FTB mortgage calc help

Makkusu

Hi, we were hoping for a 5x joint income loan before finding banks have reduced the lending to 4.5x max, this has forced us out of purchasing a 2 bedroom property thus looking at a HTB scheme.

Is anyone able to help confirm my calculations are correct on a joint income of £38k for a property valued at £225,000.

10% Deposit of £22.5k
20% Government equity loan of £45k
70% Mortgage of £157.5k

Am I missing something horribly wrong here or is this a plausible hope? We've had 1 meeting with a broker towards end of 2014 so things have changed.

We average savings of £2k pcm. If we managed to pay of the majority of the equity loan within the 5 years is the interest payable on the remainder only? Or is the house value still factored in some how?

I've been searching for days but never a straight answer. Please help!

dimbo61

Well done if you can save £2K a month on a joint income of £38K a year.
Now you have a 10% deposit and want to use the HTB scheme
You do not pay interest for the first five years on the government loan.
After that they charge you interest.
Have a look on a couple of lenders websites about the rates they offer with 5% and 10% deposit to see if you get a better deal with a bigger deposit.
See how much you are allowed to overpay on each deal.
I would simply overpay the part of the mortgage you are paying interest on for the first five years and see if you have built up enough equity to pay off the government loan by remortgaging after 5 years.

getmore4less

£38k joint is £2400-£2600pm net.(before pension)

You won't be saving £2kpm when you buy somewhere

mortgage @ 4%
30y £752
25y £832

How much of your current £600pm spends are house costs, council tax, utilities etc. you need to add those.

£45k/60 £750pm

mortgage and loan £1600, £1k for the rest of living is that enough?

looks like interest on the loan starts at 1.75%[STRIKE] going up at least 1% a year after 5 years.[/STRIKE]

The 1.75% rate goes up rpi+1 so if that is 6% then years 6 is 1.86%

kingstreet

First, HTB - Equity Loan is newbuild only. Hopefully, you already knew that.

Next, you can only pay off the equity loan in upto two chunks. One of 20% of the property value, or two of 10%.

Repayment is always based on the property value at the time of repayment, so a higher value means more to repay, a lower value means less.

As you've said nothing about the mortgage term; your credit commitments; student loan costs; dependents; ground rent & service charge it's impossible to say if your proposition will meet a lender's affordability requirements.

getmore4less

You can't pay the loan back monthly must be 10% of market value at time and based on market value(NOT what you borrowed).

looks like you get 2 goes for a 20% loan

interest is outstanding amount

At least with the new home premium you won't have increases in equity for a while.

Have you read the guide

http://www.helptobuy.org.uk/docs/default-source/default-document-library/help-to-buy-equity-loan-buyers-guide.pdf?sfvrsn=4

Makkusu

Thank you for all the responses so far, it's reassuring to know I've not got the calculations completely wrong! We could probably manage on a minimum living fee of £500 pm (after bills etc.) if we played it sensible.

On the basis that you can only pay off 10% or 20% in one go is it advisable to make payments against the mortgage and then re-mortgage or sell in 5 years time? I'm not familiar with this maths here at all but I assume it'd put you in a better position than keeping the money in savings as you'd be left with decent sized equity??

@Kingstreet - A little more information on us; no student loans, no credit commitments, no dependants, new built flats around here have £1,200 fees overall annually. My salary is expected to double at some point in the next 2-4 years but I'd rather not depend on this possibility, anything there onwards would be a blessing.

kingstreet

Enter your details in your chosen lender's affordability calculator and put £100 a month in the credit commitments box if there isn't one specifically for ground rent and service charges.

Also enter £113, 3% of the equity loan if there isn't room for it elsewhere too.

It's considered affordable on the HTB calculator and one lender's calculator I've tried.

Landofwood

If you're saving 2k a month, you'll have a bigger deposit in no time and won't need to bother with these schemes.

Penniesdontmakeyourich

I thought the maximum multiple for the help to buy scheme was 3.5x with joint applicants?
Someone more knowledgeable will confirm or deny though.

kingstreet

Nope.

HTB calculator uses 4.5 and lender calculators can be more, although you would have to abide by the lowest of the two.