Tips for purchases before the end of the stamp duty holiday

In England the stamp duty threshold sits at £500,000 until 31st March 2020 and buyers completing on their main residence up to this amount before this date, will not pay stamp duty. This is a temporary benefit, and due to the huge surge in the property market currently, applications are taking much longer than expected.

Research by Legal & General Mortgage Club, which surveyed housing market advisers, conveyancers and estate agents gives statistics which support an early as possible mortgage application:

  • The average purchase time from finding a property to completion is at least 15 weeks, (four months) as processing times for applications have doubled.
  • Before the pandemic, a mortgage application for a consumer with straightforward circumstances took less than two weeks (61%) to move to mortgage offer. Yet, since the re-opening of the mortgage market, advisers have found that this process is taking much longer – 30% said it is taking three to four weeks with a further 32% saying it is taking four to eight weeks. Those with more complex backgrounds, the self employed, those with impaired credit histories or who have been on furlough, may need to allow six to eight weeks (28%) to get approved for a mortgage.
  • Conveyancers indicated that the time between offer and exchange is now taking three weeks, while the period between exchange and completion stands at one to two weeks.
  • Estate agents indicated that the average time between receiving an offer on a property and completion has increased by some eight weeks.

This is an unprecedented situation and policy makers may need to consider a potential graduating of the stamp duty deadline. Lenders face the challenge of ensuring that borrowers only take on what they can afford in the long term and COVID-19 has complicated the financial situations of millions of people. Making high quality decisions is of the upmost importance.

The whole mortgage industry has an absolute requirement to prove beyond a doubt that everything the borrower says is true, and this is vital to make sure borrowers do not take on more debt than they can afford. Our advice to put yourself in the best position and get your application in before the end of the year is:

  1. Start your conversations early.
  2. Understand what you will need to provide-some applications for example, self employed applicants may have more information to gather for an application.
  3. Be clear on what information lenders require. If you are required to provide two months of bank statements, give every single page of the statement, or it can’t be checked off that all your bank statements have been received and you will go back to the bottom of the queue.
  4. Get your information together in one hit and packaged up well. Provide whatever documentation you are asked for, as soon as you are asked for it, and without debating the appropriateness of the request. Hesitating to answer, that will only warrant further uncertainty and slow things down more.

Henry Knight from Springtide Capital comments: “Preparation is key. It is important to make sure you understand all the information that is required for your application and provide this in one go. This will prevent your application being sent backwards and forwards, delaying your application. Aim to be the first cleared off the to-do list at each stage of the process so your loan can move forward as smoothly as possible”

In the current environment if you are struggling with what to do next regarding a mortgage, it is important to take advice as there are certain steps which may be worth taking.

At Springtide Capital we provide high quality impartial mortgage advice. We are a specialist mortgage broking business committed to providing a personal and efficient service. We understand the complexities of finding the right loan to suit both your financial and personal circumstances.


Be patient with longer timescales for mortgage applications

The confidence in the UK housing market is at a four-year high, according to surveyors and estate agents. Nationwide reports that UK house prices saw their biggest annual rise last month since 2016. On average, values rose by 5% this September compared to September 2019.

There has been a huge surge in mortgage applications at a time when lenders face considerable challenges in getting their offerings out to borrowers. Be patient, lenders are lending. If your application is taking a long time it is not necessarily that there is an issue.

In the current market lenders have had to withdraw some 90% deals in order to have the capacity to keep processing applications. In trying to support buyers, lenders have been inundated, and removing some deals serves to stem the flow of business so that they make the overall volume more manageable.

The current delays have come about due to a number of factors. Staff across the mortgage industry, like other sectors are still working from home and subject to changing regulations and local lockdowns. Where staff are still working in an office, if several members of one  team need to self-isolate at one time in accordance with the Government legislation, this can make a significant difference to how long items take to progress.

Existing customers have been contacting lenders about mortgage holidays therefore they have had more calls to contend with causing delays. Just as with Mortgage Payment Holidays, the admin associated with the Bounce Back Loan scheme has added to the workload of lenders with staff previously employed in mortgage departments being moved to teams dealing with these types of emergency loans.

The property market is busier than ever and demand for mortgages is high. More people have decided to move since lockdown. With home working increasing, many people have decided they need a home with space for an office, while others have decided they simply need more space. Also, some people living in flats or in smaller homes with limited land have decided they need a garden. There has also been pent-up demand in the market created from 23rd March until 13th May when restrictions were in place.

The Stamp Duty holiday announced by Chancellor Rishi Sunak on the 8th July has boosted the property market. Buyers can save money on their house purchases as Stamp Duty has been cut on properties up to £500,000, whereas previously it was only at zero on properties up to a value of £125,000. Many buyers are keen to take advantage of this cut.

Volumes are consistently high across England and are higher than any of us expected. This increased pressure on the system also highlight issues inherent in the systems themselves. For example almost a third of English councils are taking 20 days or more to return local authority searches. Changes have been required across the industry in processes to accommodate new COVID related practices too.

Henry Knight from Springtide Capital commented:

“Everyone across the industry is inundated but do be patient. Banks are not quite back to the pre -COVID normal and the government stimulus of the stamp duty cut will continue to hold up transaction numbers for the next few months. Mortgage availability is healthy. We are all working together to process all parts of applications as quickly as possible”

Take a look at our tips to help your mortgage application run as smoothly and quickly as possible.