HTB Scotland - Equity Loan question

wilko21

Hi All,

I have a question regarding the equity loan amount of a HTB in Scotland.

The purchase price of the property is £174k, I have £8700 deposit (5%) and the Gov have agreed to take a 20% stake worth £34800. We have an Authority to Proceed letter.

I went to BoS today to run through an application. When calcualting the loan amount, the advisor deducted the equity stake from the purchase price, and then based the loan on that amount.

The system rejected the application on the basis that my equity stake was less than 10% (being 8700 against a loan of 139200). There was not an issue with the affordability of the repayments.

The advisor then upped the deposit to £13,920 (10%) and this would be accepted. The advisor then said if we were to do this, we would not qualify for H2B and we should ask the builder about a normal shared equity scheme, which is not running on the development we are looking at.

My question is this:
Has the advisor dealt with the equity loan in the right way? I thought the full purchase price should go in (174k) and then my deposit would be taken off (43500, being 8700 from me and 34800 from gov) giving an LTV of 75%. If it is dealt with in this way, my loan will be below 90% which appears to be the trigger for rejection.

Does the loan from the government count towards my own equity stake in the property?

I am confused as to why the mortgage is affordable, we have met the H2B criteria, but the bank want us to but down more money and therefore become ineligible to take advantage of the scheme.

Any ideas?

Brendan

debbie1990

I'm not too clued up on mortgages to be honest but we have just been approved for a mortgage through halifax (will be same process as BoS) and we're also doing help to buy scotland with equity loan. We went through a broker and he entered it in to the system as if we have a 25% deposit (5% from us and 20% from government) so our loan to value was 75% of the purchase price. Hope this makes sense but it seems like they don't really know what they're doing!

wilko21

Thanks Debbie,

I spoke to someone at RBS over the phone and thats how they read it back to me, so I was a bit surprised when BoS did it the other way around.

I think I will phone tomorrow.

I had been using a broker but he doesnt seem to be on the ball, I got a 'mortgage promise' based on the additional deposit in one morning and he hasnt returned anything in over a month.

debbie1990

Where abouts in scotland are you based Wilko? I could give you the details of my broker if you want? He was fantastic, really on the ball, emailing every day with updates! Our mortgage application took 7 working days from start to finish and couldn't have been easier.

wilko21

Im based in Glasgow but looking to buy in Kilmarnock, the builders recommended a broker in Stirling.

That would be great if you could pass on his details.

kingstreet

Presumably, BoS and Halifax share a platform.

The Halifax "schemes page" requires selection of "Shared Equity" then 80% as the share being purchased and 3% of the equity loan being input as the cost. I don't know how this works for Scots cases where there is no future payment.

Then, on the loan page, you enter the purchase price and loan amount. You do not enter the deposit, simply the two figures mentioned.

wilko21

Hi Kingstreet,

Thanks for this. From what I remember, the advisor did not select this option. To be honest she wasn't entirely sure how to enter the details.

The figures used were:
Purchase price 139200
Deposit 8700

So no mention of the gov's stake. The cost for the loan would be 0 as it is interest free.

I will call her back tomorrow to discuss

debbie1990

I PM'd you wilko21