Updated: December 16, 2021

Can a Mortgage Cover Stamp Duty?

Can you add stamp duty onto your mortgage? Our in-depth guide talks you through how to do this, and all of the considerations you need to be aware of.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: December 16, 2021

The process of applying for a mortgage to buy a property can be tricky and stamp duty is another piece of the puzzle to figure out. It is possible to add the amount you need to pay for stamp duty onto your mortgage but is that the best thing to do in the long run?

By following this guide you’ll have a better understanding of what stamp duty is, how much it will cost on the property you’re looking to buy and whether adding it to your mortgage is the right option for you.

What is stamp duty?

Stamp Duty Land Tax, as it’s officially known, is payable when you’re buying a property or a piece of land over a particular value. It was brought into effect in 1684 with the original intent of raising additional funds for the government. It’s been so successful in doing exactly that across many European countries that it’s still around today.

In the United Kingdom, it has to be paid to HMRC within 14 days of completion of your purchase.

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How much does it cost?

How much to pay and who has to pay differs depending on a few different factors:

1) Whereabouts in the UK you’re looking to buy

2) Whether you’re a first-time buyer

3) How much the land or property is worth

For example, first time buyers in England and Northern Ireland buying a property less than £301,000 are exempt from having to pay it all. If you’re not a first-time buyer and purchase a residential property for less than £125,000 or non-residential land or property for less than £150,000 you also get a free pass.

The same applies if you’re opting to buy a caravan, mobile home or a house boat. Anything outside that and you’ll be paying Stamp Duty – although there are various breaks and deductions that could apply.

Generally though, Stamp Duty starts at 2% on anything valued at over £125,000 and can go as high as 15%, depending on which value band the property or land you’re buying falls into. If it’s a second property you’re purchasing, the rates are slightly higher.

How much it costs in Scotland and Wales

In Scotland, things are slightly different. Stamp duty here is called Land and Buildings Transaction Tax and the percentages tend to be a little higher for properties over £325,000. And in Wales, what’s called the Land Transaction Tax is slightly different again so it’s worth connecting with an experienced local broker who can help you calculate exactly what you have to pay depending on your location and individual circumstances.

How do you pay?

This is done through HMRC in what’s called a stamp duty return, something a broker can help you submit. It must be paid within 14 days of sale completion and even if you’re lucky enough not to have to pay anything, you must submit the paperwork saying so.

When it comes to finding the money you need to pay the stamp duty, there are a few different options:

Option 1 – Have the money all ready and put aside to pay when the property purchase is completed. So, if you’re NOT a first-time buyer in England and you buy a property worth £250,000 you’ll need your deposit plus an additional £2,500 for stamp duty.

Option 2 – Take the money needed for stamp duty from your deposit and seek additional funding for your mortgage with less deposit.

If option 2 is the route you think is right for you, here’s how to go about doing it.

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How to add it to a mortgage

If you want to add the stamp duty payment to your mortgage, in essence what you’ll be doing is reducing the size of your deposit so you have enough cash to send it as one payment to HMRC.

So, what you need to do is find a lender who will accept a lower deposit. There’s a few steps you can take in order to improve your chances of success. This is how we’d recommend you do it.

Step 1.
Step 2.
Step 3.

Book in for a chat with an experienced mortgage broker. This is where we can help. Using our unique broker-matching service, we can match you to a broker that can identify lenders who can offer lower deposit terms and guide you through the application process from start to finish.

If you get in touch we can arrange for an expert to contact you straight away.

Find out exactly what you need to pay. Your broker will be able to calculate this. Then they’ll work with you on getting all the documents together that a lender will need for your mortgage and what HMRC will need for the stamp duty payment.

Find a lender who will accommodate this. Not all lenders are a fan of adding stamp duty on top of your mortgage but to save you sifting through numerous sites to find one, your broker will already have this information. They’ll then coach you through the process of applying to that lender.

Is it advisable to add stamp duty to a mortgage?

Whether or not adding stamp duty to a mortgage is advisable depends entirely on your personal circumstances.

The plus side of adding it means you don’t have to have the money upfront and you don’t have to eat into your deposit. You can pay the money back over time.

The downside of that is the amount of money you’re borrowing is ultimately a bigger amount. This means it will take longer to pay back and could impact the type of mortgage you’re able to get.

The biggest drawback of putting stamp duty onto your mortgage is that you’d be paying more for it overall, as you’d be charged interest on this charge over the course of 25 years (or however long your mortgage term length is). With this in mind, most experts only recommend putting stamp duty onto the mortgage if there are no other alternatives.

It’s not the ideal situation but if it’s the option that works for you, then a good broker can help you work out all the details.

Get matched with an experienced mortgage broker

Whether you’re a first time buyer or multi-property owner, based in England, Scotland, Wales or Northern Ireland, we can pair you with a mortgage broker that has the best experience for your needs. The advisors we work with help people find the best solution to their stamp duty bills every day, and they’re best positioned to guide you through the process.

Call 0808 189 0463 or make an enquiry and we’ll set up a fee, no-obligation chat between you and your ideal mortgage broker today.


Can I pay stamp duty in installments?

Afraid not. It’s a one time lump payment that has to be made.

Can I pay on my credit card?

You can pay from a debit card but not a credit card.

I’ve heard of a stamp duty refund. How would I know if I’m entitled to that?

People can be eligible for a stamp duty refund if they already owned a home at the time of buying an additional piece of land or property but then sold the first property within three years of purchasing the second.

This is because stamp duty is higher when buying a second property but if you drop back down to one in that timeframe, you can claim the difference of what it would have cost had you just had one property.

What’s the stamp duty holiday?

This was a measure brought in by the UK Government amid the COVID-19 pandemic. Designed to help the economy by stimulating the housing market, stamp duty was suspended for over a year for properties under £500,000. This has since resumed and so stamp duty now applies.

What happens if I don’t pay my stamp duty on time?

If you miss the 14 day deadline following completion of your sale, you could face a fine.

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We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects. Ask us a question and we'll get the best expert to help.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

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*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

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