Can high LTV mortgages help after the stamp duty holiday deadline?

Published 22nd January 2021

As we continue to move forward during this uncertain time, the property market progresses too. With all eyes firmly focused on the imminent deadline of the stamp duty holiday, professionals and individuals alike anticipate what the future holds for the market. The House of Commons has announced plans for a debate on the topic of stamp duty. But as we eagerly await an outcome amidst concerns the debate may be blocked, it can be easy to forget that there are other ways to benefit during this unprecedented time.

Some positive news to come at the end of 2020, was the
return of high loan-to-value mortgage deals to the market. Just this week,
Santander announced the return of a 90% LTV deal. After a decline in products
over the last 12 months, the welcome return of these deals has brought fresh
energy to the market. The increase in products is a reaction from lenders to
the release of pent-up demand following the first national lockdown. Borrowers
have been propelled back to the market after re-evaluating what they want from
their homes, and the desire to benefit from savings afforded by the stamp duty
holiday.

How can high LTV mortgage deals help when the stamp duty holiday is over?

The stamp duty holiday succeeded in stimulating the market
during a challenging time, but it is not the only way of saving money when
purchasing a property. The return of high loan-to-value mortgage products to
the market can be a way to balance the additional tax. At present, the average
house price in the UK is £245,000. With a 90% loan-to-value mortgage you can
borrow £220,500, with the extra accommodating the stamp duty land tax. By
borrowing more money at a lower rate, you can still have money left over to
decorate or furnish your new home.

Previously, when mostly lower rates were available, an 80% rate on a property of average market value would require a deposit of £49,000. A higher loan-to-value deal of 85% would mean a deposit of £36,750. A 90% rate would mean an even lesser deposit of £24,500. The difference in deposit between an 80% and a 90% LTV is a staggering £24,500. High loan-to-value deals like this make buying a property more accessible to purchasers with smaller deposits. But they can also help to offset the additional costs incurred by the stamp duty tax by putting up less money upfront.

The stamp duty holiday is not the only way to save!

By taking a step back to look at the market from a different
perspective, you can find new opportunities. Even without an extension of the
stamp duty holiday, there are still ways you can benefit. With more high
loan-to-value mortgage deals on the market, more buyers will be able to return
to the market and realise their property dreams. Now is the time to remain calm
and think outside the box at all the options available, before starting your
property journey.

How can Home Legal Direct help?

Home Legal Direct facilitates fast and efficient home transfer solutions for our customers throughout the United Kingdom. From purchases to remortgages, and everything in between, we are here to support you every step of the way. Get a free online conveyancing or survey quotation in seconds and embark on your property journey today!