When budgeting for a new property, there’s always something that people forget to include in their sums. Sometimes it’s the cost of moving, sometimes it’s life insurance, and sometimes it’s protection cover. While these are all extremely important, there’s still one thing that people often slip people’s mind when thinking about how much they need to borrow: Stamp Duty.

While you might think you’re familiar with how this tax works, keep in mind that the Chancellor of the Exchequer made some substantial changes to stamp duty rates back in 2014, so if you haven’t gotten a mortgage since then, things may be different from how you remember.

Like many taxes, it’s unavoidable, so it’s crucial that you factor it into your budget calculations. If you don’t, you could find yourself in a whole heap of trouble when it comes to trying to purchase that dream property.

Unsure of how Stamp Duty rates work? Read on to find out more

What is Stamp Duty?

If you’ve never dealt with mortgages before, you might have never come across the term “Stamp Duty Land Tax,” before. Don’t worry. It’s isn’t difficult to understand.

The tax as we know it today was first introduced in 2003 and applies to both freehold and leasehold properties in England and Northern Ireland. Designed to cover the cost of all the legal documents for the purchase, paying it proves that the ownership of the land has changed from the previous occupant to you. If you don’t pay this tax, then legally you will not be able to officially purchase the property.

The tax still applies if you’re getting a mortgage or buying your property outright.

Do I Have Pay Stamp Duty?

Like most taxes, Stamp Duty rates don’t apply to everyone, so make sure you are aware if you fit the criteria to be charged.

The first significant group of people who won’t be affected are first-time buyers. As of November 2017, Stamp Duty changed so that all first-time buyers purchasing a property under £300,000 were exempt from paying it. However, if you aren’t a first-time buyer, you still won’t be taxed if you’re purchasing a property under £125,000.

Are you thinking about purchasing in Scotland or Wales? Congratulations, you don’t have to pay Stamp Duty either. However, don’t put away the cheque book just yet as you’ll instead be liable for a charge called the Land and Buildings Transaction Tax in Scotland or the Land Transaction Tax in Wales, both of which apply to all purchases over £145,000.

The tax also doesn’t apply to mobile residences such as houseboats or caravans.

In summary, if you:

• Aren’t a first-time buyer
• Aren’t buying a property in Scotland or Wales
• Are buying a property over £125,000
• Aren’t buying a house that floats or that is on wheels

Then you will be paying some amount of Stamp Duty, with the amount depending on the value of your property.

How is it Paid?

Like many other taxes, Stamp Duty Rates vary wildly depending on the circumstances.

As mentioned earlier, how much you’ll pay will depend on the value of the property that you’re buying. There are several different rate bands, each one meaning that you’ll pay a certain percentage of the property’s value in Stamp Duty:

• Up to £125,000: 0%
• £125,001-£250,000: 2%
• £250,001-£925,000: 5%
• £925,001-£1.5 million: 10%
• Over £1.5 million: 12%

There are circumstances where you may not end up paying this amount. For example, if the price of your property is only slightly over one of the Stamp Duty rate bands, then the estate agent or the seller may accept a lower amount. Also, if you divorce your partner, there is no Stamp Duty to pay if you give a portion of your property’s value to them.

To pay it, you will have to submit a Stamp Duty Land Tax return and send off what you owe within 30 days of completing the purchase. Keep in mind that Stamp Duty for a residential leasehold property will be charged differently.

Joint Ownership

If you’re jointly buying a property, then both parties will need to meet the criteria to be exempt from Stamp Duty.

While unmarried people can still be eligible for a reduction in the tax, it will only apply if there’s only one person named on the mortgage deed and that they’re a first-time buyer. Be aware that the maximum saving you can make in this scenario is £5,000 and with only one name on the mortgage application, it will be solely judged on their income which could limit your choices. Also, if you aren’t married and you split up, legally only one of you will have a claim on the property. While it might not be something you want to think about, it’s still a possibility you should keep in mind when it comes to such a large purchase.

Stamp Duty on Second Homes

If you purchase a second home, the tax still applies, and you will have to pay an extra 3% on top of what it would usually be.

If you’re planning on moving, make sure that you’re careful with dates and transactions. If you buy a new principal residence while not having sold your old one, then you will have to pay the higher Stamp Duty rates because you’ll technically be owning two properties. However, if this happens to you, you can be liable for a refund of the extra tax if you sell your previous house within three years of moving into your new home.

