Help to Buy Issue: Low-Medium Wage, Higher Deposit

Willem-de-Blois

I have been making tentative steps to see if I can buy somewhere to live after renting for many years (albeit at a below market rent from a charity). This means that I can actually save a bit each month.

I have been looking into the various Help to Buy schemes to see what assitance I may receive to buy somewhere.

It seems that Help to Buy is designed to help people with decent salaries (up to £60k pa) but low savings for a deposit (5%). The thing is, following a career change just before the crash, my situation is the opposite.

I have savings that I can put towards a decent deposit (£50k) but following the career change, my salary is quite low at £24k pa which leaves me a net monthly income of £1512. For this reason, I was advised that I would fail the local Housing Association's affordability test for shared-ownership which rules that no more than 40% of my net monthly income should go on housing costs (motgage payments, subsidised rent on the RSL's share and service charge).

I then looked into the Help to Buy Equity loan to see if the 20% loan would help. Normally, this loan of 20% is added to a minimum deposit of 5%. My question is:

"Is there a maximum percentage that I put towards the deposit to reduce the LTV on the mortgage and thus the interest rate?"

This site says that there is a maximum limit:

It’s likely larger deposits won’t qualify for Help to Buy
Help to Buy really only exists for people who can’t afford large deposits, and it’s therefore likely that if you can afford 10%, or even more, on a deposit, the government will be reluctant to assist.

http://www.bbc-law.co.uk/legal-news/10-facts-you-may-not-know-about-help-to-buy/

Am I really shut out from Help to Buy because I don't earn enough AND because I have saved too much?

Bingaling86

As someone who is applying for a house using the help to buy scheme as a disabled person, the idea that you'd get a house on the scheme knowing you've got £50k sat in your bank doesn't sit well with me.

Why not just use it to buy an apartment or house through the normal avenues? You've saved so much already and well done to you, but seriously, you can afford to not use the help to buy scheme - especially when there are people out there who'll never be able to save anywhere near as much as £50k.

That's just my opinion.

Willem-de-Blois

Fair enough, as I have had similar thoughts towards people who earn £60k per year and somehow haven't been able to save a mere 5%.

In my city, a studio flat is £100k, a one bedroom flat is typically £160k to £200k while a 2-bedroom flat is £230k+. Owing to my salary, I am not likely to get a mortgage of more than £80k. This is why I am considering Help to Buy as I need help.

Bingaling86

Then you use £40-50k as a deposit for a studio flat and have a mortgage for the rest?

We've all got to start somewhere - a studio flat is a start. Once you're on the ladder, great, but to me, £50k in savings doesn't seem like you need help - you just seem like you want more for your (significant amount of) money and are using a charitable scheme to do it.

SerialRenter

I'd hardly call Help to Buy a charitable scheme.

Political point scoring scheme would be more accurate.

Willem-de-Blois

The studio flats at this price bracket really are awful.

I don't think Help to Buy is a charitable scheme. It is a tax payer scheme and I am a tax payer. If I had my way, house prices would drop to have some relationship with average wages so people like me who save would be able to buy something. Anyway, I'd be repaying the equity loan.

chris198232

I'm sorry but you can't suggest the op shouldn't use the HTB scheme because they have a decent deposit. I had £120k deposit but used it, I'm fortunate enough to earn a decent wage too.

As far as I'm concerned me buying a fairly expensive house using this scheme frees up my cheaper current home to first time buyers, it's not a scheme to help just lower income or deposits!

Willem-de-Blois

chris198232 wrote: »

I'm sorry but you can't suggest the op shouldn't use the HTB scheme because they have a decent deposit. I had £120k deposit but used it, I'm fortunate enough to earn a decent wage too.

As far as I'm concerned me buying a fairly expensive house using this scheme frees up my cheaper current home to first time buyers, it's not a scheme to help just lower income or deposits!

What % of deposit did you put down and what was the % of the equity loans that you received?

chris198232

I got 20% equity, why?

Willem-de-Blois

chris198232 wrote: »

I got 20% equity, why?

The reason why I started this thread was to find out if people who could potentially come up with a good deposit (16-20% in my case) can still get the 20% equity loan.

Because of my lowish salary, a 75% mortgage would be too much to borrow.

chris198232

Yes as long as you can afford the mortgage for the rest then you can put what ever deposit in you wish. I'm confident you could have 50%deposit and still be accepted!