Help to buy - more than 5% deposit

tunatuna

I am considering reserving a new build property, the value is £169,995

Under help to buy with the 20% equity loan this means I would require a mortgage for the value of £133,596

I have sufficient savings to put up a deposit for £30,000

There are a couple of things I'd like to clarify:

1) Am I effectively applying for a mortgage for £103,596 (80% of equity minus my deposit)?

2) In this case would my LTV be 77%?

3) If the LTV is indeed 77% would I qualify for cheaper interest rates from the approved mortgage providers?

Thanks in advance

TravelBugHappy

No it doesn't work like that - the maximum loan is 20% but if you put 8% Government loan would be reduced to 17%
If you put 10% the Gov loan is 15% IYSWIM

tunatuna

Sorry I don't understand what you mean - can you explain in more detail please?

TravelBugHappy

I've re-read your post & can't work out where you got the figure £133,595 from?

JPB123

TravelBugHappy wrote: »

No it doesn't work like that - the maximum loan is 20% but if you put 8% Government loan would be reduced to 17%
If you put 10% the Gov loan is 15% IYSWIM

I'm afraid it's you that's got it wrong. As long as you raise a mortgage for a min 25% of the purchase price, you can put down a larger deposit (up to 55%).


PP 169,995
20% EL 33,999
Deposit 30,001
Mtg 105,995 (lenders don't like odd numbers as a rule)


Therefore your loan to value is 62%

I am an Independent Mortgage Adviser


You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.

mcphearson

Nationwide are the only lender who give you a product on the basis of the lower LTV as mentioned in previous post by JPB123. Every other HTB lender will have a 75% regardless of the additional deposit you put in. So to get the best rate explore nationwides products to start with. Speaking to a broker is advisable.

kingstreet

That's because all the other HTB-EL lenders have specific HTB-EL products. Only Nationwide offers standard products based on the LTV.

The only problem is many lenders' mortgage offers last only six months (six months + two weeks in Nationwide's case) and if the build timetable is longer than that, you would end up losing your product/fees and having to reapply.

Halifax has longer offer periods (current products to 31/12/15) and exclusive "newbuild top ten" and other products where you buy through particular builders and their brokers.

kingstreet

TravelBugHappy wrote: »

No it doesn't work like that - the maximum loan is 20% but if you put 8% Government loan would be reduced to 17%
If you put 10% the Gov loan is 15% IYSWIM

The HTB equity loan is 0%, 10% or 20% - buyer's choice. No other options.

As JPB said, as long as you take a 25% mortgage or more, you can still choose your 10% or 20% equity loan regardless of the deposit you choose to pay.

The HTB - EL parameters are;-

25% min mortgage
45% household debt to income ratio
4.8% mortgage rate used
4.5 x income multiple
mortgage must be repaid by age 70.

tunatuna

Many thanks all for clarifying