H2B Mortgage Advice Please!

ryanthelion84

Hi All!

I am after some advice around applying for a mortgage in order to move home and want to understand a bit better what my options are based on a number of factors, which I will try my best to explain in this post below.

I presently live in a 2 double-bedroom terrace (home owner) with my wife and 3 children. (We are currently expecting a forth!)

We have recently had our house valued at £140k by 2 separate estate agents and based on which we have £30k of equity in the property and £110k left to pay on the existing mortgage. (Variable rate, no early repayment or settlement fees).

My two eldest children attend school in a nearby village to which we wish to move and presently Bloor Homes are building a new development there, with suitable 3 bed homes priced at £259,950.

My annual salary is £56,500pa with an OTE of £67,500pa.

My wife earns a paltry £5kpa in a part time job.

Aside from our existing mortgage we have ~£10k of credit card debt in my name which is managed and decreasing monthly, albeit slowly.

I also have a car on finance, funded by work which equates to £400pcm in commitments.

My AMEX card used for work expenses is also linked to my credit file and is paid off in full each month.

The above equates to a credit score/rating of 879/FAIR. (No idea what the wife's may be at this stage)

Outgoings, inclusive of the above, as well as all bills, insurance, food and social commitments are ~£2200pcm.

I have been overpaying our existing mortgage at £1200pcm whilst the commitment is only £650pcm,

Based on the price of the 3 bed homes in the Bloor estate and the equity in our current property, I believe I need a mortgage of around £230k which at the current going APR's equates to a monthly mortgage payment of £1100-£1300pcm which based on the above I can clearly afford.

My concern however is around my current credit scoring (derived from the number of open credit accounts and the fact, although paid regularly some are still quite high), whether I will be eligible for a mortgage of £230k, despite having the money available to pay the monthly payments and having the required 10% deposit.

As such I'm trying to work out how either the H2B Mortgage Guarantee, or the equity loan may be able to help? - Based on my deposit available, I see no need for the equity loan (other than to bring monthly payments down a touch?), I just need somebody (i.e. the government in this instance), to guarantee I am good for the money...

If anyone, from a similar situation, that have been successful, or indeed unsuccessful have experiences they can share that would be hugely beneficial.

Thanks for reading!

Regards,

Ryan

kingstreet

At an LTV of 88%, most lenders will be out of the market, as they won't go over 85% on a newbuild house.

One or two will offer HTB - MG on newbuilds, most won't.

You need to check affordability with an experienced and independent broker who knows which lenders to consider and which to avoid.

Stop faffing over your "credit score" as it's made-up nonsense and certainly should not be paid for!

ryanthelion84

Thank you for your reply kingstreet.

I have spoken with Barclays (with whom I have banked for 12 years) who have confirmed they do offer H2B-MG on New Build Properties.

By contrast, Natwest, my existing mortgage lender do not offer this on New homes.

i'm interested to know more regarding your statement around lenders being fussy about what type of property you are buying? - Surely if you're financially eligible for a mortgage with an LTV of 90% they shouldn't care? - If anything, new build properties will increase in value, making the investment more secure?

On credit scores, I agree entirely with your sentiment, but unfortunately us muggles need to rely on something as an indicator, given that financial institutions fear so much for their own safety that they won't divulge the inner workings of the system, probably because uncertainty makes them the most money?

Kell4life

We are looking to apply for help to buy ourselves and have been reading through all the forms, there is this calculator which they use for affordability. The calculator only seems to work on a PC. You add all your income etc and the price of the house, you include any credit card payments and it will work out if you can afford it or not. You have to fall into 4.5 multiple of income or less. I tried to post a link to the calculator but it won't let me.

If you don't use HTB most mortgage lenders will require you to put down a 20% deposit on a newbuild. Have a look online at a mortgage calculator to see what the maximum they'd lend you to get a rough idea.

We have actually found the Help to Buy criteria tougher than getting a mortgage, in fact our mortgage lender has offered to lend us a lot more than we thought.

mrginge

ryanthelion84 wrote: »

i'm interested to know more regarding your statement around lenders being fussy about what type of property you are buying? - Surely if you're financially eligible for a mortgage with an LTV of 90% they shouldn't care? - If anything, new build properties will increase in value, making the investment more secure?

new build properties come at a premium, which is immediately wiped out as soon as you walk through the door.

ryanthelion84

Hi Kell,

If you are able to work out how to provide a copy of the link for the calculator that would be greatly appreciated.

Thanks!

Kell4life

I can't post a link as the website thinks it's spam but there is a website called plumlife and they have the calculator on there. It's under finding a home, can I afford to buy?

Jon_B_2

Have you not considered the Help to Buy equity loan?

kingstreet

ryanthelion84 wrote: »

On credit scores, I agree entirely with your sentiment, but unfortunately us muggles need to rely on something as an indicator, given that financial institutions fear so much for their own safety that they won't divulge the inner workings of the system, probably because uncertainty makes them the most money?

You do realise lenders don't actually see this mythical credit score, don't you?

They take only the raw data from your credit file and add it to the data your application contains and score it themselves.

When Experian start lending money then their "score" takes on some relevance.

If you have discounted using Help To Buy - Equity Loan, the Government's HTB - Equity Loan affordability calculator is pretty redundant as all it does is determines if the HTB Agent will view an HTB - EL proposition as affordable or not. They have nothing to do with HTB - MG cases.

ryanthelion84

I haven't discounted H2B-EL, logic simply told me that I didn't need to borrow money from the government, only gain a guarantee, hence H2B-MG looked the better fit.

If LTV of 85% or lower is needed for New Builds, then perhaps H2B-EL is the way forward. - I believe you don't have to borrow the full 20% either?

kingstreet wrote: »

They take only the raw data from your credit file and add it to the data your application contains and score it themselves.

So you admit the credit 'file' is relevant, but the score means nothing? - This is fine, but given that I had provided a reasonable insight into my overall financial situation including content from my credit file in my original post tends to insinuate to me that you were just out to prove a point in responding to my original post rather than add any value?

kingstreet

ryanthelion84 wrote: »

So you admit the credit 'file' is relevant, but the score means nothing? - This is fine, but given that I had provided a reasonable insight into my overall financial situation including content from my credit file in my original post tends to insinuate to me that you were just out to prove a point in responding to my original post rather than add any value?

I was going to reply, but TBH I've got too much to do arranging mortgages on newbuilds.

All the best for the future.