Help to Buy

Allan87

I've been looking at a £127k property and approached a broker for advice. They submitted my details to Halifax who came back with a letter of principle for ~£115k and so have now began my application for the Help to Buy equity loan. I have ~£7k on credit cards and old student overdrafts but I was told the letter of principle had made a credit check. How much value should I put on these letters as I had thought existing debts of that size would unlikely qualify me for a mortgage? I have the 5% deposit and my earnings before tax are £28k.

bluesbell

Others will come along and advise on the debt and likelihood of the mortgage being offered, so ill comment on the practical aspect only.

The maximum mortgage they will lend - 115k is 12k less than the purchase price, do you have this much for your deposit to cover the difference?

Have you factored in solicitors costs and the other expenses of moving?

Allan87

bluesbell wrote: »

Others will come along and advise on the debt and likelihood of the mortgage being offered, so ill comment on the practical aspect only.

The maximum mortgage they will lend - 115k is 12k less than the purchase price, do you have this much for your deposit to cover the difference?

Have you factored in solicitors costs and the other expenses of moving?

The difference I had thought is irrelevant as if the Help to Buy is approved I will only need a £95k mortgage, £20k less than that offered as a maximum. If the Help to Buy application is not approved I will not be proceeding.

And yes I have factored in the other costs such as legal costs and stamp duty.

kingstreet

So, you're purchasing a £127k newbuild property on HTB - Equity Loan, which assuming you have 5% deposit, will leave you needing a mortgage of £95,250, or 75% of the price of the property?

You have a "mortgage promise" from Halifax for £115k, needing to borrow only £95,250 and you are asking if your credit commitments will prevent your full application proceeding?

The answer, is probably not. As long as affordability is right for the amount you need, taking into account the cost of the equity loan and your credit commitments, you should be fine. Using your figures and allowing £64 per month for the equity loan, you are a little short over 25 years and would need a term of 27 to cover the mortgage and any added Halifax fees.