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<h2>The Stamp Duty Land Tax (SDLT) will increase on the 1st April 2025.&nbsp;</h2> The UK property market is set to experience significant changes with upcoming Stamp Duty Land Tax (SDLT) changes that will impact both homebuyers and property investors. In the Chancellor’s recent <a href="https://www.aventur.co.uk/blog/autumn-budget-key-points-how-will-your-finances-be-affected">Autumn Budget</a>, it was announced that Stamp Duty will increase for second properties, from 3% to 5% coming into effect the day after the budget on 31st October. However, what has subsequently been overlooked (partially due to not being mentioned in the budget), is that further changes to <a href="https://www.gov.uk/stamp-duty-land-tax">Stamp Duty Land Tax (SDLT)</a> &nbsp;are planned for the 1st of April 2025. Under the previous government, the SDLT thresholds were increased to their current levels to help stimulate the housing market. However, this was only a temporary measure which looks unlikely to be extended; meaning current rates will come to an end as planned on the 1st of April 2025. &nbsp;<h2>What do the changes to SDLT mean for you?</h2> These changes will not affect everyone immediately; if you currently own a property and have no plans to move, you will not be affected when the changes are introduced in 2025.&nbsp; However, if you are looking to move house, buy a second property, or plan to get onto the property ladder, the changes could result in additional SDLT charges that you may not have anticipated, if your purchase completes after the 1st April 2025. &nbsp;<h2>How much is SDLT changing?</h2><h3> Current SDLT rates for Next Time Buyers&nbsp;</h3> Assuming it will be the only property owned, and that you reside in the UK: &nbsp;<figure class="table" style="width:100%;"><table class="ck-table-resized"><colgroup><col style="width:92.21%;"><col style="width:7.79%;"></colgroup><thead><tr><th style="padding:.75pt;">Property or lease premium or transfer value &nbsp;</th><th style="padding:.75pt;">SDLT&nbsp;rate &nbsp;</th></tr></thead><tbody><tr><td style="padding:.75pt;"> Up to £250,000</td><td style="padding:.75pt;"> Zero</td></tr><tr><td style="padding:.75pt;"> The next £675,000 (the portion from £250,001 to £925,000)</td><td style="padding:.75pt;"> 5%</td></tr><tr><td style="padding:.75pt;"> The next £575,000 (the portion from £925,001 to £1.5 million)</td><td style="padding:.75pt;"> 10%</td></tr><tr><td style="padding:.75pt;"> The remaining amount (the portion above £1.5 million)</td><td style="padding:.75pt;"> 12%</td></tr></tbody></table></figure><h3> Current SDLT for First Time Buyers</h3> Current rates are: &nbsp;<ul><li>no&nbsp;SDLT&nbsp;up to £425,000 &nbsp;</li><li>5%&nbsp;SDLT&nbsp;on the portion from £425,001 to £625,000</li></ul> If the property price is over £625,000, then you will not be able to claim the relief, and the rates for Next Time Buyers (above) will apply to you.&nbsp;<h3> New SDLT rates for Next Time Buyers as of 1st April 2025</h3> Assuming it will be the only property owned, and that you reside in the UK: &nbsp;<figure class="table" style="width:100%;"><table class="ck-table-resized"><colgroup><col style="width:92.1%;"><col style="width:7.9%;"></colgroup><thead><tr><th style="padding:.75pt;">Property or lease premium or transfer value &nbsp;</th><th style="padding:.75pt;">SDLT&nbsp;rate &nbsp;</th></tr></thead><tbody><tr><td style="padding:.75pt;">Up to £125,000 &nbsp;</td><td style="padding:.75pt;">Zero &nbsp;</td></tr><tr><td style="padding:.75pt;">The next £125,000 (the portion from £125,001 to £250,000) &nbsp;</td><td style="padding:.75pt;">2% &nbsp;</td></tr><tr><td style="padding:.75pt;">The next £675,000 (the portion from £250,001 to £925,000) &nbsp;</td><td style="padding:.75pt;">5% &nbsp;</td></tr><tr><td style="padding:.75pt;">The next £575,000 (the portion from £925,001 to £1.5 million) &nbsp;</td><td style="padding:.75pt;">10% &nbsp;</td></tr><tr><td style="padding:.75pt;">The remaining amount (the portion above £1.5 million) &nbsp;</td><td style="padding:.75pt;">12% &nbsp;</td></tr></tbody></table></figure>&nbsp;<h3>New SDLT First Time Buyers as of 1st April 2025</h3> The new rates will be: &nbsp;<ul><li>no&nbsp;SDLT&nbsp;up to £300,000 &nbsp;</li><li>5%&nbsp;SDLT&nbsp;on the portion from £300,001 to £500,000</li></ul> If the property price is over £500,000, then you will not be able to claim the relief, and the rates for Next Time Buyers (above) will apply to you.