Stamp Duty - making up the shortfall

Rench

Hello all,

My girlfriend and I are first time buyers and should hopefully be moving in in around 3 weeks time.

We have saved hard over the past three years and the deposit is in place (being held by our solicitors ready for exchange).

We are continuing to save for stamp duty, but there will be a shortfall by the time it falls due (probably of around £3,000 - £5,000). My question is about how best to fund the shortfall. A couple of the options I have considered:

1. A personal loan, probably to be repaid over a two-year period. The payments would be very affordable (less so if we paid it off over one year). If this is the best option, I have a few questions about logistics. First, how long would it take from application until receiving the money (as a best estimate)? Second, in terms of applying, I assume it would be best to do so before we actually move, in order to avoid any credit-check issues surrounding our old/new address.
2. A credit card. I currently only have one credit card, with my own bank Natwest, which I only really got to improve my credit rating (just using it for around £200 pcm and paying it off every month). Would it be a viable option to get a 0% deal over, say, 20 months, pay the stamp duty shortfall using the card and then steadily pay it off over the 0% period? Has anyone had any experience with this? Is stamp duty payable with a credit card (I assume this will be fine, as the money will be paid to our solicitors, who should accept CC payments)?

All thoughts welcome. Thank you!

Rench

Thanks djohnst. Appreciate the advice about the personal loan. Would be interested to hear others' thoughts - has anyone gone down this route?


On the credit card option, as I said above, the money would be paid to my solicitors who would then pay SDLT (in the normal way). Therefore, to say that you can't pay SDLT by CC does not really answer my question.

Pixie5740

Any money your borrow, be it a loan or on a credit card, will affect your affordability for a mortgage. Your lender will credit score you during the application process and they can also credit score your prior to releasing the mortgage funds. Some borrowers have been stung by this by using credit to fund things between application and completion and it has bitten them on the backside ferociously.

Does your solicitor accept credit card payments?

Rench

Thanks Pixie. I believe they do.

Gordon_Hose

Read this: http://www.thisismoney.co.uk/money/mortgageshome/article-2991881/Can-solicitor-fees-stamp-duty-credit-card-protect-deposit-extra-borrowing-jeopardise-mortgage.html

What you are considering is utterly bonkers! You risk having your mortgage offer withdrawn completely.

You have come here for advice but don't seem to what to heed any of it. My advice, whether you take it or not, is to speak with your solicitor openly, see what they have to say about it.

Rench

Thanks for that link Gordon.


I appreciate your input, but you cannot reasonably say that I don't want to heed any of the advice. I simply raised a couple of questions and was not instantly prepared to accept one answer unquestioningly! The whole point of a forum is to sound out different opinions and experiences.

AndyT678

Rench wrote: »

Thanks for that link Gordon.


I appreciate your input, but you cannot reasonably say that I don't want to heed any of the advice. I simply raised a couple of questions and was not instantly prepared to accept one answer unquestioningly! The whole point of a forum is to sound out different opinions and experiences.

It's not that you're not heeding advice I think perhaps it's that you're missing the point a bit. I'm sure that there are ways of getting £4000 out of a loan or a cc but, as others have said, what happens if your lender credit checks you after exchange and before completion. That could result in you having your mortgage offer withdrawn after you have contractually agreed to buy the house. You could be leaving yourself open to a world of compensation and damages claims from everybody else in the chain that could easily run into tens of £'000s.

It's strange to me and I think to some others that this doesn't seem to bother you.

My advice is to ask your question again on the mortgages board where some of the brokers will be able to comment on how your particular mortgage lender normally operates.

Gordon_Hose

Link to the mortgages board:- http://forums.moneysavingexpert.com/forumdisplay.php?f=15

Rench

Thanks both. If there was any risk of the mortgage offer being withdrawn then I would absolutely not go ahead with the extra borrowing - the idea certainly does bother me! Appreciate the input. I will see if there is any further advice on the mortgages board.

csgohan4

Did you not factor in the SDLT when you decided to buy a house? Did you have money set aside for furniture, removals e.t.c?

ReadingTim

Your best choice is probably to ask to borrow more on the mortgage so that more of your current deposit is used to pay stamp duty and less goes towards the house. However, this will affect the LTV etc, and may be refused by the lender, but it's a better chance than taking out a sneaky personal loan or credit card loan and hoping the lender won't notice - they will, and may well withdraw your mortgage offer.

You could ask friends or family to lend/gift you the money, but that's fraught with problems from their perspective, as these board show on a regular basis.

Failing that, and you don't have funds currently earmarked for other things (new furniture in the new place for example) that you could reallocate, then you really need to seriously consider whether you can actually afford this place, and get out if you can't. Failure to complete (once you've exchanged) will see you lose your deposit, wasting those 3 years of hard savings, leaving you with no house and no deposit!