The gradual phasing out of the government’s temporary stamp duty holiday began on July 1. Following a period during which transactions valued at £500,000 or less were exempt from stamp duty liability, this threshold was cut in half to £250,000.

From July 1 to September 30, these are the stamp duty rates payable for property purchases in England and Northern Ireland:

• £0-£250,000 = 0%
• £250,001-£925,000 = 5%
• £925,001-£1,500,000 = 10%
• £1,500,000+ = 12%

However, the transition back to standard stamp duty thresholds is set to happen next week, on October 1. Unless the government introduces a surprise extension to the scheme at the last minute, these are the tax bands that will apply for purchasing homes in England and Northern Ireland:

• £0-£125,000 = 0%
• £125,001-£250,000 = 2%
• £250,001-£925,000 = 5%
• £925,000-£1,500,000 = 10%
• £1,500,000+ = 12%

Meanwhile, the equivalent tax in Scotland, the Land and Buildings Transaction Tax, now stands as follows, based on property values:

• 0% on £0-£145,000
• 2% on £145,001-£250,000
• 5% on £250,001-£325,000
• 10% on £325,001-£750,000
• 12% on any value above £750,000

Landlords in Scotland also face an additional 4% Land and Buildings Transaction Tax on top of standard rates.

In Wales, the threshold for its land transaction tax (LTT) was increased in July last year to £250,000 to mirror the stamp duty holiday in England and Northern Ireland. As of July 1, normal land transaction tax rates once again resumed, as follows:

• 0% on £0-£180,000
• 5% on £180,001-£250,000
• 5% on £250,001-£400,000
• 5% on £400,001-£750,000
• 10% on £750,001-£1.5m
• 12% on any value above £1.5m

The same 4% additional premium payable by landlords also applies in Wales, on top of standard rates.

How will the stamp duty expiration affect the property market?

There has been widespread speculation that the initial pushback towards normal stamp duty thresholds in July would have a detrimental impact on the real estate sector. The vast majority of analysts predicted a major slowdown in mortgage applications and home purchases when stamp duty rates returned to normal in October.

Many are now questioning whether the alteration will have any real impact at all. With UK real estate market activity at an all-time high, it is becoming increasingly unlikely that the end of the incentive will trigger a sudden slowdown in transactions.

“The final closure of the Stamp Duty scheme at the end of September may have no impact at all,” commented Nicky Stevenson, managing director at Fine and Country estate agents.

“Other factors are so much more important, namely the race for space, low supply, accidental savings, and low-interest rates.”

Instead, the performance of the sector is expected to be fuelled by the ongoing exemption of stamp duty liability for all first-time buyers purchasing properties valued at £300,000 or less.

The return of the 95% LTV mortgage to the UK High Street is expected to motivate more buyers to take action before average property prices climb even higher.

 

Self-employed workers have always been given the short end of the stick where mortgages are concerned. For the UK’s approximately 4.3 million self-employed workers, getting on the housing ladder can be a challenge.

Major banks and high-street lenders in particular often want nothing to do with self-employed applicants. Elsewhere, those who consider applications from self-employed workers show no mercy where interest rates or overall borrowing costs are concerned.

Particularly in the wake of COVID-19, qualifying for a self-employed mortgage via conventional channels has never been more difficult.

Why is getting a mortgage as a self-employed worker so hard?

The process of applying for a mortgage as a self-employed worker via conventional channels can be complex and frustrating for three main reasons:

1. Most lenders instinctively see self-employed workers as higher-risk applicants. Even if their job is stable and their take-home pay is high, they are still considered risky on the part of the provider.
2. There are still no specialist self-employed mortgages available from most lenders. The overwhelming majority of mortgages on the High Street are designed with conventionally employed people in mind, making it difficult to qualify.
3. Lenders have very different policies where proof of income is concerned. What you may consider to be concrete and irrefutable proof of your financial status may be worth nothing in the eyes of many conventional lenders.

All of which paints a pretty gloomy picture for self-employed workers looking to buy their own homes. But this does not necessarily mean that you are completely out of luck.

Essential tips

As is the case when applying for any type of mortgage, it is essential to adopt a strategic approach. There are steps any self-employed person can take to significantly boost their likelihood of qualifying for a mortgage.

The most prominent examples are as follows:

1. Prove your income beyond a reasonable doubt.

Copies of bank account statements and such are of no consequence when applying for a self-employed mortgage. Instead, your lender will expect to see proof of your earnings in the form of your tax returns and general financial projections.

You should be looking to provide evidence of income from at least the past few years. You can get copies of your tax returns from HRMC online or request that they be posted to your registered address.

1. Get yourself a good accountant.

Having a chartered accountant on board as a self-employed business owner is highly recommended. This alone can open a lot of doors on the High Street and elsewhere, as small businesses represented by reputable accountants are always considered safer.

There are many lenders who only consider applications from self-employed workers that are formally stamped and signed by a registered accountant. This can be the best way of adding weight to your application and showing the lender that the figures on your documents are complete and accurate.

1. Work on your credit score.

While this can be effective in supporting your application, it is rarely a short-term solution. Instead, it may take weeks or months to begin steering your credit score in the right direction. Something that can be done by paying off existing debts, tidying up your old bank accounts, ensuring you do not go overdrawn, and so on.

