Can I Add Stamp Duty to My Mortgage? 

You can often add Stamp Duty to your mortgage, but it’s a decision that requires careful calculation. Essentially, you’re borrowing more money to pay a tax, which means paying interest on that tax for decades. 

The threshold check 

As a first-time buyer, you only pay Stamp Duty if your home costs more than £300,000. 

If your property is under £300,000, you owe nothing, so there’s nothing to add. If it’s between £300,001 and £500,000, you pay 5% on the portion above £300,000. If it’s over £500,000, you pay standard rates, as first-time buyer relief no longer applies. 

For a full breakdown of what you might owe, see our guide on what to save for besides a deposit. 

The LTV hurdle 

The biggest obstacle is your Loan-to-Value (LTV) ratio. Most lenders won’t let your total debt (house price plus Stamp Duty) exceed their maximum LTV limit (usually 95%). 

If you only have a 5% deposit, you almost certainly can’t add Stamp Duty to your mortgage, as it would push you into territory that lenders won’t accept. You generally need at least a 10% or 15% deposit to have the room to roll the tax into the loan. 

The long-term cost 

Borrowing an extra £5,000 to cover Stamp Duty might only add around £25 to your monthly payment. However, over a 30-year term at current rates, you could end up paying back over £9,000 in total. 

Affordability and maximum borrowing 

Lenders will reassess your application based on the higher loan amount. If you’re already using a 6x salary scheme or have high childcare costs, adding even a few thousand pounds for Stamp Duty could push you over your borrowing limit and lead to a declined application. 

Next steps 

Calculating your total completion funds is a vital part of the legal process. At Setfords, our residential property solicitors provide a clear breakdown of exactly how much Stamp Duty you owe and work with your lender to ensure your completion statement is accurate. 

Get your free conveyancing quote today