Never add stamp duty to your mortgage
A mortgage seeker got in touch the other day to ask if they could add their stamp duty to their loan.
The answer is yes, provided you can persuade your mortgage lender to part with the extra cash for your lawyer to pay this bill.
But you’d be daft to do it.
On a typical £180,000 property, stamp duty is currently £1,800.
Let’s assume you’re borrowing £160,000 on a repayment basis over a traditional 25-year term at an average annual interest rate of 6 per cent.
Adding that £1,800 will cost you an additional £3,477 once you take the interest into account.
And if this increase in your loan takes you over the higher lending threshold, you could end up paying thousands more in penalties.
It would be far cheaper in the long run to borrow this cash using a low-cost personal loan – or even a cheap rate credit card.
Borrowing £1,800 from, say, Northern Rock, which charges 6.5 per cent, over two years would cost a total of just £1,921 – a saving of £1,556.
Better still, why not see if you can borrow interest-free from family or friends?
