Question: I’m a first-time buyer about to purchase my first flat. I’ve put an offer down but I’m fairly sure I will miss the deadline to pay a lower amount of stamp duty later in March. Is there any way that I can try and get my purchase completed before the end of the month? A friend mentioned “bridging finance” as a way of doing so?
square PROPERTY AND MORTGAGES I'm borrowing £100k from my mum for a bigger home - we couldn't afford it otherwise
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While mortgage applications and property purchases can, in some cases, move quickly, the reality is that completing a purchase within the next few weeks is now highly unlikely, unless you are already well advanced in the process.
The upcoming changes to stamp duty mean that first-time buyers in England who currently benefit from an exemption on properties up to £425,000, and a reduced rate on purchases up to £625,000, will soon face a different tax threshold.
This shift means that those purchasing between £300,000 and £625,000 will face additional stamp duty costs once the changes take effect. For example, a first-time buyer purchasing a £425,000 property today would pay no stamp duty at all, but under the new rules, they would need to pay £6,250.
At this stage, anyone who has not yet applied for a mortgage is extremely unlikely to complete before April.
For buyers already deep into the process, where contracts are close to exchange, there will still be a possibility of meeting the deadline, but only if all parties involved – solicitors, lenders, and estate agents – are working efficiently to expedite the transaction.
Bridging loans offer short-term borrowing solutions that allow buyers to complete on a property before their main mortgage is finalised. These loans are particularly effective in situations where time constraints, such as tax deadlines or seller pressures, are a factor.
Once the purchase has completed, you will then need to look to repay the bridging loan, which is why it is essential to have a clear exit strategy, such as an approved mortgage offer or the proceeds from a property sale.
There are also arrangement fees and potential valuation costs to consider. For those already close to exchanging contracts, it may be worth exploring as a last-minute solution, but it is not a decision to take lightly. Seeking advice from a specialist mortgage broker is crucial in understanding the costs, risks, and whether it is the right move for your circumstances.
Instead, it is important to speak with a mortgage broker who can help you understand your borrowing options and help you secure an Agreement in Principle. Choosing a proactive conveyancer who can manage the legal process efficiently can also help ensure a smoother transaction.
Those already in the process may be able to push for faster completion, while others can take the time to plan carefully and explore their financing options.
Seeking professional mortgage advice remains the best way to navigate the home-buying journey, ensuring informed decisions and a well-structured financial plan for the future.
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