Mortgage blog: Shop around before taking new TSB stamp duty deal

Posted 24 January 2014

If you're thinking of buying a property in the next few months, one of the UK's leading lenders has launched a mortgage deal that will pay your stamp duty for you. TSB has launched an offer to pay the stamp duty for mortgage borrowers purchasing a property worth between £125,001 and £250,000.

The value of the benefit may be up to £2,500 - a handy sum for anyone buying a new property. However, experts have urged borrowers to shop around and to compare the cost of mortgage deals as the TSB product carries higher interest rates than rival lenders.

Properties purchased for between £125,001 and £250,000 currently incur stamp duty at 1%. TSB, which has been split out from Lloyds TSB and will be floated on the stock market later this year, is offering to pay the 1% stamp duty for mortgage customers buying a property in the 1% band. They are also offering £500 cashback to applicants buying a property worth less than £125,001 or more than £250,000.

The offers apply to a limited range of TSB's mortgage deals. These include a first-time buyer two-year fix up to 85% loan-to-value (LTV) at 3.29% and a two-year, 3.69% deal for home movers up to 85% LTV.

While the prospect of having your stamp duty paid may be appealing, experts are urging borrowers to shop around and compare the total cost of deals before signing up.

Keith Osborne, editor of Whathouse.co.uk, says: "The rates on offer from TSB are higher than those currently being offered by other lenders. For example, you can get a two-year fixed rate at 85% LTV from the Post Office at just 2.78%. So it's vital that you compare the total cost of the deal over the two-year period. Depending on how much you borrow you could be better off paying the stamp duty yourself and benefiting from much cheaper mortgage repayments."

The Daily Telegraph reports that a third of house buyers do not currently pay any stamp duty, while properties worth between £250,000 and £300,000 account for 30% of stamp duty receipts, according to research by Savills.

"If you take one of TSB's deals the chances are that you will simply be spreading the benefit of the stamp duty over the course of your repayments," adds Osborne. "The best advice is to speak to a professional mortgage broker who can talk you through all your options. They can also work out which type of deal will be the most financially beneficial for you."

Click here to find out more about how Whathouse.co.uk can help you find the right mortgage.

 

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