HELP TO BUY equity loan affordability criteria, what is classed as debt?

Kell4life

My husband and I are hoping to reserve a newbuild property using HTB equity loan we have found the perfect house in a very good area and the price is very good for this particular part of the country. We have 2 young children, so are currently a 1 earner family, my husband earns a reasonable salary plus an annual bonus.

We have spoken to our bank and have been agreed a mortgage in principle for what we would need to borrow so we should have no trouble obtaining a mortgage.

We went online tonight and entered the information for the HTB affordability criteria, and are not sure as to whether an employee car scheme is classed as a debt?

I have use of a car through my husbands work which he pays for monthly from his salary, it's a slightly unusual scheme; he's allowed up to 4 cars for family members through his work as he works for a car manufacturer, we have been doing this for years without a problem.
It isn't a personal lease or a hire purchase or salary sacrifice, it's a interest free loan which is charged monthly to the employee and includes the road tax, maintenance and car insurance and the car is changed every 11 months. The company operate this scheme at cost and don't make money from it, it's an employee benefit. It is the car which is causing the problem on the affordability calculator, will this be classed as a debt as its a monthly payment we make?

The car is £150 a month so we aren't talking about a massive amount, and if my husband decided we no longer wanted a car or if he left the company we could just hand it back and not be liable for any further cost unlike a lease. Without the car payment in the debt section we meet the 4.5 ratio but with the car it's 4.6. Getting rid of the car isn't really an option right now as we live in a village in the middle of no where, and if we decided to buy a cheap 2nd hand runaround, we would need to find the money upfront, then it would need insuring, and likely have issues which cost money to fix, long term this would probably end up costing more than the £150 a month we are currently paying. This scheme isn't to be confused with an actual company car, my husband has a Eco scheme company car, this is our 2nd car.

Is it really a case of computer says no, or is there some leeway? We have no outstanding credit cards, personal loans, overdrafts or childcare fees etc, our finances have never been in such good shape. The silly thing is by buying this house through H2B will be saving at least £300 a month compared to what we pay now, the council tax will also be cheaper so from our point of view affordability isn't an issue. I'm worried we do not meet the HTB criteria and won't be able to buy this house.

kingstreet

I think it should be taken into account, but phone/email BPHA and get it straight from the horse's mouth;-

03333 214044

helptobuyeastandsoutheast@bpha.org.uk

TBeckett100

I don't think H2B check anything do they except to do their own spreadsheet ....

Perhaps it could be a viewed as a commitment that won't be there on completion of a mortgage.

clint_S

When you buy a new build on HTB you are required to be cleared by a IFA registered with HTB, affordability check. This is free and they will also advise you what you can and can't do and give you advise on mortgages if required, although you don't have to source your mortgage through them.

Most have an business card with the builder so you can pick one up from them, they are not associated to the builder so not the same as the EA advising you to use their mortgage company.

clint_S

Also Remember that the HTB loan will have interest payments after 5 years, unless you pay it off, that will increase each year. Most new builds are also lease hold and you'll also need to pay maintenance on the estate, even if you have the freehold. This isn't much per year but if you take this into account and you're already stretched with mortgage payments it could be the tipping point.

Kell4life

We rang help to buy this morning, they don't class the car as a debt, but work it out by taking 12 monthly payments off my husbands salary decreasing it by £1800 a year. We then sit on 4.6% and have been told there no leeway at all, child benefit isn't accounted for, and only 50% of bonus is taken into account, so based on this we have another £6500 income a year they won't take into account. Apparently the only way we can get it to work is upping our deposit by another £8,000 and then the calculator works. Our deposit required will be £28,000 - quite a lot! Thank you for your replies.

lovehackney

Why don't you just hand the car back for a few months if you can do so without penalty?
Then once the mortgage is complete you get another car? It's not fraud as you won't be lying at time of application?