Five important announcements that could affect your finances

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The contactless payment limit is set to increase to £ 100

Contactless payment is a very practical way of paying in a Covid-proof manner – and it also shortens the time required at the checkout.

However, with a current limit of £ 45, it is only available for smaller purchases. Some people still need to enter their grocery store PIN or fill their car with fuel.

So it was welcome news for many when Chancellor Rishi Sunak announced that the only contactless limit for credit and debit cards would increase to £ 100 and cumulative contactless payments to £ 300 – after which customers would have to enter their PIN.

However, not everyone is happy about the change, which is slated to roll out later this year. Some fear that this could lead to an increase in scammers taking advantage of the opportunity to raise large amounts of money.

Rachel Springall, Financial Specialist at Moneyfacts.co.uk, said: “This change can create a divide between consumers. Some are celebrating the change while others may now be concerned about overspending or fraud.

“It is advisable that customers keep a close eye on where their money is going and know when to use their PIN.”

She reminded consumers that when shopping with a credit card they are protected under Section 75 of the Consumer Credit Act for payments of £ 100 or more.

“If buyers are struggling to repay their balance, they should find a decent interest-free credit card to have more breathing room to pay off the debt,” she added.

Stamp duty vacation extension

Have you considered buying a home but the stamp duty deadline, which ends March 31, has been postponed? Perhaps you have gone through a real estate transaction and fear that you may not benefit from the tax break?

Well, there was some good news for current or potential household moving companies when Rishi Sunak announced that he would be extending his stamp duty leave until the end of June. This means that there is no surcharge for property purchases up to a value of £ 500,000 up to that point.

After that time, the tax exemption will only apply until September 30, 2021 for up to £ 250,000 of the purchase price.

There were major concerns that an abrupt end to the “vacation” that revitalized the property market after a major slump during the initial lockdown would lead to a “cliff edge” scenario in which thousands of people would miss out on the tax break.

Experts have welcomed the extension and the tapering end to the end of September. Others fear that this will further increase property prices as buyer interest drives demand, thereby driving first-time buyers out of the market.

Martijn van der Heijden, CFO at the mortgage broker Habitohad some advice. He said, “If you want to buy before stamp duty hits its pre-covid rate again on October 1st, think carefully about your budget.

“If you missed the new stamp duty deadline and had to pay the full tax amount, could you still afford it? If you can set aside the extra cash just in case, there is probably no reason not to move on.

“Otherwise, you may want to wait or adjust your home budget to account for the possibility of missing the deadline.”

Assistance for mortgage borrowers with 5% deposits

An added bonus for anyone looking to take advantage of stamp duty vacation but unable to find the 10% minimum deposit required to take out a mortgage was the announcement of a 95% loan program.

The government guarantees borrowers issued by lenders mortgages that only require a 5% security deposit on a property.

This applies to homes up to £ 600,000 in value and applies to both first-time buyers and all other borrowers. In addition, the loan is granted for every home – not just new buildings.

These 95% mortgages will be available from some of the UK’s largest lenders – including HSBC, Santander and Barclays – starting next month.

Prime Minister Boris Johnson promised to include such a program in his election manifesto as early as December 2019. This week’s announcement proved that the government had kept its promise to “convert generation rent into generation purchase”.

Siobhan Holbrook, founder of broker Mortgage Light, said the program’s announcement added even more confidence to the market, which is good news for buyers and will help more first-time buyers onto the property ladder.

But she asked people to do their homework. “There are already a number of programs and options available to the people – like the government’s purchase aid system or shared ownership,” she added.

“We will always consider all of these programs to help our customers find the best deal that suits their personal circumstances. We always recommend that people research their options and speak to a financial advisor or broker for advice. “

NS & I saves “Green Bonds”

Ethical investing has become increasingly popular in recent years. Now Rishi Sunak is giving people the opportunity to grow their fortunes by investing their money in projects that will help advance the UK’s net zero economy and combat climate change.

The new green bonds are provided by NS&I, which Rachel Springall of Moneyfacts calls a “Trusted Brand”. As such, she expects the bonds to prove popular.

“It wouldn’t be too surprising if these bonds sped up sharply in the summer, especially as interest rates are at record lows and savers are considering other ways to invest their money,” she said.

“There are already some ‘green bond’ alternatives for savers, including deals by Gatehouse Bank and other austerity measures with ethical providers such as Charity Bank, Ecology Building Society, Tandem Bank and Triodos Bank.”

Life sentence ISA

Not all of the Chancellor’s announcements were welcomed. Sunak’s decision to reintroduce the penalty for withdrawing lifelong ISAs has been described as “disappointing”.

Lifetime ISAs (LISAs) are tax-free savings accounts that first-time buyers or savers can use to put away money, earn interest, and receive a 25% bonus from the government.

However, from the start of the new tax year, savers will pay a 25% penalty if they withdraw the money early – either before buying a property or before retiring. Last year the penalty was reduced to 20%.

Springall said: “It is disappointing that the penalty for lifetime ISAs will return to 25% from the new tax year, at a time when consumers may still be struggling and need emergency access to funds.

“All savers considering a LISA should review full terms and conditions before entering into an agreement to ensure they are eligible for the 25% government bonus.”



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