The second mortgage industry and its stakeholders continue to see the benefits of the stamp duty holiday, which has thus been extended to 30th June 2021.
The market for mortgages and personal lending appeared bleak following the announcement of the first covid-19 pandemic lockdown around 12 months ago.
“Virtually all lending was put on hold,” explains David Beard, founder of price comparison website, Lending Expert.
“Employment, income and affordability were very uncertain during the early stages of the pandemic – and these are key points for mortgage providers.”
“But second charge mortgages are now back to funding at regular levels, which is really great to see, after the housing market opened last May. The appetite of lenders is still very much there and funding remains high for loans secured against your home. This has been largely driven by the extended stamp duty holiday and the desire of UK homeowners to renovate and maximise their living space during the rest of the pandemic.”
The Chancellor announced a stamp duty holiday initially to bring life back into the housing marketing and lending industry, something that caters to other professions such as solicitors, brokers, surveyors, estate agents and even, marketing firms. Currently, there is 0% stamp duty on properties under £500,000, giving the average buyer a saving of £15,000.
The success of the holiday has seen it be extended by Chancellor Sunak from 31st March 2021 to 30th June 2021 – keeping the mortgage market busy and allowing it to operate at its best levels pre-covid.
From 1st July 2021, the nil rate (or 0% rate) will be for properties under £250,000 and any properties between £250,001 to £925,000 will be subject to a stamp duty tax of 5%.
“Second mortgages are mostly used for home renovations and large purchases such as weddings and stay on top of bills such as car payments and school fees,” explains Beard.
“In this current climate, people are using second mortgages to renovate their homes and make real home improvements, as they adjust to spending more time at home. This can include building home gyms, home offices or loft conversions. Equally, you have a number of families using second mortgages to gift money to their children to buy a new property, and maybe downsize too, both to make the most of the stamp duty holiday.”