Help to buy and porting existing mortgage

daverave7

Hello,

I have an existing offset mortgage with First Direct and am moving to a new build next month. The mortgage I hold is portable and at a very good rate but requires 25 % deposit. However, unfortunately much of my equity has been wiped out due to the decrease in house prices. I now only have around 15 % deposit for my new home which limits myself on affordable mortgages.

Q. Can I port existing (offset) mortgage and access the governments Help to buy equity loan? Or is this equity loan only available when taking out certain mortgages.

If I can port my mortgage, I'd be able to clear the equity loan in 5 years, at the same monthly payments whilst also reducing the amount owed on my mortgage. Could be worth up to £40K in saving.

kingstreet

My expectation is that lenders who are not currently registered for Firstbuy are unlikely to register for Help To Buy because shared equity business does not appeal to them.

I do not think HSBC or First Direct will accept shared equity business as it does not do so now. Neither does Abbey/Santander.

daverave7

kingstreet wrote: »

My expectation is that lenders who are not currently registered for Firstbuy are unlikely to register for Help To Buy because shared equity business does not appeal to them.

I do not think HSBC or First Direct will accept shared equity business as it does not do so now. Neither does Abbey/Santander.

That's disappointing! So I take it that only certain lenders will sign up to the "help to buy" scheme?

Can lenders refuse to accept the equity loan as a deposit, even if affordability and credit history is OK?!

kingstreet

They either choose to accept "shared equity" business, or they don't. If they don't, you have to go elsewhere.

It's not just a question of someone giving you a 20% deposit and that's the end of it. The mortgage lender has to accept there will be a second charge over the property and that after five years, interest will be payable on that second charge, which increases each year.

For example, Nationwide takes 3% of the second charge value off affordability, as an allowance for the year six and onwards interest "fee" which is payable.

There are only a couple of differences between this and Firstbuy, such as the removal of the maximum income, not restricted to FTB etc and it may therefore be a good idea for you to carry out some research on that so you get a basic grounding in the concept of "shared equity."

daverave7

Not a fan of shared equity then?

I see it as a cheap loan which I can afford along with the mortgage repayments and I would pay off the equity loan within the 5 years, leaving myself with substantially less left on my outstanding mortgage.

kingstreet

Me?

What have I said which would make you think that? I can't see anywhere I've given any kind of opinion, other than the need for research.

My firm is on the broker panel for Orbit, the HCA HomeBuy Agent for Midlands and Eastern England and a lot of what we do is Firstbuy (shared equity) and Homebuy (shared ownership).

The new scheme is going to be run by the HCA Homebuy Agents, so I expect to be very busy with it and I'll simply provide knowledge and help to anyone who needs it, as I do on here - free of charge!

Thrugelmir

daverave7 wrote: »

I see it as a cheap loan which I can afford along with the mortgage repayments and I would pay off the equity loan within the 5 years, leaving myself with substantially less left on my outstanding mortgage.

The rates on offer will factor in the "interest free" element. As to cover the overall risk of defaults in the scheme there'll be a loading to compensate.

daverave7

Thrugelmir wrote: »

The rates on offer will factor in the "interest free" element. As to cover the overall risk of defaults in the scheme there'll be a loading to compensate.

Seemed a no brainer on paper. But think I'll apply for an 85% LTV mortgage as might be cheaper and leave the loan alone.

daverave7

kingstreet wrote: »

Me?

What have I said which would make you think that? I can't see anywhere I've given any kind of opinion, other than the need for research.

My firm is on the broker panel for Orbit, the HCA HomeBuy Agent for Midlands and Eastern England and a lot of what we do is Firstbuy (shared equity) and Homebuy (shared ownership).

The new scheme is going to be run by the HCA Homebuy Agents, so I expect to be very busy with it and I'll simply provide knowledge and help to anyone who needs it, as I do on here - free of charge!

It was a question not a statement.

Cheers for the info

dimbo61

Do you now need to earn £50K to get a mortgage with First Direct ?