Help To Buy - Equity Loan Scheme

TakeItAsRed

Is there anybody who knows anything about the Governments Help To Buy Scheme.

The office i have been dealing with seem to be very laid back about the whole process, and seem to think its just a case of filling in a very odd looking form after applying for a mortgage.

My bank has nothing to do with the scheme in terms of application, but will accept the 20% deposit from them. The broker at the development, didnt come across as entirely helpful either and seemed to lose interest in helping me out with the scheme once they learnt i was applying for mortgage with my bank.

There does seem to be a complete void in providing what information that the Help to Buy people check, ie do they do a hard search on credit file? do they check income? do they need bank statements, all of which is done by the lender of course.

If they check credit files, does this search then impact on my upcoming mortgage application?

Banks i know have a lending criteria that applicants must meet, is there such criteria other than this cant be a second home?

I cant imagine the government just handing out 20% deposits or loans to people without checking people in some way?

If there is anyone who has any experience of the application, that would be greatly received.

Thanks

kingstreet

There are no checks on credit or income.

Basically, if you can get a mortgage you can have the equity loan.

Affordability is checked using a spreadsheet provided by the HCA and the limits are 45% debt to household income, 4.5 x joint income and a rate of 4.8% is used to test payments.

Provided none of the calculator turns reed, you will be fine.

The process involves completion of the property information form and submission of this, with a copy of the reservation to the local HTB Agent.

You shouldn't apply for the mortgage until you have the Authority To Proceed from the HTB Agent which takes up to four working days.

TakeItAsRed

Thank you very much for the swift reply.

Will i need to obtain a specific mortgage when i goto the bank? Or can i just apply for the best offer and advise i have a 25% deposit, of which 5% is mine and 20% is Help To buy?

I dont have anywhere near 45% monthly outgoing to monthly income so i am hoping there wont be any issues with this. My montly outgoing is 12% of what i earn in a month.

kingstreet

Outgoings will be mortgage, loans, credit cards and service charges for the property. This is the 45%. The HCA calculator is not interested in your subscription to Viz, or whatever.

Most lenders have specific products. Before you go to "the bank" why don't you ask them if they actually do shared equity? Many don't, HSBC, Co-op, Post Office, Yorkshire BS Group etc.

Jambo5

Kingstreet are HTB schemes potentially dangerous to some people?

kingstreet

I am unable to answer that.

Study the workings of the scheme and determine if it is right for you.

TakeItAsRed

The HTB i am looking is quite dangerous, it has a clause that expects me to jump through fire hoops whilst doused in a highly flamible liquid, if i fail to pay the 20% back after 5 years. :j

I didnt take into account the mortgage repayment in my 12%, now i am up to 21%.

Jambo5

Yes I posted a thread on it last week. I think a hell alot of people will not make the EL payments and end up in s@£t creek. I believe this another plot by the government to make money. But may pug country in another recession.

MJP43

kingstreet wrote: »

Outgoings will be mortgage, loans, credit cards and service charges for the property. This is the 45%. The HCA calculator is not interested in your subscription to Viz, or whatever.

Most lenders have specific products. Before you go to "the bank" why don't you ask them if they actually do shared equity? Many don't, HSBC, Co-op, Post Office, Yorkshire BS Group etc.

Just out of interest, is the 45% calculation based on net income or gross?

kingstreet

TBH I haven't a clue.

I put the figures in the right boxes and if nothing turns red it's alright.

kingstreet

Jambo5 wrote: »

Yes I posted a thread on it last week. I think a hell alot of people will not make the EL payments and end up in s@£t creek. I believe this another plot by the government to make money. But may pug country in another recession.

On a £250,000 purchase, that's a £50,000 equity loan.

In year six, the fee will be £50,000 x 1.75% or £72.91 per month.

We actually use 3% of the equity loan in lender affordability calculators, so the only way it wouldn't be affordable is if the borrower's circumstances have changed and then is that £73 a month going to be the issue?