Can I add stamp duty to my mortgage? 

Mortgage expert David Hollingworth answers a reader’s question on the option of adding stamp duty to a mortgage loan. 

Q. Can I add stamp duty to my mortgage? 

A. When you are buying a new home it makes sense to run through all the numbers to get your budget straight. That will clearly require you to think about how much you may have to put down as a deposit, which in turn will help you decide what level of mortgage borrowing you may need.  

In trying to break that budget down it’s really important that you also cover the costs that comes with buying and selling a property.  That could include the cost of the estate agent, survey and legal fees as well as removal costs.   

One of the of the potentially biggest costs you could face will be stamp duty so that is vital to add into your costings. You should also look to build in something of a cash buffer rather than plough every last penny into the deposit, so that you can cope with any unforeseen costs once you move in. 

The stamp duty bill will effectively reduce the amount of savings or equity from your current home that you can devote to the deposit.  If you add the amount of money needed for stamp duty to your mortgage, the knock-on effect is that you will need to borrow more on the mortgage in order to leave enough money to cover the stamp duty bill and any other costs.   

As always, to be able to borrow more the lender will need to see that the borrowing is affordable.  Taking advice will help you get the best lender and deal for your specific requirements, accounting not only for the rates but also the affordability criteria. 

David Hollingworth is Associate Director of Communications for L&C Mortgages, the UK’s leading fee-free mortgage broker offering advice to borrowers from across the mortgage market. David is regularly called on to provide commentary on the mortgage market by the national and trade press as well as broadcast media. This ranges from giving opinion on new product developments and the pros and cons for consumers, through to providing a wider perspective on topical market issues, trends and initiatives.  

Photo credits: Pexels