Help to buy equity loan

charlamine

We are looking to purchase a new build via the help to buy equity scheme

I have looked at the help to buy website but am a little confused on the process so from what I can gather I need to obtain a aip first, theme reserve property and then send off the property information form so the help to buy scheme can deem affordability? The help to buy don't credit check but the aip will. Is that correct?

If I do get a aip am I limited I which lenders I can go for - or can I go with any lender and apply for any of there 75% products? I am planing on using a broker but it would be useful to know so I can have a play with affordability calculators and plug I. Some figures to see roughly what value we could go up to and the equivalent monthly payments

Thanks I advance!

betmunch

Some lenders don't allow the HTB-EL. Some have specific products for it. Some allow you to choose from their standard range.


Best thing would be to just wait until you have spoken with the broker rather than confuse the issue further.

amnblog

If you needed to have your appendix taken out you wouldn't make a start for the surgeon!


Consultant a broker as your first step.

newbuyer84

Equity Loan help to buy scheme is a total rip off and you ultimately end up with either no equity in the house or negative equity because of the amount you will need to pay back to the government when you sell the home.

Did you know that its 20% of the value of the house you have to pay back?

did you also know that if you don't sell after 5 years they add a fee (which is in the thousands I must add) every year on top of the 20% you have to pay them back. So when you come to sell you will owe an astronomical amount to the government and probably have nothing left over for yourself.

I would urge to reconsider.

Mortgage guarantee scheme is much better than the equity loan scheme as you don't pay anything back to the government when you come to sell. this however is not available on new builds.

So sorry to pile on the negatives but it really is a slippery slope.

amnblog

newbuyer84 wrote: »

did you also know that if you don't sell after 5 years they add a fee (which is in the thousands I must add) every year on top of the 20% you have to pay them back. So when you come to sell you will owe an astronomical amount to the government and probably have nothing left over for yourself.

Nonsense, I'm afraid.


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

newbuyer84

Really???

I may stand corrected, but when I worked in residential law when the scheme first came out there was something in there amongst the masses of paperwork relating to what I have written.

if that is not the case then brilliant!

charlamine

We have weighed up the pros and cons, this is however going to be our forever home, we will live in this house until we retire and downsize so given the ups and downs in the morgage market which will happen in the next 20 years and the fact that we are going to be looking at paying off the equity loan in significant chunks during the course of the term by using yearly bonus and savings during the course of the term we are comfortable with moving forward

kingstreet

Fees start in year 6 and are payable monthly at 1.75%pa of the value of the loan, increasing each year by inflation plus 1%, so inflation at 5% means the rate in year 7 will be 1.87%, in year eight 2.0% and so on.

Probably still below the rate for a mortgage.

You can repay the loan in upto two chunks of 10% each, or one of 20% based on the property value at the time. If the value has fallen, the amount you repay falls too.

kingstreet

charlamine wrote: »

We are looking to purchase a new build via the help to buy equity scheme

I have looked at the help to buy website but am a little confused on the process so from what I can gather I need to obtain a aip first, theme reserve property and then send off the property information form so the help to buy scheme can deem affordability? The help to buy don't credit check but the aip will. Is that correct?

If I do get a aip am I limited I which lenders I can go for - or can I go with any lender and apply for any of there 75% products? I am planing on using a broker but it would be useful to know so I can have a play with affordability calculators and plug I. Some figures to see roughly what value we could go up to and the equivalent monthly payments

Thanks I advance!

Get a broker with experience of newbuild and HTB to work affordability on the HCA's calculator as the output from that, or the lender's will be taken, whichever is the lower.

In other words, just because the lender says you can borrow more, the HCA won't agree if its calculator says no!