Help to buy question

danielanthony

I'm unsure about the details of this Help to Buy scheme and hope someone here can help.

I'm looking at a new build house @ £425,000.

I have a 20% deposit myself (£85,000), the government also loans me 20% through this scheme giving me a £170,000 deposit.

If this is correct, I'd only need a mortgage of £255,000 @ 60% LTV?

Also, assuming the above is all ok, are all lenders 'on-board' with this scheme?

leveller2911

I'm probably wrong but I think your LTV will be 80% . Your deposit is 20%. The Government acts as guarantor to the lender for the 20% (Government loan).

I'm sure some mortgage advisors will be along shortly.

danielanthony

The scheme is supposed to give those with at least a 5% deposit access to 75% LTV mortgages. I suppose my question really hinges on whether 5% is the minimum or the only amount the purchaser can put into the pot.

kingstreet

leveller - no, this is Help To Buy Equity Loan, so he can get an interest-free loan of either 10% or 20% of the property purchase price, if he qualifies. The guarantee bit is for HTB - MG the new launch in January 2014.

HTB - EL is not supported by all lenders, no. The usual suspects are involved, NatWest, Halifax, Nationwide, Woolwich, Santander and one or two specialists, such as Chorley & Teachers Building Societies.

When you make a reservation, two forms are submitted to your local HCA HomeBuy Agent and they decide if you qualify for HTB and if you get 10% or 20%. If you can afford the property without, you'll get nothing. There is a calculator used to determine qualification.

You can put a higher deposit than 5%, but the overall case details will determine your success.

danielanthony

kingstreet wrote: »

leveller - no, this is Help To Buy Equity Loan, so he can get an interest-free loan of either 10% or 20% of the property purchase price, if he qualifies. The guarantee bit is for HTB - MG the new launch in January 2014.

HTB - EL is not supported by all lenders, no. The usual suspects are involved, NatWest, Halifax, Nationwide, Woolwich, Santander and one or two specialists, such as Chorley & Teachers Building Societies.

When you make a reservation, two forms are submitted to your local HCA HomeBuy Agent and they decide if you qualify for HTB and if you get 10% or 20%. If you can afford the property without, you'll get nothing. There is a calculator used to determine qualification.

You can put a higher deposit than 5%, but the overall case details will determine your success.

Thanks very much for this information.

Do you know what criteria they use for assessment? In my scenario above, with 25% deposit I'd need a mortgage of £318,750. Our joint income is £75,000 so reaching this is a push, especially as we have debt of about £50,000. What I was thinking was if we used the equity to pay this off, and still have 5% left, would we be eligible to get 20% from this scheme?

kingstreet

There's a calculator. If you PM me your email address, I'll send you a copy. Otherwise call your local HCA HomeBuy Agent in the AM and they should be able to do it for you.

http://orbithelptobuy.co.uk/mediaFiles/downloads/66762288/Help%20to%20Buy%20Buyers%20Guide.pdf

See the list of HomebuyAgents inside the back cover of the guide.

leveller2911

See, I told you I was probably wrong.....:D

Thrugelmir

danielanthony wrote: »

especially as we have debt of about £50,000.

So you don't actually have an £85k deposit. More like £35k.

So you would be looking at repaying a mortgage debt of £390k on a salary of £75k.

Not sure that lenders would consider your mortgage application prudent.

danielanthony

Thrugelmir wrote: »

So you don't actually have an £85k deposit. More like £35k.

So you would be looking at repaying a mortgage debt of £390k on a salary of £75k.

Not sure that lenders would consider your mortgage application prudent.

I also get between £10,000 and £20,000 per year in bonus payments, but as I've only been with my employer a year this might not be included? My wife also does the odd shift for NHS Professionals which brings in another £2,000-£3,000 per year but isn't guaranteed. If I stayed put for another three years I could get everything paid off and move with no debts whatsoever, but if I could move now and have the house as my only debt with a low mortgage interest rate, isn't that MSE?

danielanthony

But I suppose that brings me on to another question, if we go to the maximum mortgage multiple based on our theoretically debt-free basic salaries (£320,000), would the Help to Buy deposit be added onto this amount by the banks to calculate affordability? The calculator provided by Kingstreet (Thanks!) shows that our debt to household income ratio would be 41% and within acceptable limits for the HTB scheme, but would the lenders agree?

amnblog

Each lender has their own rules and will advance differing maximum amounts Daniel. They may or may not be close the the H2B scheme calculations.