Mortgages

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There are many different mortgage options. The choice is one of the biggest problems; however, a wide choice means that there will be a mortgage suited to your requirements.

Below are six different examples

Flexible –You can decide how much you repay each month and can pay extra or even suspend payments for a while. However, underpayments will be added to the outstanding mortgage.
Variable rate –This is a rate of interest normally charged by the lender on a mortgage and can change frequently.
Fixed rate –This is a mortgage which has its rate fixed at the start of the mortgage for a fixed period, eg. 2 years, and will not change when rates either rise or fall during the period.
Capped rate –The interest on your mortgage never goes above a certain level during an agreed period, but it does go down if interest rates fall.
Discount rate –The interest rate on your mortgage is discounted from the lender’s variable standard rate for a specific period of time, usually with a bigger discount at the start of the mortgage.
Cash back –You will be given a cash sum when you start the mortgage.

Buy-to-Let Mortgages

Over the past couple of years it has become very fashionable to buy a house for investment purposes and rent it out, thus providing additional monthly income plus a hedge against rising house prices and providing that little bit of extra capital at some future date.

Consequently, many lenders have come into the market place providing funds. These mortgages are commonly known as buy-to-let mortgages. They vary widely and we would suggest that if you are interested in such a loan, you contact a Mortgage Adviser for a more in-depth meeting so as to iron out all the queries and possible tax implications.Caution!

If you want to pay off your mortgage early – maybe you have found a better deal, or you’re moving house and have decided to use a new lender – you might be charged penalties. Don’t worry, your Mortgage Adviser will always explain any redemption charges and how long they apply for.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

STAMP DUTY ON MORTGAGES

Stamp Duty Land Tax was introduced in December 2003 and replaces the old stamp duty on purchases of flats, houses and other land and buildings.

The Tax is payable only by buyers (not sellers).

From 5 December 2014 the rates apply only to that part of the property price that falls within each band –

No SDLT payable at all on properties up to £125,000
The first £125,000 on properties to be free of SDLT
Then payable at 2% payable on the portion up to £250,000
Payable at 5% on the portion up to £925,000
Payable at 10% on the portion up to £1.5m
Then payable at 12% on the portion over that amount.

Corporate bodies

SDLT is charged at 15% on residential dwellings costing more than £500,000 bought by bodies like:

companies
collective investment schemes

There are some exceptions. You’ll only need to pay 7% if you meet certain criteria. For example, where the property is used for:

A property rental business
A property development or resale trade
Providing admission to visitors on a commercial basis

Stamp Duty Land Tax is paid on the whole value of a property, so if you buy a property costing £251,000, you would pay £7,530 not just the amount over the threshold as you would do with income tax. This jump means if your property costs £250,000 you will pay £2,500, if it costs £250,001 you will pay £7500.03.
The sudden leap in bills occurs at each of the thresholds.

What is APR?

All lenders have to quote an Annual Percentage Rate (APR) in addition to their standard interest rate. This is to help you compare different schemes. The way APR is calculated can be confusing but it takes into account other costs, such as any booking fee, arrangement fee etc. It gives a more accurate indication of which mortgage is likely to be cheaper over the whole mortgage term, so is particularly useful if you intend to keep the mortgage for the whole term.

IMPORTANT

As the buyer of the property, you are responsible for completing the land transaction return and paying the SDLT.
However, in practice, your solicitor or licensed conveyancer will usually handle this for you and send it to HMRC on your behalf.
You should check that all the information on the form is correct and complete before signing the declare.