Stamp Duty is unavoidable for many, but as long as you’re aware of your circumstances and the amount you’ll be paying for your property, working out how much you’ll owe isn’t too difficult. Plus, there are plenty of free mortgage calculators online that are also capable of working out your Stamp Duty tax.

Prefab manufactured home use in the US has grown to reach revenue of $10 billion in 2018. With so many people opting for modular homes, are you missing out?

What do you do if you need modular home financing? Is financing a modular home the same as financing a traditional home? Continue reading this article to learn about getting modular home loans.

Modular Home Financing Explained

When you’re looking into financing, there are key things you need to know about the buying process. When you have all of the information you need, it is easier for you to go through the process smoothly.

Financing Is Financing

You may have heard that getting financing on your modular home is going to be more difficult than getting financing on a home that is built on-site. This simply isn’t the case.

The main difference in the home you’re purchasing and the homes built on-site is where they are built. It is true that some homes have different benefits and many people go back and forth on the topic of modular vs manufactured, but you can get financing for prefab structure.

More people are seeing the benefits of buying a prefab home, and banks are used to financing them. Here is how you can get the best results when applying for financing.

Know How Much You Can Afford

When you start looking through potential homes to see which ones are going to be the best option for you, you need to know how much you can afford. If you start looking online or in person and fall in love with a home that is out of your price point, this can lead to dissatisfaction.

When you look at homes out of your price range, you waste your time. Instead of spending time looking at homes you can’t afford, know your price range and spend your time finding the perfect home in that price range.

Think About the Location

When you purchase a modular home, you can put it anywhere you want to put it. When you’re looking at property, you should think about how close it is to town, what the view is going to be like and all of these personal things.

Other points you need to think about is how much the land you’re looking at is worth. If you want to purchase the land but the bank doesn’t think it is worth the asking price, you may set yourself up for disappointment.

Figure out how much of a loan you can get and look at how much money the land you want is actually worth.

Pre-qualified Might Not Mean What You Think

When you see that you’re pre-qualified, make sure you understand what it means and don’t take it as the amount you can use on anything you want. Pre-qualification isn’t even a true approval.

Getting pre-qualified only does a soft pull on your credit. You can pre-qualify as much as you want with as many banks as you like without hurting your credit.

Pre-qualification can help you get an idea of how much money you can qualify for, but it doesn’t always mean that you’re good to go. If you want to buy a home, you need to go through the approval process after you’ve found the home you want to buy.

Understand Higher Interest Rates Mean Big Payments

Since you have access to the internet, there are so many different lenders and options available to you. You can go onto one website and see many offers come up asking you which one you would like to take. Seeing all these offers can be exciting, but it can also be overwhelming.

When you look at some of the terms available to you, some of them could be very high-interest loans. Unless you have derogatory items on your credit or very young credit, you shouldn’t expect to pay high interest rates.

As you look at the offers that come to you, look at the APR as well as the term. A high APR and shorter term will mean a higher payment than a low APR loan with a longer term.

You need to find the sweet spot of a payment you can afford and pay the least interest as possible. If you can’t afford a big payment all months, you can simply choose to pay extra on your loan as you can so you have less interest to pay as the principal decreases.

How’s Your Credit Score?

Before you try to apply for credit, you want to get your credit score as high as possible. You may be doing things that are easy to fix and can help you get a lower interest rate if you fix them.

Are you carrying high balances on your credit cards? If you’re carrying high balances on your credit cards, this shows as high utilization on your credit cards. High utilization on your credit cards makes it look like you’re living to the max.

Look at the date your credit cards report to the credit bureaus. Whatever date they report to the credit bureaus, pay the card off or down very low a few days before the date. Don’t use the card until a couple of days after they report, so your utilization shows low.

Using and repaying your cards actually helps to build your credit, but if you’re repaying them and reusing them at the wrong times, it won’t help you.

Another thing that hurts your credit is late payments. Set up automatic payments on everything that allows you to set up automatic payments and keep the on-time payments high.

Need More Information on Buying Property?

Now that you understand modular home financing, you may want to continue your education on the topic. Knowing as much as possible before you buy is smart.

Your home is a long-lasting investment, and you shouldn’t have to worry about the buying process. Continue your education by reading our articles on buying property today.

For decades prospective homeowners have looked to mortgage brokers to help them to find the best deal on a mortgage product and ensure that they find a product that’s right for their needs.

Not only are they trusted in helping to set up an initial mortgage, they are also relied upon to keep changing the mortgage product over the years as the needs of homeowners change.

