With the number of people looking to remortgage hitting an 18-month high, the effect of yesterday's budget on mortgages and homeowners will be of the utmost interest to many of you.
If you are looking for a contractor mortgage either a purchase or remortgage then click here to calculate how much you could borrow based on your contract rate.
We have outlined the relevant areas of the budget below for your information:
250m to boost First Time Buyers
The Chancellor has announced that profits from the bank levy will fund a new 250m shared equity scheme for first-time buyers, helping 10,000 families get onto the housing ladder. The scheme will see the buyer putting up 5% of the cost and the government and home builder would both put up 10%. The downside to this scheme is that it is limited to new build properties which makes lenders less keen to offer high LTVs.
Stamp Duty
Stamp Duty will be based on the mean value of property in a portfolio not the bulk cost for large scale purchases, which Osborne said will raise another 1bn for UK coffers.
SMI Scheme Extended
The government will extend the Support for the Mortgage Interest Scheme until 2013.
Planning Permission
George Osborne has said the government is determined to strip away the bureaucracy that surrounds the planning application process in order to speed it up and boost housing supply across the country. The government said it believes that the current planning system has held back investment and distorted how businesses compete, deterring development and growth.
Taj Kang Associate Director at Contractor Mortgages Made Easy commented:
"There is some good news for contractors in the Chancellor's budget. Extending the Shared Equity offering is a good start for first time buyer contractors, particularly those who have limited deposit funds. Relaxation of planning rules is also welcome, but as with all changes around locally governed policy, the devil will be in the detail. Whether this benefits the contractor who is looking to extend their current home rather than move remains to be seen."
Those looking for a contractor mortgage will still be able to secure an interest-only deal.
It was feared that after the regulator banned "self-cert" mortgages in 2009 that interest-only products could also be under threat.
The Financial Services Authority (FSA) has published its business plan for 2011/12 in which it clearly states that it will not ban interest-only mortgages.
The regulator proposed major reforms to the UK mortgage market which included making lenders responsible for assessing a borrower's ability to pay, and banning "self-cert" mortgages. The FSA has today confirmed that interest-only home loans represent an "appropriate" method of finance for some borrowers.
A full package of proposed MMR rules will be published in the summer.
