Confused - Can you include the 3% stamp duty on your overall mortgage?

baxxy

Hi,
Hope you can help, had a very confusing experience at the estate agents.
We have had an offer accepted on a house for £275K from an original sale price of £315K.
This obviously puts us into the 3% stamp duty stage which equates to around 8K therefore full cost of house should be 283K...
We had previously thought ( and been advised ) that you can just add the stamp duty to the overall mortagage amount -so not a major concern providing you can borrow that ( we have a mortgage promise of 305K )

However, been in to see an independant mortgage advisor today who laughed at the idea and said this needs to be paid upfront in addition of the 43K deposit.... therefore we need instant access to 51K!!!!!

We simply don't have this 8K laying around anywhere, and certainly wouldn't have gone over 250K if we realised this.

However.... he said we could possibly get around this by using something called vendor gifted deposit - but that limits us to only use Halifax. It sounded extremely complicated to us and i'd expext it wil be even more confusing to the Vendor as they will now be asked to sell us the property for 283K and then at a later stage give us the 8K back.... Pending reevaluation matching this amount... i'm still confused about the full process.


We had previously seen a mortgage advisor a couple of months back who never mentioned any of these crazy loop holes, so unsure whats going on.

And to back up that claim, Martin Lewis seems to think it is much easier than this...
http://www.moneysavingexpert.com/mortgages/stamp-duty#seven

WHat do you guys think?
Am i getting the correct advise from this independant advisor?

Thanks

beecher2

If you kept aside 8k to pay for the stamp duty you'd have a deposit of £35k. This would mean bring your LTV up to 87% - does your LTV have to be below 85% to get the deals you were looking at?

SilverSix

Just put down a smaller deposit providing you can get the same mortgage deal and use what you haven't put down to pay stamp duty.

Mortgage fee's can be added to the total you wish to borrow.

opinions4u

Yes, you can include fees in the amount borrowed.

But if a lender restricts deals to 90%, 85%, 75% etc of purchase price / valuation then they're not going to go above these thresholds to lend you funds for stamp duty.

baxxy

Turns out the last mortgage advisor was right.... it is only Halifax that allows this kind of deal to add stamp duty to the mortgage.

Just not sure why Martin Lewis didn't make it clear in his post that you only have one Mortgage lender to choose.

Thrugelmir

baxxy wrote: »

Just not sure why Martin Lewis didn't make it clear in his post that you only have one Mortgage lender to choose.

Make what clear?

DVardysShadow

baxxy wrote: »

Turns out the last mortgage advisor was right.... it is only Halifax that allows this kind of deal to add stamp duty to the mortgage.

Just not sure why Martin Lewis didn't make it clear in his post that you only have one Mortgage lender to choose.

???? beecher in post 2 has clarified this. You pay the stamp duty from your own funds, which reduces your equity. And you borrow the rest. Works for all lenders.

baxxy

No, with Halifax we can keep our 15% deposit of 43K and get a mortgage for £283K even though we are only paying the vendor £275....

Martin discusses it here, but makes it sound much easier
http://www.moneysavingexpert.com/mortgages/stamp-duty#seven

Thrugelmir

You are missing the point that others have made. From Martin's article:

Secondly, this could affect your Loan-to-Value ratio (LTV) – the measure of how much of a property’s value you are borrowing. The most competitive deals require a maximum LTV of 75% - yet in the example above, adding the stamp duty would push you from 73% to 76%, so always be careful

kingstreet

The vendor gifted deposit idea is fine in principle. You buy for £283k and that is the purchase price. The vendor agrees to give you £8k on completion, so the net price you pay is £275k and that's what the vendor gets.

Both solicitors have to be happy to do this and so does the lender. Halifax is the only one I can recall at this moment on second hand properties.

The downside is the surveyor's attitude. He may disagree the property is worth £283k and may only value it at £275k. If that's the case, the scheme falls down as you're unlikely to get the vendor to accept £8k off that, or £267k instead.

Going back to what you were saying before, you don't add the stamp duty to the mortgage in some official scheme. If you don't have enough money, you simply take the stamp duty from your deposit, then work out how much you'll need to borrow on top of that to reach the purchase price you've agreed.

The net result is the same anyway.

DVardysShadow

baxxy wrote: »

No, with Halifax we can keep our 15% deposit of 43K and get a mortgage for £283K even though we are only paying the vendor £275....

Martin discusses it here, but makes it sound much easier
http://www.moneysavingexpert.com/mortgages/stamp-duty#seven

What you are trying to do is not so much add the stamp duty to your borrowings, but to get a mortgage in excess of 100%. No sane lender will give you 100% of the purchase price, plus stamp duty - and let you pocket the 43k equity in your current property.

You need to think in terms of putting your 43k to the purchase and to the stamp duty