Bigger mortgage with Help To Buy scheme?

richierich052

Hi all,

I have a question regarding the Help to buy scheme.

Myself and partner are looking to buy our first home. We're both 24 and have decent full time jobs after graduating from uni. I have a typical permanent job and my partner contracts and operates as a private company. We've got a deposit of 15K and recently saw a mortgage adviser to see what kind of mortgage we're able to get based on a 10% deposit. To our huge disappointment, due to my partner operating as a company, they deemed her ineligible for a mortgage as the business has been running for less than three years (only one). That meant that the mortgage was based solely on my income and we aren't able to borrow the the kind of sum we were hoping for even though we could quite easily afford the repayments.

My question is this, if we were to take advantage of the help to buy scheme, effectively raising 15K as a 5% deposit, would we be able to lend a bigger mortgage sum based solely on my income? The adviser seemed unsure at the time.

I understand that the whole reason my partner is ineligible to borrow is to protect us as well as the bank but we're both graduates who've never had problem finding work, and the area of work my partner is involved in is thriving.

We're both quite frustrated that we've worked hard to raise a deposit and get good incomes and still can't get the home we want. We can't realistically do another two years renting/living with parents.

Any help is greatly appreciated.

Thanks.

maninthestreet

How will having a bigger deposit mean you can borrow more? Your income won't change, so you won't be able to borrow a bigger sum.

kingstreet

No. HTB - MG is about being able to get a mortgage with a lower deposit. The lender's criteria and income requirements remain the same.

There are lenders who will include one year's income, evidenced by a single SA302, but I would not be surprised if this is not possible on HTB - MG.

You need a whole market mortgage broker for this - no estate agency advisors with limited panels and little experience.

richierich052

Actually, looking at the detail on the gov UK site, although we may not be able to borrow a bigger mortgage, we could still purchase a higher value property as the government's 20% will effectively knock 20% off the required mortgage. We'd basically be splitting the mortgage across two lenders (the bank and the government) which suits us as we're able to afford the repayments.

Not ideal and still can't get the kind of property we can truly afford but at least it helps.

kingstreet

richierich052 wrote: »

Actually, looking at the detail on the gov UK site, although we may not be able to borrow a bigger mortgage, we could still purchase a higher value property as the government's 20% will effectively knock 20% off the required mortgage. We'd basically be splitting the mortgage across two lenders (the bank and the government) which suits us as we're able to afford the repayments.

Not ideal and still can't get the kind of property we can truly afford but at least it helps.

You are mixing the schemes.

You are looking at the HTB - Equity Loan scheme details and you need to look at Help To Buy - Mortgage Guarantee;-

http://yournews-legalandgeneral.com/pv_obj_cache/pv_obj_id_BB320F8298FC1120B8826B44DE0AD12E294C0800/filename/Help%20to%20Buy%20Definition%20Budget%202013.pdf

richierich052

Yeah forgot to mention that the second scheme is only available on new builds.

Whole thing is bloody frustrating!!

kingstreet

richierich052 wrote: »

Yeah forgot to mention that the second scheme is only available on new builds.

Whole thing is bloody frustrating!!

The first scheme, we'll call that "Help To Buy - Equity Loan" which was launched in April 2103 is for newbuild property only and offers an interest-free loan (for five years) towards the deposit on a new home.

The second, we'll call that "Help To Buy - Mortgage Guarantee" sees the Government guarantee the top 15% of a 95% mortgage and relaxed capital requirements to encourage lenders to offer more high loan to value lending. This is available on current and newbuild homes.

The two schemes are fundamentally different.