Help to buy and Halifax issues

74hotspur

Hi, recently applied for an AIP from Halifax and was declined on the new help to buy scheme. After changing broker and explaining things he asked the underwriters to look at it manually, they stated that:

Even though I have had 20% offered from hca that they still class the mortgage as 95%

The property is 500k
25k in from me
100k in from Hca/government

375k mortgage needed.

My income has been verified enough to cover this and my report is clean (3 years address history etc and settled loans, hp, credit cards etc...I returned back to uk jan 2010 after working abroad)
Halifax are still deeming this to be high risk so at a loss until other lenders sign up to the programme.
Any advise on the next step would be much appreciated.

Thrugelmir

74hotspur wrote: »

My income has been verified enough to cover this

Only a lender can judge this.

What multiple of salary would you be borrowing £475k on?

opinions4u

Gobsmacked that the state is subsidising £500k house purchases.

74hotspur

About 90k 4.5-5x annual broker said works fine, I think due to the new scheme the lender isn't too sure about it.

Goverment scheme is repayable aimed at boosting house market. They will go upto 600k purchase price. I think it's a good scheme if the lenders relax their criteria. Maybe when more lenders are on board ther will be some competition.
It's good to see that I'm getting some help from the goverment after paying 40% tax for years!!!

Forgot to say the scheme is aimed at affordability, if I earned too much to cover full mortgage then I wouldn't qualify for help I.e

Salary 100k 5x is 500k mortgage ( i could afford on own-no help)
Salary 85k 4.5x is 382.5k mortgage ( not afford and qualify)

Thrugelmir

74hotspur wrote: »

About 90k 4.5-5x annual broker said works fine, I think due to the new scheme the lender isn't too sure about it.

Goverment scheme is repayable aimed at boosting house market. They will go upto 600k purchase price. I think it's a good scheme if the lenders relax their criteria. Maybe when more lenders are on board ther will be some competition.
It's good to see that I'm getting some help from the goverment after paying 40% tax for years!!!

Lenders won't relax criteria. The issue may well be the high multiple on a 95% mortgage.

Average lending multiple to FTB's across all CML members is around 3.25 times to put matters in perspective.

74hotspur

So that defeats the governments scheme then? I updated my post

opinions4u

74hotspur wrote: »

About 90k 4.5-5x annual broker said works fine, I think due to the new scheme the lender isn't too sure about it.

Goverment scheme is repayable aimed at boosting house market. They will go upto 600k purchase price. I think it's a good scheme if the lenders relax their criteria. Maybe when more lenders are on board ther will be some competition.
It's good to see that I'm getting some help from the goverment after paying 40% tax for years!!!

Not having a go at you personally. If the system allows it and it's legal I always say get what you can from it.

But are we really printing money to lender to higher rate tax payers so that they can make a £100k profit on the value of their £500k home?

It's absolute madness.

EDIT: I misunderstood your reference to £600k as an expected increase in value. My mistake.

74hotspur

It's not profit, it's a loan to be repaid interest free in 5 years or at 1% thereafter, scheme aimed at getting buyers into the market with a 75% ltv mortgage although it seems not to be working that way!!!

Thrugelmir

74hotspur wrote: »

It's not profit, it's a loan to be repaid interest free in 5 years or at 1% thereafter, scheme aimed at getting buyers into the market with a 75% ltv mortgage although it seems not to be working that way!!!

Its to help people with a small deposit obtain mortgage. Such as moving from rented property to their own home. Not provide 95% mortgages on high income multiples. As the interest rate will be based on 75% LTV. The lending will be medium risk.

74hotspur

The lender doesn't see it that way, I am in rented and now wish to buy, because of my salary I need to find a high purchase property to qualify for the scheme. It is on new build only and anything 4 bed plus in my area is at that price. The scheme is there to reduce the risk but the lender is still seeing it as a 95% mortgage so high risk. It kind of defeats the object somewhat.

I would only be borrowing 375 from the lender but they see it as borrowing 475 hence high risk, hopefully in a few weeks things will change when the scheme has established itself

Simon_gloster

Interesting, I thought affordability was based on what you want to borrow nit the loan plus builder contribution. Is this right and they take the equity loan into account for lending purposes.