Budget 2021 and the impact on mortgages

Here we explore the opportunities this brings to those looking to purchase a new home.

Stamp Duty Holiday Extension

The original deadline for the £500,000 nil rate band was 31 March but this will now apply in England and Northern Ireland until 30 June.

This will then be reduced to £250,000 for property purchases completing between 1 July and 30 September.

From 1 October, the previous standard threshold of £125,000 for home movers will apply.

For first-time buyers, you’ll get a discount (relief) that means you’ll pay less or no tax if both the following apply:

• you, and anyone else you’re buying with, are first-time buyers
• the purchase price is £500,000 or less

Mortgage Guarantee Scheme for first-time buyers

A new mortgage guarantee scheme to help first-time buyers get on to the property ladder was also announced.

This will involve the government guaranteeing 95% mortgages, providing lenders with the confidence to reinstate the low-deposit mortgage deals that have been withdrawn since the start of the Covid-19 pandemic. Major lenders such as Santander, Barclays, HSBC, Lloyds Bank and Natwest will be offering deals from April with others, including Virgin Money to follow shortly after.

The scheme will be available for first-time buyers on both new-build and existing properties priced up to £600,000 and will allow borrowers to fix their initial mortgage rate for at least five years. The scheme will apply throughout the UK and will run until 31 December 2022.

How FOCUS can help you on your mortgage journey

These changes – particularly the new mortgage guarantee scheme, are designed to allow for more people to start or continue on the property ladder.

For first-time buyers, the mortgage guarantee scheme opens up new opportunities – but also a greater need for advice.

At FOCUS, we take the time to understand your situation, as well as your future plans and help guide you through the entire mortgage process. We will discuss which lenders to approach and what deal will suit you best beyond a good interest rate.

We offer telephone and videophone appointments, and are happy to answer any questions relating to a planned purchase or for general queries. We are also happy to discuss any protection queries regardless of their relation to your property.