Martin Lewis has issued a fresh warning to homeowners and first time buyers about mortgages ahead of planned changes.
The finance and money journalist, who recently shared some vital advice to people with a PayPal account, has explained in his weekly newsletter how changes to stamp duty could have a knock-on effect on some mortgages.
Martin outlined the changes in his recent Money Saving Expert email, which warned that with the tightening criteria due to the coronavirus pandemic, mortgages with high loan-to-values – such as small deposits or little equity – have vanished.
Meanwhile, the stamp duty threshold has been temporarily increased – making the new threshold £500,000 for property sales in England and Northern Ireland until March 31, 2021.
Stamp duty is a tax paid by people buying properties but it does vary slightly across the UK – in England and Northern Ireland buyers pay Stamp Duty Land Tax.
Anyone completing on a house purchase costing up to £500,000 before the cut off date, will not pay any stamp duty, and more expensive properties will be taxed on their value above that.
READ MORE: Don’t forget, £20 notes expire in 2021, so ensure you spend them before they go out of circulation.
This can save buyers £15,000 if they are buying a property costing £500,000 or more but Martin warned that with the introduction of a tax holiday, demand for property has soared, resulting in mortgage lenders struggling to cope.
In his weekly Money Saving Expert newsletter, Martin outlined how at the start of the coronavirus pandemic there were 386 mortgages with a 5% deposit but that now there is just one 5% mortgage available, with others having more stringent conditions attached, such as parents as guarantors.
Meanwhile there were 751 mortgages at 10% but this has since dropped to just 57 available. what this means for upcoming homeowners is that 15% is the new floor for deposits and above that, rates are creeping up – the cheapest two-year fix deal was 1.09% in July – with a 40% deposit, but now it’s shot up to 1.24%.
Martin warned that if first time buyers looking to buy their first home cannot afford to buy now, they should wait and save up instead.