If I have a 25% deposit, is a mortgage almost guarenteed?

pipsqueak-mouse

Hi all,

Quick question, if my partner and I were to purchase a new-build property on the Help-to-Buy scheme, where we have a 5% deposit and the government give 20% loan to total up a 25% deposit.

Are the mortgages then still calculated on 2.5x combined income or is it a case of if you have 25%, they assume you can afford it and so the income checks aren't as strict and you can get more than the 2.5x income?

Thanks in advance

kingstreet

Income multiples aren't used much these days. If you have childcare, student loans, ground rent & service charges you may find you get less than 2.5 x joint income.

On HTB - Equity Loan, lenders take 3% of the equity loan as a cost for affordability purposes too...

None of those and you may be able to get more than 5 x joint income.

Affordability is the name of he game.

883508

King street can you explain please about the 3% for affordability purposes,
in what calculation is it used?
Thanks

kingstreet

It's used in the lender's affordability calculations as I said.

pipsqueak-mouse

So it is actually possible that if we have none of those mentioned expenses, which we don't, it's possible to get up to 5x our income? If that's true, that could help loads! Obviously I know we'd still have to be able to.afford the repayments, but trying to work out what we could afford to actually accurately look for places :j

kingstreet

Use different HTB - EL lenders' calculators and make sure you enter 3% of the equity loan if it isn't already taken into account.

For example, if you buy for £200,000 with 20% equity loan, that's;-

£40,000 x 3% / 12 = £100 per month in the mortgage or credit box.

If you have other expenditure, such as large-scale travel costs, childcare, ground rent & service charges, school fees, student loans make sure you allow for them as well.