&nbsp;<h2> How much more stamp duty will I need to pay?</h2><h3> Current Next Time Buyer Stamp Duty</h3> Looking at an example provided by the government; on a property with a purchase price of £295,000, (assuming you are a next time buyer residing in the UK and do not own any other properties), you would currently pay SDLT of £2,250. This is calculated as: &nbsp;<ul><li>0% on the first £250,000 = £0 &nbsp;</li><li>5% on the final £45,000 = £2,250 &nbsp;</li><li>Total&nbsp;SDLT&nbsp;= £2,250</li></ul><h3> Next Time Buyer Stamp Duty from the 1st April 2025 &nbsp;</h3>On a property with a purchase price of £295,000, (with the same details as in the example above), you would pay SDLT of £4,750 (an increase of £2,500): &nbsp;<ul><li>0% on the first £125,000 = £0 &nbsp;</li><li>2% on the second £125,000 = £2,500 &nbsp;</li><li>5% on the final £45,000 = £2,250 &nbsp;</li><li>Total&nbsp;SDLT&nbsp;= £4,750</li></ul><h3> Stamp Duty for Second Properties</h3>&nbsp;However, it is worth noting that if you’re purchasing a second property (for example a Buy to Let, holiday home or if it will be the second property you own at completion) for a value of £295,000 then you would have an additional SDLT charge at 5% of £14,750, which would be an increase from the pre-budget charge of 3% at £8,850. &nbsp;This would make your SDLT charge £17,000 if completing before 1st April 2025, and £19,500 if completing your purchase after the 1st April 2025. &nbsp;<h3>Current First Time Buyer Stamp Duty:</h3> Again, looking at example provided by the government, on a property purchase price of £500,000 and assuming you are a First Time buyer residing in the UK, you would currently pay SDLT of £3,750. This is calculated as: &nbsp;<ul><li>0% on the first £425,000 = £0 &nbsp;</li><li>5% on the remaining £75,000 = £3,750 &nbsp;</li><li>Total&nbsp;SDLT&nbsp;= £3,750</li></ul><h3> First Time Buyer Stamp Duty from the 1st April 2025:</h3> On a property purchase price of £500,000, with the same details as in the example above, you would pay SDLT of £10,000 (an increase of £6,250). &nbsp;This is calculated as: &nbsp;<ul><li>0% on the first £300,000 = £0 &nbsp;</li><li>5% on the remaining £200,000 = £10,000 &nbsp;</li><li>Total&nbsp;SDLT&nbsp;= £10,000</li></ul><h2> Timing Your Property Purchase to Avoid Higher Stamp Duty</h2> It is important that we look at timescales for purchasing a property, with the stamp duty increases to ensure you have planned for the correct stamp duty. &nbsp;Firstly, purchase timescales vary significantly. But generally speaking, the following timescales are a good indication: &nbsp;<ul><li>Freehold properties typically complete within 3 months &nbsp;</li><li>Leasehold properties typically complete within 4 months. &nbsp;</li></ul> Based on these timescales, in order to complete on a purchase before the new stamp duty changes apply, you will need to have started the purchase process before the 1st January 2025 for a freehold property, and the 1st December 2024 for a leasehold property.&nbsp; However, it is important to note that timescales can vary significantly, and completions can sometimes be significantly quicker or longer, based on complexity.&nbsp;&nbsp; &nbsp;<h2>Conclusion</h2> Understanding these upcoming SDLT changes is crucial for anyone planning to enter or move through the property market. The revised rates will substantially increase the tax burden for both First Time buyers and Next Time buyers, making it essential to plan purchases strategically to minimise any additional related costs. &nbsp;If you're considering purchasing a property and want to potentially save thousands on Stamp Duty Land Tax, contact our&nbsp;<a href="https://www.aventur.co.uk/contact/">mortgage advice team</a> immediately to: &nbsp;<ol><li>Assess your property buying options and confirm affordability &nbsp;</li><li>Understand the new tax implications &nbsp;</li><li>Plan your purchase before the threshold changes on the 1st April 2025 &nbsp;</li></ol><hr>*This article&nbsp;does not constitute regulated financial advice. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

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How will the New Stamp Duty Changes Affect You?

