Help to Buy mortgage scheme

kiwijus

kingstreet wrote: »

Are you buying a newbuild?

If not, you have no option. HTB - Equity Loan applies only to newbuilds.

Yeah this is for a new build.

am.jovial

My wife and I are living in rented flat in Chelmsford and we will be here for at least next 3 years. In the long run we would like to be in London or just outskirts of London so that we can get to work anywhere in London easily.

We plan to buy a house but not sure if we should buy in Chelmsford or in London. Though it is an emotional decision, I think it should make sense as good financial decision.

Option 1: buy in Chelmsford and move into this house so save on rent. But, when we have to move to London, rent this house and live in rented flat in London.

Option 2: Buy now in London, rent it out and continue to live here in Chelmsford in rented house. After 3 years when we move to London, move into the own house.

I can arrange for about £25,000 towards buying the house. So, I can target houses that are priced about £200,000 to 225,000.
If I go for Help-To-Buy options, my affordability is £300,000 to 325,000. But, I am confused about the overall cost of HelpToBuy. I have referred to few articles on HTB (HelpToBuy) but all of which explain the basics but not the actual cost comparisons between the HTB and non-HTB. For example, if we buy a £200,000 house using non-HTB considering the normal interest rate of 4% the cost would the total interest cost that we would be paying over the loan tenure. I am not able to get an idea how much this cost would be if I were to opt for various HTB schemes.

I would appreciate any advice in deciding.

Cheers
Am

kingstreet

Q1. Are you buying a newbuild?

If you are, HTB - Equity Loan is available to you, if your builder is registered. This will provide a 10% or 20% loan towards your deposit, leaving you needing a mortgage of no more than 75%, if you go for 20%.

This will have a lower interest rate.

The equity loan is payment free for five years. After that, you pay 1.75% fees, increasing by RPI + 1% each year.

Examples, here;-

http://www.homesandcommunities.co.uk/sites/default/files/our-work/help_to_buy_buyers_guide_sept_2013.pdf

You pay off the loan when you sell, at the end of the term, or voluntarily in up to two lump sums. The repayment will be based on the value of the property at that time. ie 20% of the purchase price borrowed, 20% of the property value at the time repaid.

If you are not buying a newbuild, only HTB - Mortgage Guarantee is open to you. This increases the amount of 95% mortgages available by the Govt guaranteeing the top 15%, leaving lenders needing less capital to fund them. There is no extra loan, so the rate is higher as it is a 95% mortgage.

You may wish to consider speaking to an independent broker to get proper regulated advice.

dotcodotuk

Hi there,

I'm a FTB looking to take advantage of the HTB scheme on a new build property, but I'm finding it very difficult to get straight answers on a number of queries. Can anyone advise me?

In short, the main question I've got is this: am I able to 'go it alone' and look to arrange my own mortgage and apply for the 20% equity loan or do I have to use a third-party?

I ask as I've applied for the scheme via a recommendation from the developers and have been steered towards an supposed IFA from NHMH who tried to push me into a mortgage with a far higher rate than seems necessary (2 year fixed @ 1.5% more than I think I should be able to get directly) and insisted I could only get said mortgage if I had life insurance and house and contents insurance in place and arranged all at the same time, plus loads of other bits and pieces.

I know when I'm being pressure sold to, so I've played dumb and pretended I need some time to think about things. But what's annoying me is these NHMH people were recommended by the developers... seems like a cleverly worked scheme to con the unsuspecting and ignorant.

So, assuming I have enough faith in the developers having tried to shaft me with NHMH to not bin the idea of buying their new build, what's stopping me from arranging a mortgage myself for the value I need and applying for the equity loan directly?

Is it impossible or just improbable to achieve in the timescales desired by the property developers?

kingstreet

You can use any broker, or deal directly with a lender.

Make sure the chosen lender accepts builder cash incentives, if you have any.

Ensure you are looking at the correct product in the lender selection, as often they are specific to the HTB - EL scheme.

Finally, try to choose a lender with a chance of an offer being issued in your target period. I'd say Leeds, Woolwich and Santander should be avoided for this reason.

dotcodotuk

Sorry for the delay in responding - got caught up with stuff!

Would I be right in thinking that most lenders have a specific rate product on offer for the HTB Equity Loan scheme? I'm having a little difficulty getting sensible answers from lenders, although I appreciate I might not be asking the right questions.

The scenario is this.

Property price: £290k
Equity Loan: £58k
My Deposit: £85k
Desired mortgage: £147k

How does the Equity Loan affect the LTV of the property? Am I at 63.36% (taking the equity loan out of the equation) or 50.69% (the full value of the property) and what sort of rates should I be expecting to be offered?

kingstreet

Many lenders have specific products for HTB - Equity Loan.

Halifax, NatWest, Woolwich, Abbey/Santander, Leeds, Skipton and Virgin Money do. Nationwide will only allow you to choose from the fee-free product.

The LTV will be based on the mortgage v the property price, so will take into account the equity loan and your deposit.

GlamGirlie

Hi

I wonder if anyone can help, please?

We exchanged on a new build property using H2B equity loan scheme in April 2014, and paid our 5% deposit.

We have since paid a further c.£10K on fittings, carpets, tiles etc.

Our Halifax mortgage offer was granted in April 2014, and expires 30th November 2014. We were initially told the house should be finished well before then so had no concerns.

We have now been told the NHBC visit will be 21st November and we will then have up to 14 days to complete - which MAY be before 30th obviously, but given delays etc could potentially not be.

I gather Halifax are no longer offering H2B (equity loan) mortgages and they are now closed until Monday so I can't ring them to ask........ :mad:

Can anyone answer where we stand, please?

Will we lose our mortgage and all the associated fees we paid?

I presume we 'just' need to get another mortgage, but this would be at further cost with arrangement fees, valuation fees etc.

Obviously I will ring Halifax first thing Monday but for now would appreciate it if anyone can shed any light on our position.

Very many thanks.

novitiate

Hello,

If going ahead with a help to buy scheme where govt pays 20% towards down payment and I put in another 5%, am I likely to get mortgages with similar rates to a normal 25% down payment?

I spoke to a help to buy agent who mentioned a rate of around 3.2% which is much higher than a normal 25% down payment rate.

Any help will be much appreciated.

kingstreet

novitiate wrote: »

Hello,

If going ahead with a help to buy scheme where govt pays 20% towards down payment and I put in another 5%, am I likely to get mortgages with similar rates to a normal 25% down payment?

I spoke to a help to buy agent who mentioned a rate of around 3.2% which is much higher than a normal 25% down payment rate.

Any help will be much appreciated.

You're buying a newbuild then?

Some lenders have specific HTB - Equity Loan products, while others allow you to pick from their normal product range for your LTV.