Yet, while mortgage brokers are trusted all over the world by first time buyers and veteran homeowners alike… Do we really need them? And are they getting us the fair deal we trust them to?

Peeking behind the curtain

In recent years we’ve had a peek behind the curtain at mortgage brokering practices. And said insights have often portrayed mortgage brokers in a less than flattering light, especially when a line is drawn between the practices of mortgage brokers and the property lending bubble which precipitated the global financial crisis of 2007-2008.

Anyone who’s seen Adam McKay’s biting satire The Big Short will have seen an image of particularly greedy and shortsighted mortgage brokers lining their pockets at the expense of their clients and the greater economy.

They get big fat commissions from the banks whether their client is able to actually pay the mortgage or not so why should they acre whether their client ends up losing their home?

How mortgage brokers are remunerated

In order for us to understand whether or not it’s worth enlisting the services of a mortgage broker it’s worth looking into how they are remunerated. This is not always clear, unlike in the case of a real estate agent whose commission is fully disclosed.

Mortgage brokers are remunerated in a number of different ways. In some cases they are paid on a commission only basis by the lender. Some will charge a fee to the borrower and some do both plus an additional fixed fee.

Why does it matter?

The way in which mortgage brokers are remunerated goes a long way to explaining their practices (it certainly did prior to the financial crisis).

If they are paid hefty commissions by one bank while another pays them a more modest commission they’re more likely to be inclined to sell a product by the bank that pays them more regardless of whether or not their product is right for the needs of the customer.

In this light how can we be sure that they are going to act in our best interests rather than their own.

Property Investors

For investors this may not matter as much. They will be inclined to use a mortgage broker to help them to borrow as much as possible because their rental income will be more than an owner occupier’s mortgage payments would be on the same property.

Owner Occupiers

For owner occupiers who will only ever buy a handful of properties in their lives at the most it’s a slightly different kettle of fish. Owner occupiers need to think about how their financial circumstances will change and how their mortgage product can help them to maintain a balanced household budget without their mortgage payments subsuming all of their income.

Are Lenders Listening?

It’s worth keeping in mind that banks are, slowly but surely changing. It’s taken over a decade for increased regulation of global financial services industries to kick in (at least in ways that are meaningful to most of us). Suffice to say, banks are certainly less cavalier when it comes to whom they lend to and how much they lend.

They are also growing increasingly wary of paying out fat commissions for mortgage brokers.

This means that more and more mortgage brokers are charging a flat fee to their customers rather than relying on heavy commissions from banks.

This is potentially a double edged sword for Australian buyers. They will have to face greater upfront costs, but in return they have greater assurances that the interests of the broker will be more aligned with the interests of the buyer.

The pros and cons of using a mortgage broker

So, as we can see, the question of whether or not we need mortgage brokers is fairly nuanced and depends largely on our circumstances.

Pros

One obvious pro is the fact that hiring a mortgage broker can take a lot of the legwork out of searching through the myriad products on the market.

Buyers will also be more likely to borrow more if they go through a mortgage broker rather than going directly to the lender. Once again, this is a double edged sword.

It’s understandable that owner occupiers may be tempted to go for a home at the upper end of their budget.

However, they may find themselves facing mortgage payments that become untenable if they lose their jobs, take a pay cut or face a long period of sparse work if they are self-employed.

Cons

In terms of cons, unless they are completely clear and transparent in how they are paid, you cannot be sure that they are acting in your best interests. If they are paid on commission by a bank they will be more inclined to push that bank’s products rather than the products which are best for you.

Keep in mind that the larger a mortgage you get, the more a mortgage broker could get paid. Don’t let a broker push you to borrow more than you feel comfortable with.

The bottom line

The decision of whether to go through a mortgage broker or apply directly through the lender depends on your circumstances; the kind of property you have your eye on and whether you can live within your means if you buy at the top end of your budget.

If your broker is transparent about how they are paid and has earned your trust, there’s a good chance that they can be trusted to act in your best interests.

We love to dream big, but when our dreams don’t match our bank accounts, it is time to become financially creative and look for solutions. One way to get more money fast is to use your home as collateral and get a second mortgage, also known as a “Home Equity Loan”.

The name also gives a clue about how this arrangement works, namely by tapping into the percentage of your home you’ve already paid. You are actually getting credit for the part covered by the initial down payment, and the monthly installment paid so far.

Therefore, you can’t ask for this type of credit immediately after buying a house. You have to wait a bit so that your asset gains some value either by making payments or due to an upswing of the market.

