Mortgage borrowers with TSB can save up to £2,500 thanks to its new Stamp Duty offer.
TSB has launched a new offer where it will pay the Stamp Duty for mortgage borrowers buying a home costing up to £250,000.
Stamp Duty works on a tiered basis, with transactions between £125,000 and £250,000 attracting a 1% tax charge. So TSB’s offer could save you a £2,500 bill – no small change when you consider all the additional expenses associated with moving house. For more, read Why moving home costs £8,000.
If you buy a property for less than £125,000, there’s no Stamp Duty to pay. But if that applies to you – or even if you buy a property for more than £250,000 – there’s still help from TSB in the form of £1,000 towards your legal fees or removal costs.
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How it works
The Stamp Duty offer is open to borrowers who take out a mortgage with TSB with a loan-to-value of between 75% and 90%. The payment will be passed directly to the borrower’s conveyancer alongside the mortgage itself when the time comes to complete on the transaction.
[SPOTLIGHT]The conveyancer will then make the Stamp Duty payment on your behalf.
It’s not available on buy-to-let, shared equity or shared ownership mortgages. But you don’t have to be a first-time buyer either.
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A good way to help buyers
Offering to help cover the cost of Stamp Duty is a popular move for mortgage lenders – Halifax and Bank of Scotland, as well as TSB, have all had similar promotions earlier this year.
However, while it’s a useful helping hand at the outset of your new home, you must make sure it doesn’t cost you in the long run. There’s absolutely no point saving £1,000 in Stamp Duty costs, only to lose more than that over the course of the mortgage as you’ve gone for a less competitive deal.
With that in mind, let’s take a look at TSB’s current mortgage offering and how they compare to the rest of the market.
Let’s start with two-year fixed rate mortgages at 80% loan to value, with TSB’s best offering at the top for ease of comparison.
|
Lender |
Fixed mortgage rate |
Follow-on rate |
Fee |
Monthly repayment on 25-year £160,000 mortgage |
|
2.84% |
3.99% |
£995 |
£752.11 |
|
|
1.99% |
4.99% |
£1,295 |
£677.39 |
|
|
2.18% |
4.49% |
£1,495 |
£692.28 |
|
|
Tesco Bank |
2.29% |
4.24% |
£998 |
£700.98 |
|
2.39% |
5.69% |
£999 |
£708.96 |
Over two years, the TSB mortgage will set you back £19,045.64 including the fee. By contrast, the Norwich & Peterborough mortgage would set you back £17,552.36, though you’ll also be £2,000 worse off as a result of the Stamp Duty bill you’ll have to pay with an N&P mortgage. So in this example, TSB’s deal will leave you £500 plus better off, despite its far higher interest rate.
What about five-year fixed rate mortgages, then?
|
Lender |
Fixed mortgage rate |
Follow-on rate |
Fee |
Monthly repayment on 25-year £160,000 mortgage |
|
4.54% |
3.99% |
£995 |
£902.89 |
|
|
3.38% |
4.49% |
£1,495 |
£790.74 |
|
|
3.39% |
3.99% |
£799 |
£791.59 |
|
|
Hinckley & Rugby Building Society |
3.49% |
5.64% |
£990 |
£800.14 |
|
3.49% |
3.94% |
£999 |
£800.14 |
Over five years, and including the product fee, the TSB mortgage will set you back a total of £55,168.40. The cheapest deal from the table above actually ends up being the West Brom Building Society mortgage, which will set you back £48,294.40. Even accounting for the £2,000 saved on the Stamp Duty bill, that’s a saving of nearly £5,000 compared to the TSB offer.
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Do your research!
What the examples above demonstrate is that there is far more to working out the best mortgage for you than either plumping for the lowest rate or going for the deals that offer to pay some tax for you.
You also have a lot of decisions to make. Do you want to fix your mortgage rate or gamble with a cheaper tracker rate? And if you do fix, how long do you want to fix for? How important are low early repayment charges?
These are decisions that only you can make. Personally, I always like the safety of knowing exactly how much my mortgage bill will be each month. But I’ve been paying a premium for that security over the last five years. If I’d gone with a tracker, I’d have saved thousands.
You can compare mortgage deals with the lovemoney.com mortgage centre, and there are mortgage brokers ready to help you if you need some advice.
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This article aims to give information, not advice. Always do your own research and/or seek out advice from a regulated broker, before acting on anything contained in this article.
Your home or property may be repossessed if you do not keep up repayments on your mortgage.
More on buying and selling property:
What's happening to house prices?
Fixed rate mortgage interest rates on the rise
Stamp Duty, estate agents, legal fees: why moving home costs £8,000