Before applying, check your credit score with the major credit agencies and make as many quick fixes as you can.

1. Offer a larger deposit.

Offering the lender a larger deposit is also guaranteed to work in your favour. Along with boosting your likelihood of being accepted for a mortgage, a larger deposit can also pave the way for lower interest rates and more competitive borrowing costs.

Most major lenders will only accept self-employed applicants who are able to provide at least 15% or 20% by way of a deposit. If you are able to increase this to 25% or 30%, your application is far more likely to be accepted.

If you would like to learn more about self-employed mortgages or have any questions regarding your eligibility, we would be delighted to hear from you. Call or e-mail anytime for an obligation-free consultation with a member of our team.

One of the most important forms of financial evidence required for a mortgage application is the bank statement. As part of the application process, it has been a standard requirement to provide at least three months’ worth of bank statements for the lender to scrutinise.

Bank statements are inspected and analysed by lenders to get an idea of an applicant’s outgoings and general financial activities, though experts have often argued that this is technically inconsequential as what matters most is how much they earn and their creditworthiness.

Having apparently seen sense after so many years, several of the UK’s biggest lenders have now said they no longer need to see bank statements to support mortgage applications. Santander, Halifax, and Virgin Money are instead placing heavy emphasis on applicants’ credit scores along with formal proof of their salary and employment status.

This is a move that is likely to come as welcome news to many, who, despite being in comfortable financial positions, may not be able to produce the most attractive bank statements.

Priorities differ for bridging loan specialists

Many of the UK’s most prominent specialist lenders have entirely different priorities. When considering loan applications, bridging finance specialists are likewise uninterested in bank statements.

As far as bridging finance is concerned, the applicant’s credit score is also unimportant, as is their ability to provide proof of income.

With bridging finance and many similar forms of commercial finance, what matters most to the lender is the applicant’s exit strategy. This means their ability to provide a full disclosure of how and when they intend to repay the loan, verifying that the lender will get back their capital in full and on time.

This can make bridging finance a particularly useful facility for applicants with a poor credit history or the inability to provide formal proof of income at the time. Issues that often prevent private applicants and business borrowers from accessing the financial support they need despite their strong financial position and capacity to repay the loan in a timely manner

The benefits of independent broker support

Working with an independent broker is highly recommended to anyone who may struggle to meet the standard qualification criteria of any lender. Irrespective of financial history, credit score, proof of income, and so on, there are specialist financial products available to suit all requirements.

Many of the UK’s leading specialist lenders offer their products and services exclusively via broker introductions. These are not available on High Street, nor are they offered directly to the applicant.

Consulting with a broker can help you gain a better understanding of the options available while ensuring you get the best possible deal on your chosen loan.

For more information on any of the above or to discuss your eligibility for a mortgage in more detail, contact a member of the team at UK Property Finance today.

As demand for desirable properties continues to outstrip supply in all regions of the UK, mortgage processing times have been increasing for several months. According to the latest figures from Property Mark, a leading UK estate agency body, the average property transaction completion time has now reached between 13 and 16 weeks.

Commenting on the growing bottleneck, the company’s CEO, Nathan Emerson, said that current mortgage processing times were exponentially longer than the typical 6 to 8-week norm. He also attributed much of the backlog to the rush that preceded the partial withdrawal of the stamp duty holiday, which saw lenders and brokers inundated with hurried mortgage applications.

Reports suggest that many prospective buyers who wanted to take advantage of the temporary stamp duty suspension were unable to do so due to slow mortgage processing times. Even those who believed they were getting their applications underway at an early juncture found there was insufficient time to complete the process before the offer was withdrawn.

Bridging loans proves popular to prevent delays

The more difficult it becomes to arrange a mortgage quickly and efficiently on the High Street, the more attention the UK’s specialist lending sector is attracting. Bridging finance in particular is proving a popular option among movers, looking to ‘bridge’ the gap between the purchase of their new property and the sale of their current home.

With bridging finance, it is possible to reduce the lengthy processing time of a typical mortgage to less than two weeks. In some instances, the funds provided by way of a bridging loan can be accessed within a matter of days. For time-critical property purchases and investments, bridging loans can be uniquely flexible and accessible.

Put into context, a homeowner looking to relocate may find their dream home at an unbeatable price in the perfect location. However, their current home has only recently been put on the market, and a buyer is yet to be found.

A bridging loan secured against their current home could provide them with the funds they need to pay for their new home outright. After which, the bridging loan is repaid several weeks or months later, just as soon as their previous property is sold.

Bridging finance attaches a monthly rate of interest, often lower than 0.5%, along with minimal borrowing costs where the balance is repaid promptly.

Assessing suitability for bridging finance

Prior to applying for a bridging loan for any purpose, it is advisable to speak to an independent broker to discuss all the alternative options available. Bridging finance is offered exclusively with short-term applications in mind and should never be seen as a viable alternative to a conventional long-term mortgage.

As a way to bypass mortgage processing times and ensure your dream home does not slip through your fingers, bridging finance can be an unbeatable facility.

For more information on bridging loans or to discuss bridging finance qualification criteria in more detail, contact a member of the team at UK Property Finance today.