Just last month love was in the air. We, the public, spoke and tasked our politicians with finding a solution to precisely who would govern the country for the next five or so years. The Kingmaker held out his hand to the Tories and a new relationship was formed.
After several weeks of mutual appreciation, the reality of the challenges for the next government reared their ugly heads, and none was more notable than the emergency Budget. With said Budget now delivered, what does it mean for the mortgage market?
Well, frankly, in the raft of measures announced by the Chancellor there was little in the Budget that specifically impacts on the mortgage and property markets.
It’s more about the general economics and the effect on interest rates, and this Budget went someway to reinforce the expectation that interest rates will remain low for quite some time; helping to support both the residential and commercial property market.
Unquestionably, the measure that had the most potential to seriously impact the housing market was a change to capital gains tax (CGT). Much Ado questions whether increasing the CGT rate for higher rate taxpayers to 28%, as opposed to the widely expected 40% will have too much of an impact on the buy to let market.
The fact that the £10,100 annual exemption has not been reduced, and that its current indexation will continue, means amateur landlords should still be able to mitigate their tax liabilities by selling one property a year. And, if they defer a sale until retirement they may well still only have to pay tax at 18% on the taxable profit. Of course, this is merely our opinion and you should always take specific tax advice on your situation.
After all, whilst we are the mortgage experts, the same cannot be said for tax…However, being part of the Towergate Group means we know a man (or indeed a woman) who is. Ask a consultant and they will point you in the right direction.
The CGT rise is also something that may impact owners of second homes. Yet, one would argue that most people who buy a second home will not be buying it for any tax benefits, rather because they want, and can afford, a second home. If you do end up paying more CGT when you eventually come to sell, most will see this price worth paying for the benefits of having a second home.
To fix or track (or even cap)
The age old question still remains one of the most important factors for anyone who is taking on a new mortgage currently. For some, the security that a fixed rate provides will always be appealing, but the better value still looks to be found in the tracker market. With trackers considerably cheaper than their fixed counterparts, and the expectation of low interest rates for some time to come, a variable rate still looks to be the right route to take.
Of course, you could hedge your bets and take a tracker and purchase a cap, as we have discussed in previous editions, but this is not likely to be the right option for some. Much Ado tries not to repeat itself too much, but the message for advice is still the same as it was last month, and for many months before that.
Getting specific advice on your own situation is critical. What’s right for one person is not right for the next. There are a myriad of solutions available, but finding the one that is right for you is key. Until next month, we bid you adieu…
Article courtesy of www.charcol.co.uk
Tags: interest rates, mortgage, property markets
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While we’re talking about topics related to Mortgages | Key Properties (UK) Ltd Blog, Many lenders will require at least a 15% deposit, while others will ask for more. However for first time buyers there are a few banks and building societies that will accept a 5% deposit.
In this situation your current mortgage provider may be willing to provide you with a new loan but it would be wise to get some independent advice and shop around a bit to find the best interest rates and special deals that suit your circumstances.
If you have a job and are trying to get a mortgage, you should write to a lender. Let them know you are interested in a capital repayment mortgage and include your gross income. If you have a partner, include their income, as well and be specific about who earns what amount.
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