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Mortgage News: How the Spring Budget Changes the Market

On the 3rd of March, Chancellor of the Exchequer Rishi Sunak announced the 2021 UK budget, releasing news on all aspects of the country’s finances and looking forward after the challenges of the coronavirus pandemic. Within the budget announcement was news for those looking to buy or sell property in the next few months. There have been multiple pieces of news for future buyers and sellers as a result of the new budget and plans put in place to help the country recover from the economic fallout of the pandemic.

In this blog post, we’ll be going over the biggest news for mortgage customers or those looking to buy homes in the next year and breaking it down…

Mortgage Guarantee Scheme

One of the biggest pieces of news for homeowners and first-time buyers from the Spring Budget announcements was the introduction of a ‘Mortgage Guarantee Scheme’, which will be launching in April.

Under the scheme, buyers (either existing or first-time) will be able to purchase homes up to £600,000 with just 5% deposits. This scheme relies on the government repaying lenders if buyers default on mortgage payments for any reason. This way, lenders can offer mortgages of up to 95%, something basically unheard of in the last year or so.

This is fantastic news for those looking to buy or sell in the near future, particularly for first-time buyers who may have had difficulty saving for higher deposits (and higher property prices) in the last few years.

Stamp Duty Holiday Extended

Another exciting plan in place for buyers is that the Stamp Duty Holiday that was put into effect in July 2020 has now been extended until the end of June 2021. The holiday meant that property buyers would not pay Stamp Duty on any property below £500,000 and was originally in place until the end of March, but has been extended for another 3 months.

Even after June, the Stamp Duty threshold will be set at £250,000 (so anyone purchasing properties under this amount will still not pay stamp duty tax) – which is double the standard level – until September 2021. The usual level of £125,000, according to Mr. Sunak, will return in October.

This tax-relief plan was originally put in place to help the property market recover from the effects of the pandemic, and to help first-time buyers whose finances may have taken a hit in the last year. Now, after the pandemic and numerous lockdowns have affected many buyers’ completion dates, the holiday has been extended to take this into account.

How Does That Affect Me?

With both of these schemes put in place by the government, the good news is that buying property in the next few months and beyond is looking to be made much cheaper and easier than we were looking at in the last year. First-time buyers in particular should look to jump on these schemes and take advantage of them while they are in place, especially as completion of mortgages and contracts is taking longer than usual during the pandemic.

If you’re looking to buy or sell your home and want to take advantage of these schemes, we can help. Give us a call on 01258 857101 to discuss your needs, or…

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