Advice on Help to Buy please.

Jamesb15uk

Hi, me and my partner are in the process of saving our deposit for our first home.

Unfortunatley I will not have a permanent contract for the next two years, but I am on £26k. My partner, Anna, is on £33k.

We currently have £4k savings, pay £575pm rent and can save at least £1k per month between us.


Now I know that me not having a perm contract means the bank will not trust me as reliable income, so they would only lend to us based on (3x?) Annas income, which would be £99k.


What I would like to know is how much the Help to buy scheme, probably the Equity loan one, will be able to help us out.


This is how I understand it, we can get a mortgage for £99k, so if that is upto 75% of the property's value, the maximum house value we could look at would be £133k.

£26k of this could be the 'Equity Loan' - 20%
£99k would be our mortgage. - 75%
The remaining £8k would be our deposit. - 5%

Is that roughly correct?

I understand that if we were paying that with only Anna's wage, it would be a real stretch.. but in reality, it is very easily affordable with both our wages coming in

ACG

How much do you want to purchase for? (in an ideal world).
Your aware HTB 1 (the equity loan) is only available for new builds?

The figures you give appear to be correct although potentially you could borrow more than 3 x your partners income - potentially 4x. Depending on your contract you may even be able to include your income.

There are 2 versions of HTB:
HTB1 - new builds where you have an equity loan.
HTB2 - any property. You put down 5% and have a 95% mortgage.

EllaMac

Hi, first of all with the new MMR rules, income multipliers no longer apply to mortgages. Rather each lender has an independent affordability calculator with some being more generous than others. Similarly, whilst the household-name lenders may be unwilling to lend based on your income, there are actually a few lender who would be willing to do so.

This is where taking advice from a mortgage adviser becomes truly beneficial. Many whole of market advisers do not even charge a fee and can save you a lot of money. They will also be able to give you more personal advise and information about the H2B scheme.

Jamesb15uk

Yes a new build is probably what we are looking at, we live in Liverpool, so in an ideal world, £150k would be pretty nice for our first house... but realistically around £130-140k I think.

Pixie5740

If you haven't already, speak with a whole of market mortgage broker. Just because you're not in permanent employement doesn't automatically mean that your income won't be taken into account.

ACG

£130-140k should be achievable without having to do the equity loan (ie you will own the full property from day 1) thats without having to take your income into account.

It will depend on the finer details, but I would be confident in there being a way to get this through.

kingstreet

In E&W, you need to remember lenders take 3% of the equity loan as a commitment from affordability, along with any ground rent and service charges which may apply.

There are lenders on the HTB - EL scheme who will lend to those on fixed term contracts.

An experienced newbuild broker will be able to source the right lender/product for you. Your builder may offer incentives to use one of their preferred brokers.

Jamesb15uk

Thanks for the advice, we are in the very early stages, so just seeing where we stand at this point. It all sound really encouraging.

ging84

It's not true that mortgage lenders won't take the income of a contractor into account
it was not an issue for my partner who is a contractor, as far as i know the only issue with her as a contractor was that she needed to have been in the job for longer than she would have needed if she was permanent, but she's been there several years so was not an issue

Jamesb15uk

Ah, well I have only just started this contract, after 2 years it will be made permanent, but we would like to buy within the next 12 months ideally.

kingstreet

Jamesb15uk wrote: »

Ah, well I have only just started this contract, after 2 years it will be made permanent, but we would like to buy within the next 12 months ideally.

See a broker.

You will have options.