Should you overpay on your mortgage? Overpaying on your mortgage can be beneficial, but there are a few things to consider before you commit.&nbsp;Let's break down the pros and cons of overpaying, so you can decide what's the right move for you. &nbsp;Overpaying on your mortgage is typically available to most people, with the majority&nbsp;of&nbsp;mortgage lenders allowing overpayments of up to 10% per year without any penalty.&nbsp; &nbsp;<h2>Early Repayment Charges</h2> It is important however to consider any Early Repayment Charges (ERC’s) that may be due. Most lenders will charge a 5% ERC, with the 5% being based on the amount you overpay (once you have exceeded your overpayment allowance).&nbsp; &nbsp;The ERC’s will also typically reduce the longer you are with the lender, although this is not guaranteed, as every lender has their own ERC structure. A typical ERC charge might be as follows:<h3> ERC’s on a 5 year fixed rate: &nbsp;</h3><ul><li>5% - In the first year</li><li>4% - in the second year</li><li>3% - in the third year</li><li>2% - in the second year</li><li>1% - in the last year</li></ul><h3> ERC’S on a 2 year fixed rate:</h3><ul><li>2% - in the first year</li><li>1% - in the last year</li></ul><h2> The benefits of overpaying your Mortgage</h2> So, the question of 'should I overpay?' is an important one, and with inflation reduced to 2% (<a href="https://www.bankofengland.co.uk/monetary-policy/inflation">Customer Price Index</a>) at the time of writing, and cash savings offering lower interest rates than they were even a few months ago, it’s a question that a lot of people are asking. Let’s start with the positives. There are many positives that come with making overpayments on your mortgage. These include, but are not limited to:&nbsp; &nbsp;<ul style="list-style-type:disc;"><li>When you make an overpayment, the whole payment will be used to reduce your mortgage&nbsp;balance (excluding any fees charged by the lender).&nbsp; This can be incredibly useful especially in the first few years where only a small portion&nbsp;of your monthly payment is used to reduce your mortgage balance, with the majority being used to cover the interest. &nbsp; &nbsp;</li><li>Even a small overpayment can have significant effects on your mortgage balance. For example, making an overpayment of just a £100 per month (around £3.33 per day) could reduce your mortgage balance by £30,000 over 25 years. This could increase to £60,000 if you make an overpayment of&nbsp;£200 per month.&nbsp; Reducing your mortgage balance this way also has some added benefits, such as:&nbsp; &nbsp;</li></ul>§&nbsp;&nbsp;&nbsp;&nbsp; You would typically stop paying interest straight away on the amount you have overpaid.&nbsp; &nbsp;With your monthly payments either reducing, or if your monthly payments stay the same, you will be making an overpayment each month by the amount you would have paid in interest, had you not made the overpayment. &nbsp;&nbsp; §&nbsp;&nbsp;&nbsp;&nbsp; The ability to clear your mortgage sooner than expected – sometimes shaving a significant number of years&nbsp;off your mortgage term.&nbsp; §&nbsp;&nbsp;&nbsp;&nbsp; Your Loan-To-Value (LTV) bracket could also reduce, resulting in a potentially lower interest rate when you come to remortgage, compared to what you would have been offered had you not made the overpayment.&nbsp;&nbsp;This is because the lenders typically categorise their products based on LTV with the higher LTV’s offering a higher interest rate, and the lower LTV’s offering a lower interest rate.&nbsp; &nbsp;However, lenders typically work on 5% intervals. For example, if your LTV is 91% you would potentially be offered a product that is up to 95% LTV despite being closer to the cheaper 90% LTV product.