legal paperwork and I’m optimistic I’ll get the keys in the coming weeks.
‘But if anything goes awry with the sale now, and if the vendor were to withdraw, I’d be very nervous about being able to find a new property and complete in time to beat the stamp duty deadline.’
deposit of between 25 pc and 35 pc, average two-year fixed rates have fallen.
And for those with a 40 pc deposit, rates remain relatively unchanged at around 1.8pc.
Monmouthshire Building Society offers the best two-year fixed rate for borrowers with a 25 pc deposit, at 1.6 pc, compared with a best buy of 1.19 pc six months ago.
Those who are lucky enough to have a 40 pc deposit can access Halifax’s top two-year fixed rate of 1.28 pc and HSBC’s fiveyear fixed rate at 1.44 pc.
COULD DELAYS MEAN I’M LIKELY TO MISS OUT?
EXPErTS say delays are so bad up and down the property chain that movers need to apply for a mortgage no later than November to be in with any chance of beating the stamp duty holiday deadline in March.
It takes an average of 160 days to go from agreeing a sale to moving in — up from 95 days last year, according to property data analysts TwentyCi. And as the stamp duty deadline draws closer, experts fear delays could spiral further.
As many staff have been furloughed or are working from home, banks and building societies are now taking weeks rather than days to review mortgage applications. Surveyors and solicitors are also warning of long delays as they struggle to keep up with the buying frenzy. Some legal firms have already stopped taking on new cases. And as solicitors struggle to cope with a 50 pc rise in transactions, more than 300,000 sales are tipped to miss the deadline. Colin Bradshaw, from TwentyCi, says: ‘Solicitors are trying to deal with nine months’ business in six months.’
WHAT IF I NEED TO REMORTGAGE?
IF your current mortgage deal is due to expire in the next two months, start the remortgage process now. Lenders are predicting more than £30 billion of deals will be up for renewal at the end of the year, putting even more strain on lenders’ resources.
A standard remortgage takes six weeks to complete, but brokers are warning it could take a further four weeks because of the bottleneck. To avoid falling on to your bank’s costly standard variable rate, which you pay once your mortgage deal ends, brokers are urging those with loans nearing renewal not to delay.
The good news is that remortgage borrowers may find their new rate is largely the same as their old one, or it may even have gone down. According to Moneyfacts, the average two-year fixed rate now is 2.44 pc.
Compared to average two-year fixes in october 2018, you would be paying 0.05 pc less. If your five-year fix is about to end, and you want to choose another five-year deal, you are likely to be paying even less.
The average five-year fixed rate in october 2015 was 3.31 pc compared with 2.69 pc now.
Lloyds Bank is currently offering the lowest two and five-year fixed rates. At 60 pc loan to value, they are 1.09 pc and 1.33 pc respectively. At 85 pc, the two-year fixed rate is 1.80 pc and the five-year is 2.17 pc. All deals come with a £1,499 fee.
If your circumstances have changed since the start of the pandemic, such as a reduction in your salary or you were placed on furlough leave, another lender may be reluctant to take you on as a new customer. Don’t panic. your own bank is likely to offer you a new deal and some lenders give their existing borrowers better rates than new customers.
SHOULD I WAIT TO FIX MY RATE?
THE Bank of England base rate is already at a record low of 0.1 pc, but there are whispers it could be cut to zero or below to stimulate spending and lending. But that doesn’t mean mortgage rates will follow — and it’s highly unlikely you would ever be paid for having a loan.
However, if the mortgage market starts to cool early next year, as expected, rates could begin to fall.
rachel Dixon, mortgage adviser at rH Dixon, said: ‘It has been a crazy few months. As we see demand subside over the coming months, rates will return to more normal levels.’
So it may pay to hold off locking into a fixed-rate deal.
If you opt for a variable-rate deal in the meantime, these tend to have lower or no early repayment charges if you want to switch later.
The cheapest 85 pc two-year variable rate with no exit penalties is with West Brom BS at 2.34 pc, compared to Lloyds Bank’s fixed rate at 1.8 pc. Both are for remortgage only. Mortgage rates are still ultra-cheap compared to a decade ago when a typical borrower with a 10 pc deposit might have paid 6 pc as opposed to 3.99 pc today. So if you can afford the repayments, you may prefer the peace of mind a fixed deal can offer.