Why would you need a second mortgage?

Getting a home equity loan is usually a way to access a considerable amount of money, typically necessary to fulfill a bigger goal. Think about investing more in real estate, getting an education or covering important medical bills. Some people get second mortgages to start their business, as a way to get capital at a lower rate than they would get otherwise.

No matter what are your motivations, keep in mind that you are putting your home on the line. Since this is a secured loan and you use your house as collateral, you could lose it if you are unable to make the payments on time.

Try to use this as a financing method if you plan to take the money and invest them in something with an excellent potential to generate even more money. For example, you could renovate an attic or the basement and rent it on Airbnb.

What are the pros of a home equity loan?

If you qualify for a second mortgage, there are plenty of reasons to choose this as a solution to grow your dreams. Here are the top three.

Lump sum

The first advantage of this type of loan is that you get a significant amount fast. Depending on your specific situation, you could get up to 80-85% combined debt ratio of your home’s value. Be careful that this is the total debt rate you can get, considering all your other loans, like your first mortgage, car loan, student loans, and any other credits.

Better interest rates

Since interest is directly related to risk, and this is a low-risk loan, you can get interest rates which are a few times lower than those of credit cards or personal loans. When you guarantee with your home which holds enough value and it is usually easy to sell the bank doesn’t think it over exposes itself.

Tax incentives

In some situations, you would get a deduction for the interest paid on your second mortgage. There are numerous boxes to tick to get such a fiscal facility, so by no means, should this be a motivation to get a second mortgage. In the best case, this is a nice to have and good to know about. Right now, the fiscal regulation limits the application of this law to loans taken for substantial home improvements.

Fixed interest

These types of loans always come with a fixed interest rate. There are no surprises related to how much you have to pay over the years. This is a comforting thought and helps you manage your budget better.
What should you be aware of when taking a second mortgage?
Of course, getting into more debt can’t be all good. You are exposing yourself and your family to high risks. The most important of these is the foreclosure possibility.

Debt ratio

Even if the credit institution or bank allows you to accumulate up to 80% or a bit more debt, you have to take only as much as you need. Think about the financial pressure you are putting on your budget every month for the next decades. Also, keep in mind that unemployment, salary cuts or medical problems happen and could impact your ability to repay the loan.

Costs

Any loan means that for the money you get upfront you pay the price in time. The most prominent cost is that of the interest. Although these rates are lower than those of credit cards, the interest rate will still be usually higher or equal to that of your first loan, because a higher debt ratio means more risk.

Conclusion

Although this should not be the first choice, a home equity loan is a solution if you need a lump sum to grow. Before signing the papers, make sure you educate yourself about all the matters by reading How a Home Equity Loan Works: The Pros and Cons from a financial advisor.

Wondering if using a mortgage broker is the right choice for you?

Getting a mortgage is one of the biggest financial decisions you’ll ever have to make. While saving money and finding deals yourself might sound like an appealing option, remember the sheer amount you’ll be borrowing. Getting a property isn’t like buying a holiday, a shed or even a car. Not only is it possibly the most expensive thing you’ll ever buy, but if you end up with a bad mortgage deal, it can be tricky to try and sort it out later.

With such a huge choice to make, it’s always a good idea to get some advice from an expert. That’s where online mortgage brokers come in.

Designed to help reduce some of the stress, these financial advisers are specialised in finding their clients the right mortgage deal while also commenting on other costs you might have to deal with during the buying process: building insurance, conveyancing, stamp duty etc.

So why should you use one? Read on to find out!

What is a Mortgage Broker?

Whether you use an online mortgage broker, or meet a physical person, they’re both there to accomplish the same goal: to find you the best mortgage deal.

They essentially act as a middle man between you and the lender, saving you the legwork of chasing down deals yourself and advising you on the best options for your situation.

A bank or building society will often have limited mortgage products and definitely won’t let you know about any other deals out there. Not so with a mortgage broker. As this is their business, they are obliged to go through all the deals they can find and recommend you the best one, as well as explain why.

Plus, there’s always one advantage that, no matter how hard you try on your own, you probably won’t be able to match: their scope.  There are literally thousands of mortgage deals on the UK market, all different depending on your current financial/housing situation. You could spend MONTHS tracking down all the deals yourself and end up finding out that you can’t even qualify for the deal you’re searching for.

Don’t stress yourself out.

Give a mortgage broker a few details and you’ll be saving yourself a lot of time and effort in the long run.

There are a few different kinds of broker, so make sure you do your research to find out which one could be best for you.

