Mortgage bulletin for week commencing Monday 3 March

Posted 3 March 2014

As the family moves on, many homeowners look to downsize their home to reduce costs. One factor when looking at new or pre-owned properties will be stamp duty land tax (SDLT, or more commonly ‘stamp duty'), currently 1% on homes purchased for between £125,001 and £250,000, rising threefold to 3% on homes at £250,001 to £500,000. Keeping below that £250,000 threshold can save those moving house many thousands of pounds.

With a 40% deposit, downsizers moving home to a smaller property can look to a number of mortgage providers for loans at 60% loan-to-value (LTV) on homes purchased for between £125,001 and £250,000. With some appealing introductory and fixed-rate offers, buyers should take care to look at the standard variable interest rate the lender will charge after any fixed or discounted period.

Until 6 March 2014, TSB is offering to pay stamp duty for new mortgage customers whose home cost between £125,001 and £250,000 - saving them up to £2,500. TSB is currently offering a two-year fixed-rate mortgage at a rate of 2.29%, reverting to its Homeowner Variable Rate, currently 3.99% for the remainder of the term.

Ian Ramsden, TSB's director of mortgages, says: "With UK house prices rising, it should come as no surprise that the cost of stamp duty is on the up too. Yet, a worrying number of homebuyers are failing to factor this significant outlay into the overall cost of buying a home. It is important for potential homebuyers to factor it in to their purchase decision at an early stage."

Other loans at 60% LTV on homes with a purchase price at that 1% stamp duty band, include a two-year fixed rate with Santander at 1.89% with booking fees of £1,145, including a free valuation and £250 cash back. After the two-year fixed period, the rate reverts to Santander's standard variable rate of 4.74%.

The Bank of China (UK) is offering a rate of 3.18% with its Lifetime Tracker Mortgage with £1,295 arrangement fee, while Barclays Lifetime Offset Tracker mortgage is currently 3.19% with a £1,499 application fee.

For new-build mortgages, Hinckley and Rugby Building Society is offering 3.33% variable for two years reverting to its standard variable rate of 5.64%, with £295 arrangement fee, free property assessment and completion fee of £695. The Society's special buy-to-let mortgage deal has an initial rate of 2.74%, variable for two years, with a £250 arrangement fee and 2.74% product fee. This buy-to-let mortgage also reverts to Hinkley and Rugby's standard variable rate, currently 5.64% after the introductory period.

Buy-to-let specialists Paragon Mortgages has a lifetime tracker buy-to-let mortgage, currently 4.5% (LIBOR+3.9%), with 1.5% product fee, while its five-year fixed-rate is 5.49% with 2% product fee reverting to LIBOR+4.75% for the remainder of the term.

Among the 60% LTV offset mortgages available to those downsizing, the NatWest Offset variable rate is currently 4.00%, with a £499 product fee. There are no Early Repayment Charges or overpayment charges.

Lloyds Bank two-year tracker is 1.79% for the first two years with £1,995 product fee or 2.39% with no fees, then both deals revert to Lloyds' homeowner variable rate thereafter, currently 3.99%.

Norwich and Peterborough Building Society two-year base-rate tracker is currently 1.99% reverting to the society's standard variable rate thereafter, currently 4.99%. The deal includes free valuation and legal fees, with product fees of £345, and is available for new remortgage customers only.

HSBC has two-year Discount Special Mortgage at 1.49% with booking fees of £999. After the two-year fixed-rate period, the interest rate reverts to HSBC's standard variable rate, currently 3.99%.

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