Most Budgets or fiscal statements have a ‘rabbit pulled out of the hat’ moment and this July’s summer statement was no different. Mr Sunak revealed he would immediately raise the stamp duty threshold to £500,000 until March 31, 2021 – a sharp increase from the current level of £125,000.
This was because the housing market had fallen by 50 per cent in May, he said, but the new measures will mean ‘nearly nine out of 10 people buying a main home this year will pay no stamp duty at all’. This should have a significant impact on property sales but we have seen substantial interest in mortgages throughout lockdown.
Recently there has been much discussion on equity release mortgages as a way to assist children to get on the property ladder. These are normally called a lifetime mortgage and allow you to borrow money against your own home in order to fund a home purchase for loved ones (or indeed a trip around the world or anything else you wish).
Some clients see this as a way of giving children their inheritance early or providing help at a more opportune time. Normally, you can borrow up to 50 per cent of the value of your home (depending on your age and health) on the understanding that it will be repaid after your death or if you enter long-term care, via the sale of your home. You will not make any repayments as interest is added to the lump sum that must be repaid.
Let-to-buy mortgages have also proved popular. These essentially mean renting out your existing home and buying a new one to live in. Your existing mortgage is converted to a buy-to-let mortgage, giving you permission to let your property and gain a standard mortgage on a new place. It does mean having two mortgages at once but allows you to access the equity you may have built up in your home while retaining your existing property as a long-term investment. For some, it can be useful if in a hurry to buy the ‘perfect’ property or unable to sell a current property but keen to move.
As ever, there are various factors to be aware of before making any financial decision. If you would like further information on anything mortgage or property related, please do not hesitate to contact Ade Abiose, head of mortgages at MFF on ade.abiose@medicalfamilyfinance.co.uk or 020 7252 5765.
