When you’re calculating what home you can afford, don’t forget that you need to factor in Stamp Duty. There’s nothing to pay at all if you’re buying a home worth less than £125,000 but after that, what you pay depends on the cost of the property.
The system for Stamp Duty changed at the end of 2014. Before then, whatever price a property sold for would set the percentage due in Stamp Duty – and that fee would be due on the entire property value. That could mean spending just a fraction more on a home could cost thousands of pounds extra in Stamp Duty.
However, since the changed you pay a more progressive rate. So, there’s nothing to pay on the first £125,000, then 2% on the value between £125,000 and £250,000. After £250,000 there’s 5% to pay on the remainder.
As an example, if you bought a home worth £300,000 you’d pay a total of £5,000 in Stamp Duty. That’s 0% on the first £125,000; 2% for the value between £125,000 and £250,000 = £2,500; and 5% on the last £50,000, which is £2,500.