Can You Add Stamp Duty to Your Mortgage?

Can Stamp Duty be Added to Mortgage?

Buying a property involves more than just the purchase price. Alongside your deposit and mortgage, buyers also need to budget for legal fees, survey costs and Stamp Duty Land Tax (SDLT).  

One of the most common questions buyers ask is whether SDLT can be added to their mortgage rather than paid separately upfront. 

The short answer is: In practical terms, yes but not in the way many buyers assume. 

You cannot usually “add” stamp duty to a mortgage as a separate item or delay payment to HMRC. SDLT still needs to be paid shortly after completion. However, some buyers effectively fund SDLT indirectly by borrowing more overall and using less of their savings as a deposit, provided the lender agrees and affordability criteria are met. 

At Starck Uberoi Solicitors, we regularly advise buyers, investors, first-time buyers and limited company purchasers on SDLT and conveyancing costs. We can calculate the SDLT payable, submit the SDLT return and guide you through the conveyancing transaction from instruction to completion. You can find our SDLT calculators here.  

What Is Stamp Duty Land Tax? 

Stamp Duty Land Tax is a tax payable when you buy land or property in England or Northern Ireland. Different property tax regimes apply in Wales and Scotland. 

For residential property purchases in England, SDLT depends on factors including: 

• the purchase price;  

• whether you qualify for first-time buyer stamp duty;  

• whether you already own another property;  

• whether the property is residential, non-residential or mixed-use;  

• whether you are buying personally or buying property through a company;  

• whether you are non UK resident for SDLT purposes. 

The SDLT return must usually be filed, and the tax paid, within 14 days after completion. 

In most conveyancing transactions, your solicitor calculates the SDLT, files the SDLT return and pays HMRC using funds provided by you. 

You can use our SDLT Calculator to estimate the tax payable before committing to a purchase. Buyers purchasing additional properties may also find our guide on the 3% SDLT surcharge helpful. 

SDLT can be complex where the transaction involves additional properties, company purchases, mixed-use property, non-resident buyers, linked transactions or reliefs. In those cases, the SDLT position should be reviewed carefully before exchange. 

Can Stamp Duty Be Added to a Mortgage? 

Strictly speaking, stamp duty is not “added” to the mortgage as a separate tax item. Your lender does not usually pay HMRC directly for your SDLT. 

Instead, the practical position is this: 

If your lender agrees to lend a larger amount, and the borrowing still falls within the lender’s affordability and loan-to-value requirements, you may be able to structure the transaction so that you retain enough cash to pay SDLT and other purchase costs. 

For example, if you originally intended to use all of your savings as a deposit, you may instead contribute a slightly smaller deposit and increase the mortgage borrowing, provided the lender agrees. 

However, this is entirely subject to lender approval.  

Can Someone Gift You Money to Pay SDLT? 

Yes, in many cases a family member or another third party can gift you money to help pay SDLT or other purchase costs. However, SDLT remains the buyer’s tax liability, even if the money used to pay it has been gifted by someone else. The gifted funds must be available in time for completion, as the SDLT return and payment are usually due to HMRC within 14 days after completion. 

If you are using gifted funds, this should be disclosed early to your solicitor, broker and lender. Most lenders will want to know where the money is coming from and may require a signed gifted deposit letter confirming that the money is a genuine gift, is not repayable, and does not give the donor any ownership rights or interest in the property. Your solicitor will also need to carry out source of funds and anti-money laundering checks on the gifted money and, in some cases, on the person providing it. 

It is important not to leave this until just before exchange. If the lender has not approved the gifted funds, or if source of funds checks have not been completed, this can delay exchange or completion. At Starck Uberoi Solicitors, we can guide you through the evidence required, liaise with your lender or broker where needed, and ensure the gifted funds are properly dealt with as part of the conveyancing process. 

Can You Borrow 100% of the Purchase Price and SDLT? 

Usually, no. 

Most lenders will not lend more than the property value simply because SDLT is payable. Mortgage lending is generally capped by the lender’s loan-to-value limits and affordability criteria. 

In practice, buyers who “add Stamp Duty to the mortgage” are usually reducing the amount contributed as a deposit and borrowing slightly more instead. 

For example: 

• a buyer with £80,000 in savings purchasing a £400,000 property may initially plan to contribute the full £80,000 as a 20% deposit;  
• if SDLT and other costs total £15,000, they may instead contribute a smaller deposit and retain some savings to cover those costs;  
• the mortgage borrowing would therefore increase, subject to lender approval.  

The lender will typically consider: 

• affordability and income;  

• the property value;  

• the loan-to-value ratio;  

• your credit profile;  

• the property type;  

• whether the purchase is residential, buy-to-let or through a company.  

The important point is that SDLT still needs to be paid after completion. Borrowing more may assist with cash flow, but it does not remove the SDLT liability. 

Why You Should Confirm SDLT Before Exchange 

You should never assume that Stamp Duty can be funded through increased borrowing unless this has been agreed with your broker or lender before exchange of contracts. 

