Will 95% mortgages and the stamp duty extension begin a 2021 property boom?

The Spring Budget has delivered a massive boost for the UK property market, with two key measures to help buyers and sellers: 95% loan-to-value (LTV) mortgages and the stamp duty extension.  The outlook for 2021 now looks promising for UK home movers, thanks to the Chancellor’s intervention.

If you are thinking of buying a property this year, it’s worth taking a close look at what is on offer to see if you can take advantage of these initiatives.

Why has the UK government chosen to extend the stamp duty holiday and offer low-deposit mortgages?

Despite the pandemic restrictions imposed in 2020, average house prices in England rose by 2.8%, with a 4% rise predicted for 2021.  However, in the months leading up to the budget, property experts were concerned that without more help, the market would begin to cool.

By introducing these measures, the government has signalled its intention to support the property market as the national gradually unlocks.

Why is the government offering a mortgage guarantee scheme in April 2021?

The idea behind the new mortgage guarantee scheme is to reduce the risk to lenders, so more low-deposit mortgages become available. If you have previously been unable to raise a deposit, the new scheme will make it much easier for you to buy a home, but be aware that the offer may involve higher mortgage repayments.

Can I get a 95% LTV mortgage?

The Mortgage Guarantee Scheme allows UK homebuyers to get a mortgage on property valued at up to £600,000 with a deposit of just 5%.  The good news is that the scheme doesn’t only provide 95% mortgages for first time buyers: it is open to anyone who wants to buy a property.

Our mortgage partners Carbon will be happy to help you secure a 95% LTV mortgage, whether you are a first-time buyer or just taking your next step up the property ladder.

How will the Stamp Duty Holiday extension benefit UK buyers?

The second piece of positive news to emerge from the Spring budget was that the June stamp duty extension has been extended by a further three months.

The Stamp Duty Holiday, announced in September last year, granted a temporary reduction in Stamp Duty Land Tax.  The offer will now taper down – with the amount of tax payable gradually increasing - until September 2021.

The current limit of zero tax up to £500,000 will stay in place till the end of June, and then it will be reduced to £250,000 for the final three months.

While there can be no absolute guarantees that you will be able to get a new property purchase through by the June deadline, there is still time to take advantage of the final phase of the Stamp Duty Holiday (available from July 1st until the end of September).

If you are serious about buying a property this year, our advice is to act quickly, as these new measures are likely to trigger a spring boom in property sales.

Backed up by a long and successful track record in Surrey property sales and lettings, we are ideally placed to help you take advantage of the spring budget boost. We’re always happy to offer advice and guidance, so why not get in touch with us to discuss your home move or property investment plans?

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