Martin Lewis advises guest against taking mortgage holiday
Stamp duty changes were introduced in early 2020 as coronavirus began to affect the economy. As a result of the changes, people will not need to pay stamp duty on homes bought in England or Northern Ireland valued under £500,000.
Homes over this value will also see a reduced rate levied.
These changes were broadly welcomed but the support is due to end on March 31 2021, with the old rules being reinstated beyond this.
With this deadline approaching, many would-be homeowners will be keen to take action before it’s too late and this could create a problem for consumers heading through 2021.
Gary Hemming, a Commercial Lending Director at ABC Finance, explained how difficulties could emerge: “With the stamp duty holiday coming to an end on March 31st, there will be a lot of pressure to complete before the deadline.
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“This is likely to cause a backlog for lenders and conveyancers, which will lead to a lot of people missing out.
“In 2020, we also saw mass disruption to turnaround times from lenders due to difficulties with staff working from home and surveyors struggling to keep up with demand.
“The key to mortgage success in 2021 is to make sure you plan ahead and apply in plenty of time to avoid missing your deadline and losing out financially.”
Indeed, according to recent research from Trussle, mortgage approval times increased by 144 percent since the beginning of 2020, from eight days in January to 22 days in November.
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While this may be disheartening for those looking to get their mortgage affairs in order, additional analysis from Trussle highlighted five lenders in the UK who had the fastest median approval times towards the end of 2020.
The lenders are as follows:
- HSBC – 10 days
- BM Solutions – 13 days
- Halifax – 14 days
- Accord – 14 days
- Barclays – 19 days
In late December, Miles Robinson, the Head of Mortgages at Trussle, provided the following comments on the troubled mortgage market: “2020 has been a tough year for everyone and lenders are certainly not immune from the pressure.
“The strains of adapting processes during the pandemic coupled with increased demand have seen many wait times extend to unprecedented levels.
“Mortgage approval times are extremely important to the wider process of purchasing a property.
“And as many race to beat the stamp duty deadline, securing a mortgage is quickly becoming imperative to saving up to £15,000.
“While it’s understandable for lenders to be under increased pressure, it’s encouraging to see HSBC bucking the trend and we’re hopeful that things will start to return to normality as we head into 2021 and the hopeful era of COVID vaccination.”
Until March, the following stamp duty rates are in place:
- property price up to £500,000 – zero percent
- property price between £500,001 and £925,000 – five percent
- property price between £925,001 and £1.5 million – 10 percent
- property price over £1.5 million – 12 percent
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