Help to Buy with big deposit?

djlevackio

Hi!

I'm wondering if anyone has any direct or in-direct experience of the help to buy equity loan scheme with a reasonably large deposit?

Now, I know this isn't really the spirit of why the scheme is I'm place but is there any limit to the cash deposit you can put down? I can't find one mentioned anywhere?

For example:

Property Price £450,000
HTB Equity loan £90,000
Deposit £210,000
Mortgage £150,000

Leaving the rights and wrongs aside for a bit, I myself am questioning the ethics or taking a public subsidy to get a more expensive house, is there actually anything in the scheme to prevent this?

shortchanged_2

There probably isn't seeing as the scheme was set up by numpties.

However of course it's wrong and as per usual the people who shouldn't benefit from the scheme are most likely to be the ones that will, yourself included.

MoneySaverLog

No there is not anything stopping you putting a big deposit down. What if you wanted a better house but you were borrowing the maximum you could on the mortgage based on a salary multiplier in this example was £150,000?

Then without HTB you would not be able to buy. The scheme is there to help out there too.

djlevackio

Thanks MoneySaverLog - that is roughly our situation, I don't want to borrow more in case our situation changes and the mortgage becomes unaffordable. I kind of see it as a bit of a hedge, and will staircase if able but if not then I've been able to live in a nicer house.

Shortchanged - I do agree with some of your points and obviously I don't need the help as much as a FTB with a small deposit, but who's to judge if I need it more than other people who are using HTB (the ones buying £600k houses?) and if my circumstances mean I'm eligible and I feel it makes sense then I will go for it.

kingstreet

You are buying a newbuild, I assume?

When it comes down to it, this is a loan and it is repayable as a percentage of the property value at the time of repayment.

If you expect your property to increase in value, do you want to give away 20% of the increased value?

ging84

you can only put down a large deposit if you would not otherwise qualify for a big enough mortgage

if you can reasonably borrow £250k but want to use the interest free loan to have a smaller mortgage you won't qualify

jumperjohn

ging84 wrote: »

you can only put down a large deposit if you would not otherwise qualify for a big enough mortgage

if you can reasonably borrow £250k but want to use the interest free loan to have a smaller mortgage you won't qualify

Are you sure, could you link the policy to accompany this fact?

SophieH123

When me and my husband looked in to doing what you are hoping to do we found this...


"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."

www plumlife[dot]co[dot]uk/Finding%20a%20Home/Available%20Schemes/Documents/Help%20to%20Buy%20Buyers%20Guide%20270313[dot]pdf

P10


Sorry - too few postings to paste the link! Hopefully you know what I mean or else some kind soul can post the proper link for me.

djlevackio

I saw this, but I think the problem is it is all somewhat subjective. Yes I might find a lender who will offer us £250k mortgage but what about commuting costs, childcare, saving for pension etc etc. Who's to say what 'affordable' really means?

On further research HTB is administered by local agencies, mine suggests a minimum 25% mortgage (so Max 55% deposit) to be eligible

Can't post a link but you'll find that on help to buy dot net.

To answer your question kingstreet - I see it as a pretty fair deal, I get a bigger house for less than 2% interest + HPI.

Now the question is...is the whole thing sustainable???

ccbrowning

jumperjohn wrote: »

Are you sure, could you link the policy to accompany this fact?

There is definitely no limit if you're just going a bit over, anyway. I know since I've just been given authority to proceed and have a large deposit + a large government one. However, I'm only doing like 10% myself + 20% from the government - 70% LTV...don't know about ginormous personal deposits.

Also, if you pay the equity loan off in 5 years (my plan), there is no interest, etc., so it's pretty good from that respect.

Edit: Just went to do the final mortgage application and asked. Supposedly the max % you can contribute is 10%.

Alys

In Scotland, the maximum deposit under Help to Buy is definitely 55%, I've had this confirmed by my IFA and by the agent for my area. The developer didn't know this though and told us that it was just 10%.

I wish I had a 55% deposit!