Help to buy-Mortgage Guarantee scheme doubts

calltobala

Dear Experts

I am a first time buyer and the prices of house in my area is at peak for the last 2 years.

To buy a previously owned property of £270k, I can arrange deposit of £35k and for my salary bank can give up to £215k under normal mortgage and now I need another £20k to buy the property.

I read about HTB-Mortgage guarantee scheme and I don't understand it fully.

It would be great if you could please clarify my following questions

1. under HTB - Mortgage Scheme can i get more mortgage or is it still comes around same affordability limit?

2. Is the HTB mortgage guarantee scheme's interest rate is higher than normal mortgage rate?

3. if i cannot get higher limit then i need to find a bank which can give mortgage of 4.6 to 4.8 times of my salary.

4. what are the pros and cons of HTB-mortgage guarantee scheme

Thanks

stator

calltobala wrote: »

Dear Experts

I am a first time buyer and the prices of house in my area is at peak for the last 2 years.

To buy a previously owned property of £270k, I can arrange deposit of £35k and for my salary bank can give up to £215k under normal mortgage and now I need another £20k to buy the property.

I read about HTB-Mortgage guarantee scheme and I don't understand it fully.

It would be great if you could please clarify my following questions

1. under HTB - Mortgage Scheme can i get more mortgage or is it still comes around same affordability limit?

No, all it does is allow you to take out a 95% mortgage. You need a deposit of 5% and the bank must be willing to lend you 95%. So if they say they will only lend you £215k , you can buy a house for £226k

calltobala wrote: »

2. Is the HTB mortgage guarantee scheme's interest rate is higher than normal mortgage rate?

Not really, but there aren't many non-HTB 95% mortgages, so not much to compare it to! The rates are definitely higher than a non-HTB 90% mortgage though.

calltobala wrote: »

3. if i cannot get higher limit then i need to find a bank which can give mortgage of 4.6 to 4.8 times of my salary.

Ask a broker, I think the absolute limit is 4.5 these days?

calltobala wrote: »

4. what are the pros and cons of HTB-mortgage guarantee scheme
Thanks

PRO: You can get a 95% mortgage. CON: Rates are high (although still relatively low historically).
5 year Fixed rates under HTB are still cheaper than renting though, so not much to lose.

Under the HTB:EL (new build) scheme you can get lower rates but then have the loan to start paying back and the risk of negative equity.

amnblog

1. No
2. No
3. Yes
4. No cons to the borrower worth discussing

calltobala

Thanks very much for the reply. I thought I can get more mortgage amount on HTB mortgage guarantee scheme. Now its clear