Second part of Help to Buy brought forward!

Second part of Help to Buy brought forward!

The second phase of the Help to Buy government scheme has been brought forward from its previous launch date in January 2014 to 7^th of October 2013! David Cameron has expressed his understanding that the need for this is now.

The second part of the Help to Buy Scheme is a mortgage guarantee, the government will back up to 15% of the mortgage for borrowers with deposits as little as 5%. The aim is to make mortgages more readily available. However there is still a strict process borrowers will have to go through to obtain the mortgage such as rigorous affordability checks. The property being purchased will have to be the sole property and cannot be bought as a second home or buy to let.

There are already several lenders signed up to the scheme although it has not yet been revealed how much the government guarantee will cost the lender. The lender will have to pay a fee for the mortgage guarantee, in the case of a property getting repossessed and not being able to recover the loan from the sale the government will cover 15% of the loss. This is to deter lenders from allowing loans to anyone and everyone and ensuring the loans are affordable for the borrower.

First time buyers and existing property owners are eligible for the scheme and the second part is for new and existing properties. Some banks are welcoming the news of the scheme being brought forward, offering longer opening hours in busy periods, although mortgage brokers fear a flurry of new applicants.   

New interest rates on these new government backed mortgages are yet to be revealed as is the fee for the lender. Applicants can apply for the scheme as early as next week.

Should Stamp Duty be re-vamped?

Should Stamp Duty be re-vamped?

When you move home there are many expenses involved; solicitor fees, new furniture, mortgage fees, surveys, deposit and on top of all that STAMP DUTY. For such a large amount of tax Stamp Duty does not actually make a huge contribution towards paying for hospitals and schools. The issue lies with first time buyers not being able to get on the property ladder and growing families not being able to move up the ladder. It also prevents people from moving to better jobs and the elderly from downsizing.

Stamp Duty is currently applied on property priced between £125,000 and £250,000 at 1%, then 3% up to £500,000 and then 4% up to £1million and finally 5% up to £2million. There is also a higher 7% bracket for the super-rich!

Some people are moving less due to this high tax. Back when it was introduced in 1993 at 1% on property over £60,000 this was above the average property price. This then was a fair and relative tax; it is now out of proportion. If the tax was cut more people would be able to finance moving and therefore the amount of tax would balance out again. I’m not saying it should be abolished altogether (although that would be nice) but more fair, so the 1% begins above the average house price bracket so it serves the same purpose as when it was introduced.

There is currently a scheme attempting to stamp out stamp duty. Where you can visit the website and enter your postcode to contact your MP.

http://stampoutstampduty.org/