If your mortgage offer is based on a specific loan amount, your solicitor cannot simply increase the borrowing shortly before completion. Any increase usually requires lender approval and, in some cases, a revised mortgage offer. 

If you are unsure whether your mortgage can be structured to leave enough funds available for SDLT, you should raise this with your broker or lender as early as possible. At Starck Uberoi Solicitors, we can work alongside your broker during the conveyancing process and connect clients with recommended mortgage brokers who can discuss lending options before exchange. 

This matters because once contracts are exchanged, you are legally committed to complete. If you later discover that you cannot fund the SDLT or other completion costs, the consequences can be serious. 

Before exchange, your solicitor will usually need to confirm that sufficient funds are available for: 

• the deposit;  

• the balance of the purchase price;  

• SDLT;  

• legal fees and disbursements;  

• Land Registry fees;  

• any apportionments, such as service charges or ground rent.  

We provide clients with clear completion statements so they understand exactly what is due and when. 

Will Borrowing More Increase the Overall Cost? 

Generally speaking, yes. 

If you borrow more to preserve cash for SDLT, you will normally pay interest on that additional borrowing over the life of the mortgage. 

For example, borrowing an additional £10,000 over a 25-year mortgage term may result in repayments significantly exceeding the original £10,000 once interest is included. 

Increasing the borrowing may also affect: 

• your monthly mortgage payments;  

• the available interest rate;  

• the loan-to-value band;  

• lender affordability calculations;  

• the size of deposit required.  

A broker can help assess whether increasing the borrowing is both possible and commercially sensible. 

Can First-Time Buyers Add SDLT to a Mortgage? 

First-time buyers may qualify for stamp duty relief which can reduce or eliminate SDLT on qualifying purchases. 

However, where SDLT is still payable, the same principles apply. The tax cannot simply be deferred because the buyer is a first-time buyer. Any increase in borrowing must still be approved by the lender and remain within affordability requirements. 

First-time buyers should calculate SDLT early so that the total purchase costs are fully understood before making an offer. 

What About Second Homes and Buy-to-Let Purchases? 

The same general funding principles may apply to second homes SDLT and Buy-to-Let Stamp Duty. However, SDLT is often significantly higher because the 3% higher rates for additional dwellings may apply. 

This can substantially increase the amount required on completion. 

For example, buyers purchasing an additional residential property will often pay SDLT at the higher rates unless an exception applies, such as replacing a main residence. 

If you are buying a second home or investment property, early SDLT advice is particularly important to avoid unexpected liabilities. 

Can Limited Company Buyers Fund SDLT Through Borrowing? 

Limited company and SPV buyers commonly use specialist buy-to-let mortgage products. Whether the company can borrow enough to preserve funds for limited company SDLT depends entirely on the lender’s criteria and the terms of the mortgage offer. 

Company purchases can also involve more complex SDLT considerations because higher rates frequently apply. 

We regularly assist buyers, investors, first-time buyers and limited company purchasers with SDLT calculations, SDLT returns and conveyancing costs. 

Can SDLT Be Paid Later? 

Usually, no. 

The SDLT return and payment are generally due within 14 days after completion. Late payment can result in penalties and interest from HMRC. 

For that reason, SDLT funding should always be planned before exchange rather than left until completion. 

Common Mistakes Buyers Make 

One of the most common mistakes is assuming that the mortgage offer covers all purchase costs. In reality, buyers remain responsible for SDLT, legal fees and other completion expenses. 

Another common issue is calculating SDLT too late in the transaction. SDLT can materially affect affordability, particularly for: 

• second homes;  

• buy-to-let properties;  

• limited company purchases;  

• non-resident buyers;  

• mixed-use transactions.  

Buyers also sometimes assume that if the lender is advancing enough funds, the solicitor can simply use the mortgage monies to pay SDLT. In practice, the solicitor must comply with lender instructions and properly account for all completion funds 

How Starck Uberoi Solicitors Can Help 

At Starck Uberoi, our conveyancing team helps clients understand the full legal and financial requirements of a purchase before exchange and completion. 

We regularly assist with residential sales and purchases, remortgages and refinancing, buy-to-let transactions, second home purchases, limited company and SPV conveyancing, bridging finance matters, transfers of equity, Help to Buy redemptions, and both leasehold and freehold property transactions.  

The important point is to calculate SDLT early, confirm affordability with your broker or lender, and ensure the funding position is clear before exchange of contracts. 

We can calculate SDLT, prepare and submit the SDLT return, liaise with lenders and brokers, and provide a clear completion statement setting out the funds required for completion. 

If you are unsure whether SDLT can realistically be funded as part of your overall mortgage arrangements, we can work alongside your broker to ensure the position is clear before you become legally committed. 

To discuss your purchase or request a conveyancing quotation, contact Starck Uberoi Solicitors by email at solicitor@starckuberoi.co.uk or call 020 8840 6640. 

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