Help to buy scheme

nabberuk_2

A couple of friends are thinking of moving in with each other (first time buyers), they've seen some nice homes that are being build up around the corner from them.

We were having a chat over dinner about the help to buy scheme and wondered if the following was possible.

As an example say we have the following;

House they would like to purchase is £230,000 They have a £40,000 deposit saved up

Now if they put £11,500 (5%) down as the a deposit.
The government loan would be £46,00 (20%)
There for there mortgage would be £172,500 (75%)

They still have £28,500 left in cash, could this be used to lower the initial mortgage amount or does the mortgage lender liaise with the government regarding all this?
If they do, would it be advisable to get a mortgage that does not penalize for over payment and lower your mortgage that way?

Is any of this immoral or even make financial sense?

nabberuk_2

rubbish, how did i manage to post it in this forum!!

Could a mod move it into the correct one, thank you and sorry about that!

Yorkie1

You probably either need to re-post in the Mortgages or House Buying forum, or PM a board guide on this forum to ask them to move this thread to another (specified) forum.

kingstreet

They only have to put the minimum deposit down if your income(s) indicates a mortgage amount sufficient to complete the purchase, based on;-

4.5x income
household debt to income ratio 45% or less
assumed mortgage rate 4.8%.

HTB is based on affordability from an income point of view, you do not have to use very penny of savings you have. Amount of savings is not even requested on the PIF.

Only income and credit commitments are requested.

If you want a copy of the HTB Calculator (XL file) PM me your email address and I'll send you one.

nabberuk_2

thanks for moving the thread.

I've PM'd you my email address kingstreet. Thanks for your help.

kingstreet

Emailed at 15.33.

nabberuk_2

got it thanks.

joe134

kingstreet wrote: »

Emailed at 15.33.

Is this the new scheme for January.?
My Grandson is also thinking of taking advantage of it, BUT, I,m not sure it,s wise because of the 20% loan by the Gov, enabling a higher mortgage, at a better LTV rate,which has to be repayed later at 1.75%( I think);;;;on top of existing rate.;;;It will lead to a false sense of security, until the Gov term is up, or a fixed rate mortgage has expired.or both?
Looking into it for him.
Single, £36k Gross income.renting £650pcm.
Where does the 4.8% assumption come in?
Haven,t read exact details of Januarys scheme.
interested in opinions.

kingstreet

No, it isn't.

There's no equity loan with the January 2014 Help To Buy - Mortgage Guarantee scheme.

The 4.8% assumption is nothing to do with HTB-MG.

Read about NewBuy, it's the closest current scheme to HTB-MG.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/221897/help_to_buy_mortgage_guarantee_scheme_outline.pdf

joe134

kingstreet wrote: »

No, it isn't.

There's no equity loan with the January 2014 Help To Buy - Mortgage Guarantee scheme.

The 4.8% assumption is nothing to do with HTB-MG.

Read about NewBuy, it's the closest current scheme to HTB-MG.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/221897/help_to_buy_mortgage_guarantee_scheme_outline.pdf

Hi Kingstreet, Thanks for reply.
I,ve read the Newbuy, and don,t like the look of that scheme, because, same as Barrats, the Developer can inflate the price.
A second hand home, is at market price, are there any figures/info about the january scheme available now, to consider options if it does come out, compared to straight 90>95% mortgage.?
Are you saying the 20% equity help is not available on januarys ?

joe134

kingstreet wrote: »

No, it isn't.

There's no equity loan with the January 2014 Help To Buy - Mortgage Guarantee scheme.

The 4.8% assumption is nothing to do with HTB-MG.

Read about NewBuy, it's the closest current scheme to HTB-MG.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/221897/help_to_buy_mortgage_guarantee_scheme_outline.pdf

Hi kingstreet, regarding your statement that there will be no equity loan in Januarys scheme.I,ve looked everywhere, read umpteen articles, and nowhere have I come across your statement.The second part, is basically a Guarantee for the lender, and the borrower, may not even know about it.
Can you clarify this, and supply info backing your statement.
The way I read it, is that, part 2, is part 1, + the advantage of the second hand market, and the government backing against default.
I would be obliged to stand corrected,