Online Mortgage Brokers

You can do basically anything online now and finding the right mortgage is no exception.

Thanks to the digital age we now live in, plenty of businesses have essentially become 24/7, with websites not having to close for the day or take an hour for lunch. A lot of us either work odd hours or don’t have the time to get to the bank when they’re open, meaning getting an appointment can be an annoyingly long and difficult task. Not the case with an online mortgage broker.

By doing everything online, you can find mortgage deals without having to leave the comfort of your own home! (Or even your own bed if you’re more of a night owl). With an online mortgage broker, there’s an element of speed that you just can’t get with a face-to-face meeting. With a lot of mortgage calculators, it essentially functions the same way as a Google search: you’ll enter a few basic details and then you’ll be listed all the deals that you could qualify for. Perfect if you’re looking a quick summary of your potential mortgage options.

Many are also drawn to online mortgage brokers because of the cost. While the price of the service will vary from business to business, many online mortgage brokers won’t charge a fee for their initial search. This can be great if you just want an overview of deals, though many will require more details and may charge if you choose to take your application further with them.

Physical Mortgage Brokers

The internet has made so many things more accessible, but some people still prefer not to use an online mortgage broker. This is especially true for those in more complicated situations or who would prefer an actual person explaining the details to them. Luckily, physical mortgage brokers have a lot of the same perks.

Many can work around a hectic schedule, offering to call or meet you at times outside of regular business hours. While an online mortgage broker is great for those who are short on time, having an actual meeting can be a better option for those who’d like to properly discuss the deals available.

Most physical mortgage brokers will have access to the same number of mortgages as online services and will be able to move your application on immediately.

Many also prefer them because they can offer a more personalised service. With someone directly in front of you, there can be a more open dialogue, and they’ll be able to answer any questions you might have. They will also often offer to investigate other deals for you, like life insurance and stamp duty.

While they won’t be able to meet you in the middle of the night and will usually charge a fee for their services, a physical broker could be the way to go if you have a more difficult situation, are really unsure about anything, or would just prefer to talk to an actual human being about your finances.

At the end of the day, it’s up to you what kind of mortgage broker you use, or if you even use one at all! Any mortgage product will be a substantial financial commitment, so make sure you do all you can to find the best deal.

Buying a home involves a lot of big decisions, and the process can be complicated when you owe back taxes.  Having unpaid taxes won’t always keep you from being approved for a mortgage, but it does make things more difficult.

For best results, do your homework and take the proper steps to get your tax debt in order before you begin the often-complex mortgage application process.

Find Out What You Owe

You need to know exactly how big your tax debt is before you can make a plan to tackle the problem and start working on a solution. The Internal Revenue Service has tools available to help you view your tax account so you’ll know how much you owe. Avoiding the problem won’t make it go away.

If you know you’re going to owe taxes and can’t pay, be sure to file anyway because there are penalties for failure to file as well as for failure to pay. Don’t miss the deadline, as this will add to your fees. Request an extension if needed, but know that late-payment penalties will still apply.

Consider Your Options

If you need more than 120 days to pay your taxes in full, the IRS offers three options: installment agreements, delayed repayments, and “offer in compromise” (settling for less than what you owe). These plans have stipulations and drawbacks, including penalties and fees, so do your research before choosing.

These options are for individuals; find out what to do if your business owes back taxes. Tax debts can be paid with a credit card, but beware of cards with high interest rates as the IRS options are often lower.

Get Help From a Tax Professional

It’s not surprising that so many individuals and businesses owe back taxes when you consider how complex the United States tax code is. The statutes that make up Title 26 of the U.S. Code fill 2,652 pages — that doesn’t even count IRS regulations (about 9,000 more pages). A CPA or other tax professional can help you navigate these complex rules to find the best solution for your unique tax-debt issues.

Avoid Owing To Begin With

The easiest way to deal with tax debt is to make sure you won’t owe the IRS in the first place. Use a W-2 calculator to adjust your withholdings so you won’t end up with a bill at the end of the year. While getting a big refund check can be beneficial, some financial planning experts advise against withholding too much. Do your research and play with the calculator to find the best approach for your financial situation.

Like applying for a mortgage, taxes can be stressful and complicated. Unfortunately, taxes are unavoidable, so if you plan to buy a house and have tax debt, you need knowledge and a solid plan. Don’t be afraid to ask for help from a professional, and don’t avoid the problem or delay taking action. There are ways to solve your tax-debt problem.