Help to buy. Translation

Rebecca01

Hello

I am just wondering if someone could explain what the following means to me. It has me confused. It is on the Help to buy T and C's.

Typically, your mortgage will be based on a multiple up to 4.5 times your household income. Your Local HomeBuy Agent will also work to a guideline to ensure that your monthly costs (mortgage, service charges and fees) are no more than 45% of your net disposable income.
You cannot choose to take a lower mortgage if your affordable income multiple suggests you can afford and sustain a higher one. This is because the scheme is designed to assist buyers by giving them the help they need (but not more than that) to buy a new home. With limited resources available, the Agency is seeking to help as many buyers as possible, and allowing a buyer to reduce their mortgage (and maximise their equity loan) could stop others from also benefiting from the initiative.

Hope someone can help.
Thanks

okborednow

Essentially what they're saying is there are two sides to how they judge affordability. Firstly to make sure you can actually afford the payments the mortgage should be around 4.5 your salary and the mortgage payment, any service charges and council tax should not exceed 45% of your disposable income after you've paid debts etc.

The second part means that they haven't made this money available to help people who could easily afford to pay more and save a large deposit simply have smaller mortgage repayments and a higher standard of living. So if for example your mortgage payment was only 10% of your disposable income they would likely refuse to lend you any money

Hope that helps

Rebecca01

Great thank you.

First bit ,yes makes sense and second bit I think I get it.

So if you have a salary of 60 k . You couldnt get a mortgage for say 60 k. It would realistically have to be around the 200 k mark for them to lend?

Thanks for your help.

okborednow

Yeah, from what i understand when the scheme started people were saying "i have a 60k deposit but if i take this Help to Buy scheme i can just use 20k of that and use the other 40k to make home improvements, go on holiday, invest it etc." As i said the scheme is supposed to help people genuinely struggling to afford a deposit/get a mortgage for enough. It isn't there to give an interest free loan to people who clearly don't need it.