Can a person buying a property in the UK include the Stamp Duty in the mortgage?
If this is possible, I wonder, how common is this and would it make harder to secure the mortage?
2 Answers
Usually a bank will only lend you a percentage of the house valuation say 75%, although you might be able to find mortgages with higher rates e.g. a 95% mortgage. Generally the higher the percentage the higher the interest rate and/or fee because the bank is taking on a higher risk.
Stamp duty is then your concern alone. You need to find both the missing percentage, that's your deposit and also all other fees involved in the house purchase including stamp duty.
Many years ago banks did offer > 100% mortgages but those banks failed. The remaining banks and the regulators have tried to learn from those mistakes.
If you don't have money to pay for stamp duty then perhaps you need to consider saving up for a bit longer till you do. There are many other expenses involved in buying a house. Legal fees, searches, furniture.
answered Oct 22, 2021 at 7:50
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Thanks Robert. I think my question was not detailed enough, judging by your answer. I have a 25% deposit for the property, which is a relatively decent amount. But if I go for a 25% deposit, I'll use 85% of all my savings. I realised recently that the Stamp duty that I'll need to pay will be higher than what I thought originally. And if I pay it straight away I'll be just £4K - £5K above zero. For this reason I was thinking about 3 possibilities. 1) Include stamp duty in my mortgage (this is why I asked the question) 2) Go for a 20% mortgage 3) Go ahead with 25% and almost touch £0 Oct 27, 2021 at 10:32
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As far as I understood from my broker, the only way to "include stamp duty in my mortgage" is to go for 2). But I finally decided to go for 3), since this will save me 15K over the next 5 years... Would you agree, that the only way to achieve 1) is to do 2)? Also I would not wait anyway for saving more money, because I spent half a year looking for a flat and after seeing around 1000 on Rightmove and 30 in real I found one which fully satisfies me. Moreover inflation is raising now in the UK which will affect the base rate (by Christmas?) and so mortgage rates will increase later on... Oct 27, 2021 at 10:42
Yes. It is possible to borrow 100% + Stamp duty, effectively no deposit. You should of course have some other security and the ability to service the loan, or have a high ranking officer in the bank as a "mate".
If multiple properties secure the loan, this then allows the bank custody of the title (security packet) after any primary loans against those properties are paid off.
This suits people who traditionally paid out the loans but did not formally discharge the mortgage for security purposes.
Ask. Declare your circumstances.
