Nationwide using Help to Buy scheme against mortgage application

danderton

Hi,

I am currently in the process of removing my partner from the our current mortgage policy. I will be carrying on the current mortgage, simply removing the other party.

I have been through all the assessments to ensure i can continue with the mortgage in hand, and on initial assessments this was all fine.

However they have since come back and said the Help To Buys scheme is classed as a loan and must be included within my application, therefore putting me well under the threshold required.

In my opinion this is incorrect, the debt is against the property and a percentage rather than a direct financial value. Also this sum was never used in there original calculations (to get the mortgage in the first place), and have been told it would not be if i was to renew my application. (Keeping both parties on the mortgage)

Does this seem correct? How can the H2B scheme be used against an application in some cases rather than others?

Does anyone have any advice of where i can purse this further, Nationwide are not open to discussions about this unless via a solicitor.

Thanks ahead

Dan

kingstreet

So, you purchased a newbuild property with a mortgage and an equity loan.

The purchase, mortgage and loan are in joint names.

You wish to remove your former partner from the ownership, mortgage and loan.

You have already obtained information from here about the loan;-

http://www.myfirsthome.org.uk/schemes/help-to-buy/change-of-ownership

and have applied to the mortgage lender for a transfer of equity.

They are telling you the notional cost of the equity loan has to be included in affordability (which it does at 3%) and you are saying it wasn't at the time of applying (which it was at 3% but you may not have known about that).

Use the current Nationwide calculator to establish if affordability works. In this case, if you enter the ownership as equity share, the system takes the 3% loan cost into account automatically. Prior to April 2014, you had to do it manually.

http://www.nationwide-intermediary.co.uk/calculators/aff_calc

danderton

Hi,

Yes that is correct i am looking to do a transfer of ownership. When i initially took the policy out the H2B was not included. I am also told of i was to just renew the policy it would not be included. (renew being end of term where both parties where still part of the mortgage)

Is the 3% the 3% of the outstanding help to buy loan, or 3% of the value of the property?

Thanks

Dan

kingstreet

Lenders use 3%, or sometimes 4% of the equity loan in affordability. Although it would be over ten years until the fee payments actually reach this level, lenders were prudent in factoring-in these payments so there would be no future affordability issues.

I've just looked back on our Nationwide newbuild bible and 3% of the equity loan was to be included for affordability purposes back in November 2012. That was standard for FirstBuy, before HTB was launched in April 2013.

kingstreet

I've just found the Nationwide launch email from 29 May 2013 and 3% is clearly shown as the deduction for HTB equity loan cases, as it was previously for other shared equity schemes.

danderton

Thank you, is that 3% on the start figure of the H2B loan, current house price or the estimated house value at the end of the term?

Just to clarify the 3% should only be on the Help to Buy portion not the totally outstanding sum.

Thanks

Dan

kingstreet

3% of the value of the equity loan borrowed to purchase the property.

For example, £150,000 purchase, £30,000 (20%) equity loan;-

£30,000 x 3% / 12 = £75 per month taken into account.

danderton

Perfect Thank you. They are definitely not doing there sums incorrectly. Can you point me in the direction of any paperwork to back this up so i can approach them with it?

Thanks ahead. Really appreciated

kingstreet

They are not doing their sums correctly, or they are doing their sums incorrectly?

I don't have anything you can use, no. Is this any help;-

http://www.nationwide-intermediary.co.uk/lendingcriteria/schemes/equity_share_schemes

danderton

Thank you, i will use this for clarification.

Based on the information you have given me they are not calculating this H2B correctly. Using this information and Nationwide affordability calculator their figures are still well off.

Thanks again