&nbsp; &nbsp;So, if you overpay by just 1%, you could reduce your LTV to 90% and be eligible for the cheaper product. &nbsp; §&nbsp;&nbsp;&nbsp;&nbsp; Reducing your mortgage balance will result in lower monthly payments when you get to your remortgage date, when compared to what you would have been offered with a higher balance, as your mortgage balance will be lower. &nbsp;<h2> What to consider when overpaying on your mortgage</h2> Whilst the above points may outline the positives of overpaying your mortgage, there are some important considerations to be aware of, including:&nbsp; &nbsp;<ul style="list-style-type:disc;"><li>The main consideration currently is the comparison between interest on your mortgage when compared to interest rates being offered on other savings accounts.&nbsp; For example, if you have £10,000 in spare cash, a mortgage charging you 2% interest, and an option to invest into a Tax-Free ISA offering 4% interest, it will potentially make more sense to invest the funds into the ISA instead of your mortgage.&nbsp; This means you would effectively gain £200 (£10,000 x 2%, with 2% being the difference between the mortgage interest rate charged and an ISA interest rate, in this example).&nbsp; When you also factor in that inflation erodes the real value of debt (mortgages) it can sometimes be more beneficial to invest your extra funds rather than making an overpayment on your mortgage.&nbsp; &nbsp;</li><li>Most lenders will usually charge&nbsp;an overpayment charge once you have exceeded your annual overpayment allowance (typically 10% of the outstanding balance).&nbsp; These early repayment charges can sometimes be quite high, and typically vary from 1% - 5% of the amount repaid which can make overpayments slightly less cost efficient, and potentially making alternative investments more beneficial. &nbsp; &nbsp;</li><li>Whilst overpayments can be beneficial, once the funds are used to reduce the mortgage balance, getting the funds back can be a time-consuming process which can sometimes involve costs and charges.&nbsp; If you’re thinking over making overpayments but feel that you may need access to the funds soon, it may be better to reconsider overpaying. &nbsp;</li><li>Do you have enough surplus funds in your savings? Generally, you should aim for at least 3 - 6 months’ worth of income to be kept within an easy access savings account in the case of emergencies.&nbsp; Once you have sufficient savings, it might be time to consider overpaying on your mortgage. However, using all your savings to reduce your mortgage balance, leaving you without an emergency fund, could potentially leave you in a vulnerable position financially. &nbsp;</li><li>If you have other debts with a higher interest rate than your mortgage, such as credit cards with no overpayment penalties, it may be more beneficial to clear those debts first before deciding to overpay on your mortgage or investing the money. &nbsp;</li></ul><h2> How to know if overpaying on your mortgage is right for you</h2> Overall, overpaying on your mortgage can be an easy way to accumulate wealth, reduce your mortgage term and reduce your monthly payments in a structured way.&nbsp; However, making an overpayment may be suitable if you meet the below criteria:&nbsp; &nbsp;<ul style="list-style-type:disc;"><li>You do not need access to funds for the&nbsp;foreseeable&nbsp;future (excluding using the funds to buy a bigger house). &nbsp;</li><li>You do not have any debts that are charging you a higher interest rate than your mortgage, without an overpayment charge. &nbsp; &nbsp;</li><li>You have an emergency fund. &nbsp; &nbsp;</li><li>Interest rates offered on savings accounts are lower than your current mortgage interest rate.&nbsp; &nbsp;</li><li>You are not intending to overpay by more than your&nbsp;annual overpayment allowance. &nbsp;</li></ul> It is always recommended that you speak to a mortgage professional as everyone's circumstances are different, and most mortgages will have different terms and conditions.&nbsp; So, even if you think that you would like to make an overpayment, it is always best to <a href="https://www.aventur.co.uk/contact">speak to a mortgage professional</a> first to ensure that you’re not putting yourself at financial risk.<hr>*This article does not constitute regulated financial advice. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

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