Take advantage of cheap mortgages and savings on stamp duty to move home

Thinking about a house move? Here’s why it might make sense to do so now with mortgage rates at rock bottom and the potential to save thousands on stamp duty

Detached house

The summer is usually a slow period for moving house as people are usually on holiday, but right now the property market is positively booming.

Several factors have combined to power this renewed momentum.

After months of confinement due to Covid-19 – and restrictions placed on the property market, with house sales effectively banned between March and May – there is currently a lot of pent-up demand.

At the same time, those looking to buy a home now find themselves in a low-interest-rate environment, and faced with financial support in the form of a stamp duty holiday, as the Government takes steps to prop up the housing market.

All of this points towards now being a potentially a good time to move house.

Here we take a closer look.

Grab a mortgage while deals are cheap

If you are looking to move home, the good news is, mortgage rates have been at historic lows for some time – and show no sign of rising any time soon given the state of the economy.

The Bank of England base rate is currently at just 0.1%.

Right now, if you have a big deposit, you could get a home loan at just a little over 1%.

Equally, if you’re a first time buyer with a deposit of 5% – meaning you need to borrow at 95% loan-to-value LTV – you may still be able to get a very competitive rate of less than 3%.

Note, though, that eligibility will depend on the lender.

To compare mortgages, head here.

Cash in on the stamp duty holiday

In addition to cheap mortgages, home-movers can currently cash in on the help offered by the Government’s stamp duty suspension.

Stamp duty is levied on house purchases above a set amount in England and Northern Ireland.

In July this year, Chancellor Rishi Sunak announced that stamp duty would be waived on the vast majority of property purchases.

Those who buy a house or flat worth £500,000 or less will pay no tax, while those who buy more expensive homes will benefit from reduced costs.

The aim is to encourage people thinking about a house move to do so sooner rather than later, and get the housing market moving.

To find out how much you could save on stamp duty, head here.

For more about equivalent charges in Scotland and Wales read our guide.

House-buying costs could rise in a few months’ time

Given there’s now a potential £15,000 stamp duty saving up for grabs, this could be a pretty persuasive reason to think about moving house now, rather than waiting – especially as this exemption won’t be around forever.

The giveaway is only going to be available until March 31, 2021, at which time, for many people, the cost of buying a home could rise significantly.

Further, as the furlough scheme unwinds and unemployment creeps in (see below), this may limit banks’ willingness to lend, meaning it may also get harder to borrow a little further down the line.

Don’t rush into a house purchase

While all of this points to taking action, you still need to tread very carefully.

Buying a home is never a decision that should be taken lightly, and this decision needs to be given more consideration than ever right now, given the UK is now officially in a deep recession.

The Chancellor has warned that ‘hard times’ are here after the economy suffered its biggest slump on record.

With unemployment likely to rise for some time and redundancy announcements coming thick and fast, many people could find themselves with less job security.

Household finances will also be squeezed, meaning many could find themselves going through a prolonged rough patch.

Word of warning about ‘negative equity’

House prices may be rising right now, but you need to be aware that the worsening economic conditions could mean property prices end up falling soon after you buy.

This could leave you in ‘negative equity.’ This is where the total amount of borrowing secured against your home is greater than its value – and tends to affect those with small deposits.

Tips when buying a home at a time of recession

  • Only move house if you have a decent stash of savings behind you
  • Don’t max yourself out. Make sure you can afford your monthly mortgage payments with room to spare
  • Be sure to factor in all the costs of moving, including surveyor fees, solicitor fees, estate agent fees and removal costs
  • Don’t move just because the government is offering an incentive. It’s only a good deal if you can comfortably afford to do so
  • If you’re in any way worried about your situation, delay making any major financial decision until the outlook is clearer. Delay your purchase and see how the recession plays out

Did you find this helpful? Why not share this article?

Take control of your energy bills

Our handy tips and tools will help make sure you never overpay again

Popular guides