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The ‘Step Up’ mortgage product offered by the Coventry Building Society has been withdrawn, because borrowers may be hit by the 3% Stamp Duty surcharge on second homes.
The Step Up product had allowed parent’s additional disposable income to be added to First Time Buyers affordability calculations by being a party to the loan application and hence on the title deeds as well. Thus this tax on landlords would effectively need to be levied on these purchases as technically at least one of the owners would be buying a second home.
A Coventry spokesman said “the changes to stamp duty have had an impact on the support we offered First Time Buyers through our Step Up facility. We are looking at other ways that we can help families.”
Stamp duty for the purchase of your only property starts at 2% from £125,000 to £250,000 and then from £250,000 to £925,000 it is 5%.
However for second property purchases the tax starts at a lower point and is surcharged by 3%:
Therefore using this product the Stamp Duty for a First Time Buyer on a £150,000 purchase might have increased from £500 to £5000 a staggering 1000%.
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